Cross-border e-commerce refers to e-commerce businesses that target customers outside Japan. In recent years, cross-border e-commerce has been attracting attention in Japan thanks to its potential to help businesses expand globally.

For businesses in Japan that are considering selling their products overseas, cross-border e-commerce can be a good choice. When a business wants to expand to other countries via cross-border e-commerce, the first thing it needs to do is understand the size of the global e-commerce market.

In this article, we’ll look at the size of the cross-border e-commerce market, both in Japan and worldwide, and discuss e-commerce trends specifically in Japan, China, and the United States. Lastly, we’ll look at the reasons for the growth in market size and forecasts for the future size of the market.

What’s in this article?

• E-commerce market share by country
  
• How big is cross-border e-commerce in Japan, China, and the United States?
  
• Why is cross-border e-commerce growing?
  
• What is the future of cross-border e-commerce?
  
• Cross-border e-commerce in Japan
  

E-commerce market share by country

According to a 2024 e-commerce market report released by the Ministry of Economy, Trade, and Industry (METI), the top 10 countries ranked by e-commerce market share in 2023 were:

1. China (51.3%)
   
2. United States (19.5%)
   
3. United Kingdom (3.6%)
   
4. Japan (3.4%)
   
5. South Korea (2.1%)
   
6. India (1.7%)
   
7. Germany (1.6%)
   
8. Canada and France (tie 1.4％)
   
9. Other (2.1%)
   
10. Russia (1.3%)
    

China and the United States alone accounted for more than 70% of the global e-commerce market. China, in particular, made up the majority of the total market, and was vastly more active than other countries, including Japan. For business owners considering entering the cross-border e-commerce market, it is therefore important to understand the size and impact of both the China and the US.

How big is cross-border e-commerce in Japan, China, and the United States?

Now that we know the e-commerce market shares in the US and China, let’s look at these figures relative to Japan’s market size.

The following points are noteworthy about Japan, the United States, and China’s cross-border e-commerce:

• The amount of money spent by customers in Japan on purchases from the US and China is relatively low at ¥376.8 billion and ¥44.0 billion, respectively.

• The amount of money spent by customers in the US and China on purchases from Japan is extremely high at about ¥1.5 trillion and ¥2.4 trillion, respectively.

In other words, while Japan is a major seller to the US and China, it spends relatively little on e-commerce purchases from those countries. Further, the amount of money spent by customers in China on e-commerce purchases from Japan exceeds ¥2 trillion. China therefore has a clear influence on Japan’s cross-border e-commerce.

The reasons people in Japan do not often use cross-border e-commerce sites include:

• Experiencing language barriers
  
• Having concerns about site security
  
• Being satisfied with the services and quality of domestic e-commerce sites
  

Why is cross-border e-commerce growing?

Let’s look at the factors driving the expansion of the cross-border e-commerce market.

The spread of information via social media and the internet

With recent improvements in communication technology and electronic devices, more and more people are using the internet. Smartphones, in particular, have become more accessible than ever before, and the use of social media on phones and tablets is increasing. Subsequent online advertising has made it possible for people all over the world to learn about products from different countries.

The ability to reach overseas customers has made it easier for businesses to attract their interest, which has resulted in an increase in demand for cross-border e-commerce. This rise in demand is a key factor in the expansion of the market.

COVID-19 restrictions

During the COVID-19 pandemic, many people in Japan started shopping on cross-border e-commerce sites because they were unable to leave the house and were spending more time indoors. As a result, even those who traditionally only shopped in physical stores began to embrace online shopping. The convenience of being able to purchase overseas products from home led to a surge in demand for cross-border e-commerce.

Even after the pandemic, interest in buying products unavailable in Japan remains strong. As a result, the global cross-border e-commerce market continues to grow and shows no signs of decline.

An example of a popular cross-border e-commerce purchase made by customers in Japan is dietary supplements and health foods from the United States, a leading producer of supplements. In some cases, it is cheaper to buy dietary supplements through US-based cross-border e-commerce sites than to purchase them locally in Japan or from e-commerce platforms in Japan. This has caught the attention of health-conscious customers in Japan, especially those focused on improving their health and boosting their immunity in the wake of the pandemic.

Reduced expenses due to overseas business development

When selling products from Japan to customers overseas, it’s certainly possible for a business to open a physical store in the target country (i.e. the country the business is selling to). However, this approach comes with costs such as rent and salaries for local staff. In contrast, cross-border e-commerce operates online, which allows a business to eliminate the expenses associated with a physical store. This makes it much easier for businesses to expand internationally. The ability to significantly reduce costs is another key factor driving the rapid growth of the cross-border e-commerce market.

What is the future of cross-border e-commerce?

According to data collectedby market research organisation Facts & Factors and included in METI’s report, the global cross-border e-commerce market is expected to reach $7.938 trillion USD by 2030. The estimated compound annual growth rate (CAGR) is around 26.2%, indicating that the cross-border e-commerce market will continue to grow in the coming years.

This forecast represents a tenfold increase compared to the 2021 market value of $785 billion. The predicted acceleration in growth is largely attributed to the widespread use of the internet and social media, as mentioned previously.

Cross-border e-commerce in Japan

In recent years, various types of products from Japan – including cosmetics, food, and items from subcultures such as anime and gaming – have gained popularity worldwide. Additionally, the recent depreciation of the Japanese yen has sparked growing interest in products from Japan among overseas customers, much like the increased demand for tourism to Japan. This presents a great opportunity for Japanese businesses to enter the cross-border e-commerce market.

By focusing on polite, attentive service and offering high-quality, unique products and services that embody Japan’s brand, there is significant potential for businesses to grow and increase sales. However, to fully leverage the potential of cross-border e-commerce, it is important to conduct thorough market research on any target countries and understand the needs of customers in those markets. Businesses must be particularly knowledgeable about cross-border e-commerce to China and the US, and aim to provide quality services to these destinations.

Additionally, it is important to have a solid understanding of cross-border e-commerce business models, mechanisms, local laws, and regulations. Ensuring that the proper logistics routes and payment systems are in place is key. Above all, providing a secure and reliable shopping experience for overseas customers can increase purchasing motivation and trust in a service. Therefore, it’s important to prepare carefully for cross-border e-commerce, particularly with regard to the payment environment, and work towards successful cross-border e-commerce operations.

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