The ecommerce industry has become widely established as a system for buying and selling goods and services online, and it is now indispensable to both businesses and customers. The digital commerce landscape in Japan continues to grow and is deeply established in everyday life as a way to shop.

However, the nature of ecommerce has markedly shifted in recent years. Alongside the traditional approach of searching for items on one’s own, it is now increasingly common for shoppers to discover a product after seeing it on social media or through an influencer, then decide to try it.

Advances in artificial intelligence (AI) technology are also beginning to transform the shopping experience itself. A new concept called agentic commerce—which selects products on behalf of users, compares prices and specifications, and assists with the checkout process—is also gaining attention.

This article provides an overview of the Japanese ecommerce industry, covering the basic structure and systems, the main business models, leading companies, and trends in digital storefronts in the age of AI.

Key takeaways

• Japan's ecommerce market continues to grow, while market size and penetration rates highlight its future potential.
  
• Understand how Japan's ecommerce industry has evolved since the 1990s.
  
• Ecommerce business models vary across B2C, B2B, C2C, and D2C, and are often combined with online marketplaces, company-owned websites, and social commerce.
  
• Social commerce, AI, and agentic commerce are beginning to change how customers discover, evaluate, and purchase products online.
  

What is the ecommerce industry?

In the simplest terms, ecommerce refers to the buying and selling of goods and services online. This concept covers a wide range, from online shopping to video and sports streaming subscriptions to flights and accommodation reservations.

Japan’s digital retail landscape plays an integral role in everyday life, and continued expansion is likely in the years ahead. As AI use becomes more widespread, we can also expect the nature of online shopping to evolve gradually.

Market size

The size of the ecommerce market in the country continues to grow every year. According to the market survey on Electronic Commerce for Fiscal Year 2024 published by the Ministry of Economy, Trade and Industry (METI), the size of Japan’s domestic business-to-consumer (B2C) ecommerce segment (B2C electronic transactions) in 2024 was just over ¥26 trillion.

In particular, the retail sector, spanning clothing, home appliances, and daily necessities, accounts for a significant share of the ecommerce landscape. Beyond those product classes, it is also widely used in the service sector, covering travel, ticketing, and video streaming.

On the other hand, the market size of business-to-business (B2B) ecommerce exceeded ¥514 trillion in 2024, far surpassing that of B2C online retail. Ecommerce plays a central role not just in customer-facing sales but also as a foundation for B2B transactions.

Penetration rate of ecommerce

The ecommerce penetration rate measures the share of total commercial transactions conducted via digital storefronts.

According to a METI survey, digital retail accounted for approximately 9.78% of retail activity in 2024. The figure continues to rise year after year, with further growth likely in the future. In contrast, the B2B ecommerce penetration rate is very high at 43.1%. Still, these numbers also include factors such as system integration between companies and processes designed to simplify order placement and fulfillment.

History of ecommerce

The ecommerce sector expanded alongside the spread of the internet. A variety of factors drove that growth, from advances in communication infrastructure and devices to shifts in shopping behavior.

Late 1990s to early 2000s
When ecommerce first emerged, most people had dial-up connections with slow speeds, and since images took a long time to load, simple text-based websites were the standard. Later, as the expectations of what internet-related companies could and needed to provide increased, the industry entered the “dot-com bubble,” which eventually burst around the year 2000. The online retail field shifted from a brief period of extreme hype to a model driven by actual demand.

Around this time in Japan, online auction services such as Yahoo! Auctions emerged, and peer-to-peer transactions (consumer-to-consumer, or C2C) began to gain popularity and became more widely adopted.

Late 2000s to early 2010s
As broadband connections spread more widely and internet speeds increased, ecommerce site design evolved considerably.

Since the 2010s
As smartphone capabilities and performance improved, the number of mobile device owners also surged. In Japan, many people kill time by browsing shopping sites on the train while commuting to work or school, so retailers had to develop strategies to accommodate this trend.

Since the 2020s
In recent years, promotion and advertising methods that use social media and influencers have become mainstream, and social commerce now serves as one of the key channels for ecommerce. Now the industry is beginning to see changes in marketing strategies, such as enhanced personalization, including AI-powered recommendations, and the creation of creative content. Meanwhile, a new concept known as “agentic commerce” has surfaced, where AI bots autonomously select and buy items on behalf of users.

Ecommerce business models

Japan’s ecommerce models generally fall into the following transaction categories:

• B2C: Selling products from businesses to consumers
  
• B2B: Transactions between companies
  
• C2C: Buying and selling between individuals
  
• Direct-to-consumer (D2C): Manufacturers selling their own products directly to consumers
  

Beyond the transaction models mentioned above, ecommerce operations can also run through one or more of the following approaches:

• Mall-type ecommerce
  
• In-house ecommerce
  
• Social commerce
  

For example, in the B2C sector, some retailers choose to open stores on large online marketplaces such as Rakuten Ichiba. In contrast, others build branded shopping sites because it allows them to emphasize a unique brand image. Within the D2C model, approaches are diversifying. Some companies choose to incorporate social commerce alongside their own website.

Trends and developments in the ecommerce industry

Several trends are emerging in the ecommerce industry due to technological advancements and shifts in shopper behavior.

Evolution of AI and ecommerce

Ecommerce business models have undergone notable changes in recent years. One of the major factors behind this is the evolution of AI technology.

Until now, the typical ecommerce process has been for shoppers to search for products themselves, compare them, and then make a purchase. However, in recent years, the use of AI has changed the steps leading up to a sale. Recommendation features that suggest the best items for each user based on data such as past orders and browsing history are increasingly sophisticated. It is also common for suggestions to appear before users start searching.

AI also supports backend online retail operations through demand forecasting, inventory refinement, and fraud detection. It now plays a major role in ensuring a simple shopping experience for both sellers and customers.

Agentic commerce and other AI technology

One new concept in AI is agentic commerce: a new approach to shopping in which an AI program, or “agent” selects, compares, and buys products on behalf of the user. Until now, people have had to perform this entire process themselves, but AI will likely take over in the near future.

For instance, a shopper might tell the agent “I want to buy a new TV. I’m looking for something around 60 inches with 4K resolution, and my budget is under ¥200,000.” With recent developments, the AI agent can deliver an experience in which it selects items that meet the requested criteria across multiple ecommerce sites, compares them based on price, reviews, and delivery schedules, and completes checkout.

Growth of social commerce

In Japan, the social commerce sales method continues to gain traction. Under this model, influencers with strong audience reach introduce items and encourage followers to place orders. Reaching out through influencers who align well with your brand’s products is an effective way to grow your business.

The shift from a style where customers choose for themselves to one where they have someone they trust choose for them is a contemporary trend that shares similarities with agentic commerce, where AI handles the selection process.

Major ecommerce companies

While there are many companies in the online retail space, Rakuten Ichiba and Amazon are the clear leaders in Japan.

Rakuten Ichiba

Rakuten Ichiba is a mall-style ecommerce platform where many companies operate their own stores. Because of their strong brand recognition and ability to easily attract a large volume of customers, they offer the advantage of making it easier to get business off the ground than building a shopping site from scratch and then frantically working to attract customers.

Rakuten has robust, strategic loyalty programs in place that promote continued user engagement through regular sales on Rakuten Ichiba and Rakuten Rebates. Another important feature is that the platform has successfully built a strong “Rakuten economy” by integrating a wide range of offerings, including banking, credit cards, mobile services, and travel planning, which helps it effectively retain its user base.

Amazon

Amazon’s model combines selling its own products and services with a marketplace for third-party sellers. A strong logistics network enables fast delivery, which is a major strength for them.

In addition, the company handles logistics for sellers through the Fulfillment by Amazon (FBA) program, enabling smaller retailers to focus on their core sales operations.

The future of the ecommerce industry

Although the ecommerce sector already operates at a considerable scale, substantial growth potential remains. B2C activity in Japan, in particular, still maintains a relatively low digital retail share of around 10%, and internet-based shopping will likely continue expanding.

Furthermore, as AI use becomes more widespread, the path from product selection to purchase is expected to undergo significant changes. How retailers respond to these developments and how they integrate AI will be a key turning point for them. Businesses that can design a unique user experience with new technologies will gain a competitive edge over those that are stuck simply selling products.

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