Today, new businesses are consistently emerging in the ecommerce market. Thus, ecommerce offerings are becoming increasingly diverse. Even businesses with physical stores are likely to consider expansion by integrating ecommerce sites with physical stores.

With the acceleration of globalization, Japanese companies are focusing on the domestic market and cross-border ecommerce, which is aimed at customers outside of Japan. As a result, companies have implemented various strategies to stand out from competitors.

What kinds of business models exist for ecommerce sites? In this article, we explain the main business models, ecommerce strategies, key points for success, and what artificial intelligence (AI) can provide to current ecommerce businesses and future prospects.

What’s in this article?

• Market size of the Japanese ecommerce industry
  
• Types of ecommerce business models　
  
• Ecommerce site formats
  
• Strategies for businesses with physical stores and ecommerce sites
  
• Key points for successful ecommerce sites
  
• The AI transformation of ecommerce and future developments
  
• How Stripe Checkout can help
  

Market size of the Japanese ecommerce industry

Using data from the Ministry of Economy, Trade and Industry (METI), we provide an overview of the market size of the ecommerce industry below.

According to this data, the market size for B2C ecommerce in Japan in 2024 was ¥26.1 trillion. This is a 5.1% increase compared to the previous year’s figure of ¥24.8 trillion. Furthermore, the market size for B2B ecommerce reached ¥514.4 trillion. This was 10.6% higher than the previous year’s ¥465.2 trillion.

Below, we provide the ecommerce penetration rates for B2C and B2B ecommerce. Penetration rates indicate the proportion of the ecommerce market size relative to the total value of all commercial transactions. These rates demonstrate that ecommerce adoption is progressing across both types:

• B2C ecommerce: 9.8%, a 0.4% increase from the previous year
  
• B2B ecommerce: 43.1%, a 3.1% increase from the previous year
  

The growing number of businesses entering the Japanese ecommerce market highlights the importance of ecommerce.

Types of ecommerce business models　

Business models for ecommerce sites can be broadly categorized into one of the following four types:

Ecommerce business models are categorized based on whether their target customers are businesses or individuals. B2C ecommerce sites are aimed at individuals. Because of the lifestyle changes caused by the COVID-19 pandemic, many shoppers have used this type of site and business.

While D2C is often confused with B2C due to their similarities, the key difference between D2C and B2C is that the D2C model removes intermediaries from the transaction. This eliminates costs—such as store setup fees and sales fees—which is a key strength of the D2C business model.

Ecommerce site formats

When developing and expanding an ecommerce business, it is important to create an ecommerce site that is suitable to the business model. In this section, we introduce the different formats and types of ecommerce sites.

Ecommerce malls

An ecommerce mall is a mall-style shopping site that hosts a number of different stores in an online format. When opening a store in an ecommerce mall, even relatively unknown shops or products can attract customers because of the mall’s existing reputation. This makes it easier to start a business and generate sales, compared to establishing an independent online shop.

Ecommerce malls also offer operational support. However, they tend to have high running costs, such as setup fees and sales commissions. Therefore, it is important to carefully assess the cost-effectiveness of an ecommerce mall before opening a store.

Standalone ecommerce sites

To sell products or services through a standalone online shop, it is necessary to build an ecommerce site. This is an alternative to relying on another company’s site, such as opening a storefront on an ecommerce mall. There are several ways to build a site, including using one of the ecommerce platforms below:

• Application service provider (ASP)
  
• Instant
  
• Cloud-based
  
• Package-based
  
• Open source
  

Excluding ASPs and instant ecommerce solutions, the above options offer high degrees of flexibility and customization. They are well-suited for building ecommerce sites that align closely with companies’ brand images.

However, building an ecommerce site in-house requires significant time and effort, including initial costs. The more the business customizes the site, the more other expenses grow. This means that the operation of the ecommerce site can be impacted negatively. When choosing a format, it is important to carefully evaluate which options fit within the business’s budget.

Cross-border ecommerce

As briefly explained above, cross-border ecommerce involves expanding sales channels outside of Japan and across national borders. This approach offers the potential to acquire a broad customer base that is not limited to Japan.

One important point to note is that cultural norms, business practices, and preferred payment methods can vary significantly between countries and regions. Therefore, when engaging in cross-border ecommerce, it is important to use flexible approaches that are customized for the target countries and regions. This can include the following:

• Support for multiple languages: By translating and localizing an ecommerce site, businesses make it possible for customers who don’t understand Japanese to shop for their products.
  
• Popular payment methods outside of Japan: By offering multiple payment methods for cross-border ecommerce, businesses ensure that they can easily process payments from overseas.
  
• Fraud prevention: Implementing fraud protection measures that provide global support and coverage can enhance an ecommerce site’s security.
  

Strategies for businesses with physical stores and ecommerce sites

Below, we discuss some of the main marketing strategies that businesses operating both physical stores and ecommerce sites can use to succeed in the competitive ecommerce market.

Omnichannel

The omnichannel strategy refers to a system that integrates data from multiple sales channels, such as physical stores, social media, and ecommerce sites. This strategy connects and engages with customers across all channels.

For example, the omnichannel strategy enables centralized management of inventory data across physical stores and ecommerce sites. Therefore, store staff can quickly check inventory using a mobile device. This allows staff at one store to inform customers that out-of-stock items at that location are available on the ecommerce site or at another nearby store. This also allows businesses to offer services such as ordering from other stores, which can further enhance the customer experience.

In this way, the omnichannel strategy aims to break down the barriers between physical stores and ecommerce sites. The goal is to enhance the customer experience and drive sales growth. Successful examples in Japan include major companies such as MUJI and UNIQLO. The apparel industry is just one of many industries that successfully use omnichannel strategies.

Online-merge-offline (OMO)

OMO is a marketing strategy that aims to eliminate the divide between online (i.e., ecommerce malls and apps) and offline (i.e., physical stores). This can provide an optimal shopping experience where customers are no longer aware of the boundaries between online and offline shopping. In Japanese, it is generally translated as “the fusion of online and offline.”

The OMO strategy combines the strengths of online and offline shopping to enhance overall service quality. This can lead to increased customer satisfaction, credibility for the company, and a larger number of customers.

Key points for successful ecommerce sites

In addition to understanding ecommerce business models and strategies, it is also important to know the following key points for achieving success with your ecommerce business.

Conduct research and analyze data

Conduct market and competitor research; analyze the data to understand what customers want; and develop strategies to meet those needs. To develop a viable and effective strategy, it is also important to identify the target audience for your company’s ecommerce site and thoroughly understand customer needs and concerns based on purchase behavior data and surveys.

Enhance customer engagement

If your ecommerce business builds solid customer relationships, you can expect an increase in repeat customers. To create these relationships, you can implement various marketing approaches—such as the omnichannel and OMO strategies introduced above—to maximize customer touchpoints. Offering customers multiple sales channels can create a closer relationship with your company, which can further increase customers’ willingness to purchase.

Additionally, for customers who add items to their carts but leave without purchasing, recovery emails can be effective for reengagement.

Create storefronts on multiple ecommerce malls

Some customers express a preference for ecommerce malls over standalone sites. Therefore, you might consider opening stores on multiple ecommerce malls. This can allow you to spread your brand to a large number of ecommerce mall customers without actively pursuing customer acquisition. This can help the business gain new customers.

Focus on convenience

Prioritize the site’s readability and usability to ensure that the process of using your ecommerce site—from browsing and searching to completing a purchase—is as smooth as possible.

For example, it’s important to build an ecommerce site and app that are easy for customers to navigate. Make sure text and images are displayed appropriately, not too large or too small. Purchase buttons and carts should be placed where they can be immediately found on laptops and smartphones.

In addition, by adopting multiple ecommerce payment methods and delivery methods that suit the lifestyles and preferences of your customers, you can further enhance the customer experience on your site.

Follow up with customers

After a customer makes a purchase, it is important to prioritize after-sales support. Follow up by responding promptly to customer inquiries and providing attentive assistance.

For example, to encourage first-time shoppers to become repeat customers, you should pay attention to the quality of service leading up to purchase completion and the follow-up support provided after the sale. Establish a comprehensive customer support system to ensure that you can respond appropriately to any issues.

In addition to customer support provided by staff, you can also use chatbots to quickly answer simple questions and enhance your FAQ page.

The AI transformation of ecommerce and future developments

In the past several years, systems and tools equipped with AI capabilities have grown in number and popularity. Many business operators are considering how AI can be integrated into ecommerce. Led by major ecommerce sites, many businesses are moving to incorporate AI into a variety of situations and applications.

One example is the use of AI in simple digital interactions, such as chatbots. However, more sophisticated and innovative AI technologies could cause an even more significant transformation of ecommerce businesses in the future.

For example, a new shopping format called agentic commerce is gaining attention. With agentic commerce, AI agents act on behalf of customers to perform tasks, including product searching and purchasing. Customers entrust the entire shopping process to AI agents, including the following steps:

• Product search
  
• Product selection (i.e., proposing products to customers)
  
• Purchase completion, with customer approval
  

In this new era, AI technology is fundamentally transforming the nature of the ecommerce industry. However, it is also important to understand that AI does not replace humans. To ensure AI agents function properly in the context of agentic commerce, it is important to further enhance and improve interactions between AI and customers. This can include building a highly precise framework that adapts various functions—such as payment processing—to AI.

How Stripe Checkout can help

Stripe Checkout is a fully customizable prebuilt payment form that makes it easy for you to accept payments on your website or application.

Checkout can help you:

• Increase conversion: Checkout’s mobile-optimized design and one-click checkout flow make it simple for customers to input and reuse their payment information.

• Reduce development time: Embed Checkout directly into your site, or direct customers to a Stripe-hosted page, with just a few lines of code.

• Improve security: Checkout handles sensitive card data, simplifying PCI compliance.

• Expand globally: Localize pricing in 100+ currencies with Adaptive Pricing, which supports 30+ languages and dynamically displays the payment methods most likely to improve conversion.

• Use advanced features: Integrate Checkout with other Stripe products, such as Billing for subscriptions, Radar for fraud prevention, and more.

• Maintain control: Fully customize the checkout experience, including saving payment methods and setting up post-purchase actions.

Learn more about how Checkout can optimize your payment flow, or get started today.