EC market and trends In Japan Updates in 2024 September
Jan 19

EC market and trends In Japan Updates in 2024 September

Jan 19

In September 2024, the Ministry of Economy, Trade and Industry published a report on the domestic EC market and trends in internet and smartphone usage in 2023 (Market Research Report on Electronic Commerce).

According to the report released in September 2024, the EC ratio had been growing significantly since the end of 2019 due to the impact of the pandemic of the new coronavirus infection, but after 2022, a slowing trend was seen, and the EC ratio for BtoC physical goods sales in 2023 was “9.38%”.

The EC ratio is a figure that shows the percentage of all commercial transactions accounted for by EC (electronic commerce), and is an indicator for understanding the trends of EC businesses across all industries (or businesses).

Let's take a closer look using data from the BtoC-EC retail sector of the food industry (food, beverage, and alcohol industry) in 2023.

■EC ratio of the BtoC-EC food industry (food, beverage, and alcohol industry) in 2023

2.9299 trillion yen (EC market size) ÷ 68.296 trillion yen (total market size for all commercial transactions) = 4.29% (EC ratio)

 “EC market scale” and “EC ratio” are from the Ministry of Economy, Trade and Industry's “2023 Market Survey Report on Electronic Commerce” (announced September 2024), and “total market scale” is a calculation by the author.

The rate of domestic BtoC e-commerce is 9.38% (for physical goods).

According to a report by the Ministry of Economy, Trade and Industry, the global BtoC e-commerce rate in 2023 is estimated to be 19.4%, and the domestic e-commerce rate in the same year is 9.38%, so Japan may give the impression that BtoC e-commerce is not very widespread, but when you look at the size ranking of the e-commerce market, Japan is fourth in the world, so it is by no means particularly behind in e-commerce.

The growth rate of the BtoC-EC market size in the physical goods sector in 2022 was 5.37% year-on-year, and compared to the 4.83% growth rate in 2023 year-on-year, although the EC rate is steadily increasing, the rapid growth in the EC rate has passed the “corona disaster”, so it seems that the rapid demand for EC has calmed down after 2022.

Based on materials from the Ministry of Economy, Trade and Industry, we will summarize the events, GDP, consumption trends, retail industry conditions, and EC market that affected the EC ratio in 2023.

 

◆A summary of events, GDP, consumption trends, retail industry conditions, and the EC market in 2023

 

Real GDP growth rate for the year was 1.9%. Increased in the first half, but decreased in the second half

・In May, the new coronavirus infection was moved to “Category 5” and isolation measures were lifted

Price increases due to rising energy costs are affecting consumption

・Overall retail sales increased 6.8% compared to 2019, before the coronavirus crisis. Food, automobiles, pharmaceuticals and cosmetics, and non-store retailing are growing

Eating out and travel are increasing, but they have not reached the pre-corona level

・ The EC market is expanding, especially the food EC market is expanding

 

The total market size of the three categories of domestic BtoC-EC - “physical goods”, “services” and “digital goods” - is 24.8435 trillion yen.

The total market size of the three fields of domestic BtoC-EC - “merchandise sales”, “services” and “digital” - in 2023 was 24.8435 trillion yen, with a 9.23% growth rate compared to the previous year, and in particular, the services field grew significantly.

 

After 2020, due to the impact of the new coronavirus, the service sector, particularly the food and beverage service, travel service, and ticket sales sectors, experienced a sharp decline, but in 2022, the service sector also made a rapid recovery, and in 2023, the momentum continued to grow, with the EC market size expanding.

Trends in the three areas of domestic BtoC-EC (merchandise, services, digital)

◆EC market size and growth rate in each field in 2023 (growth rate in 2022 is shown in parentheses)

 

・“Retail goods sector”: 14.667 trillion yen,
growth rate +4.83% (previous year: +5.37%)

・“Service sector”: 7.5169 trillion yen,
growth rate +22.27% (previous year: +32.43%)

・“Digital sector”: 2.6506 trillion yen,
growth rate +2.05% (previous year: -6.10%)

 

The BtoC-EC growth rate was 9.23%, about the same as last year. All sectors, including physical goods, services, and digital, grew.

The service sector, which turned to negative growth in 2020 due to the spread of the new coronavirus infection, has seen the market size for ticket sales and food delivery expand since 2021, with a significant increase of +32.43% year-on-year in 2022, and continuing to grow at +22.27% in 2023.

In 2023, the market size of the digital sector grew by 2.05%, after negative growth the previous year. Although the online gaming industry experienced negative growth, the market size of the digital sector as a whole increased slightly, due to the steady performance of streaming services such as Netflix and Spotify.

 

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