Our latest proprietary survey of 1,000 Japanese internet and mobile users shows the battle to dominate remains heated. Mobile-communications providers face new entrant Rakuten, but consumers demand good deals and excellent networks to even consider switching teams. Rakuten has also made some progress in reclaiming ground in ecommerce against Amazon, though Yahoo Japan seems to be hanging on. Meanwhile, as cashless payments take flight, competition is intense and looks set to continue for many years.
Tricky times for telecoms
Our survey suggests that a portion of mobile-telecommunications consumers are willing to move to Rakuten if the price is low and the quality high. Otherwise, there remains a lot of inertia. Consumers are not very aware of pricing changes in the sector, and the majority have little interest in shifting. We do not expect Rakuten’s entrance to change the sector dynamics much near term.
Amazon leads, but Rakuten is responding
Japanese ecommerce continues to constitute the majority of domestic consumption growth. Consumer purchase frequency is increasing, and ecommerce is closing in on 10% of retail sales. Amazon continues as the leading brand, though Rakuten has narrowed the gap in the past 12 months. Yahoo Japan so far is not finding a way to catch up on the market-leading duo; we expect more initiatives based on PayPay to be its key approach going forward.
Fintech and content boost platformers
The worlds of media and internet service continue to merge. Instagram is the only major media platform to experience much improvement in Japan; ecommerce app Mercari sees more clicks for services. Amazon’s significant investment in video is helping: some 38% use Prime and of these, 78% take advantage of its video offerings. Fintech services are making more impact at Yahoo Japan, Rakuten and Line.
Payment battle enters round one
Most major platforms and carriers have launched app payment solutions. Consumers show limited usage of and no brand loyalty towards payment apps. This is likely to change, but our sense is that the battle has only just started. Round two will begin after the consumption-tax hike, when government incentives give the best salesforces the chance to get a wider footprint.