Q&A: Lessons Shopify is learning in Japan

Canadian ecommerce platform Shopify made Japan the site of its first non-English-language launch earlier this year. Since then, it has introduced a sales channel integration with Instagram Stories, rolled out AR rendering for its merchants, and introduced a service called Frenzy that aims to enhance the customer experience around streetwear drops, with Bape the first brand to use it.

In Japan, the company, which makes the bulk of its revenue through merchant subscription fees, consists of a 10-person team operating out of a WeWork space in Harajuku. The brand has some way to go in terms of awareness: country manager Mark Wang admits to frequently having to explain that it has nothing to do with a certain Swedish music streaming service. Taking into account the pace at which new services typically gain acceptance in Japan, he accepts it will take time for things to get off the ground, but is enthused by the scale of the market and social trends that suggest services like Shopify can play a bigger role. 

How does your mission in Japan differ to in other markets?

Things differ by being very aligned. Our company mission is to make commerce better for everyone. To do that in Japan requires a lot of effort on our part to localise the product, localise the selling experience, the buying experience, and the general way we support merchants… What’s interesting is that localising for Japan has actually made Shopify better [elsewhere], because Japan is a demanding and difficult market. One example was the zip code autocomplete function. We did not have this checkout process prior to expanding to Japan. We’ve now taken it and implemented it globally.

Japan is one of the only markets where you’ve localised the language. Why?

For ecommerce, Japan is one of the most appealing countries in the world [the market the third-largest after China and the US, worth around $120 billion]. So the size of the market is phenomenal. Not only that, but what we see in Japan is what we’ve seen in other markets such as the US: it’s a very mature market in terms of how people shop online, and one that’s dominated by a few key marketplace properties. Amazon, Rakuten, Yahoo Shopping and Zozotown control around 55% of online purchases, which is significant, but there’s still another 45% not dominated by them, which is a good market.

What has surprised you since you started operating in Japan?

Something Japan has really loved which took us a bit by surprise was a product called Hatchful, an online logo creator. You put in your slogan and company name based on a theme and it’ll generate a logo. This for some reason has resonated with the Japanese audience far more than anywhere else.

What do you want to change about this market?

According to Jetro, only 24% of retailers in Japan sell online. In this day and age that’s phenomenally low. So part of our mission is to take away the barriers in terms of time, knowledge and cost… Even more shocking is that out of these, less than half are even selling globally. We all know that Japanese goods have a fanatical base outside Japan: everything from anime to electronics, videogames and fashion—there’s such respect and demand for Japanese goods. For Japanese merchants not to be able to capitalise on this opportunity is very unfortunate. If we can influence this somehow, I believe that would be a huge measure of success for us.

How are shoppers here different?

Shoppers here are excessively demanding so what really puts us on our toes is the checkout experience. At the front end, we notice little difference in terms of conversions. We hear a lot about websites in Japan looking different, as in busier, but what we’ve noticed in ecommerce is that does not necessarily have to be the case. Ecommerce is migrating to a more user-friendly experience where you don’t have to scroll down six pages to get to the checkout. But at the backend it’s different. In the US and most other markets you offer one payment gateway—a credit card—and you’re OK. Here, the demand of being customisable to the shopper is increasingly important and we’re still working on this.

How are you raising awareness of Shopify as a brand?

At the core, we have a belief that our brand is secondary. We don’t require our branding to be on any Shopify store. In other core markets, our brand increased quickly through word-of-mouth. In Japan, it’s significantly weaker, but we don’t mind. We’re not going out doing typical market-entry marketing. When you think about it, how many of those people on the daily commute on a Yamanote Line train would really be our target market? What’ we’re trying to be is more targeted and really focusing on those who are existing sellers and those that are potential sellers. We’re invested in Japan for the long term. We don’t need to be the number one platform overnight. Japanese merchants rarely build their own shops. They rely heavily on their relationships with service providers. So if we break the barriers with these partners that’s effectively how we gain our growth. We also do more focused events such as meetups, and we recently held a popup festival with 12 merchants. In a font one fiftieth the size of the words ‘Popup Festival’ it said, ‘powered by Shopify’, and that’s the philosophy we take to our brand.

Are you using influencers?

That’s something we’re looking into as we know it’s a very effective means of communication in Japan. But here there’s an agency model that we have to understand first. We do have our set of Japanese celebrities and models selling on Shopify, but for now we’re trying to understand how we can leverage them as influencers. How we can begin this journey is to focus on micro-influencers, those entrepreneurs. That’s closer to our hearts.

What would a micro-influencer do for you and how would you ensure transparency?

We have no particular model in Japan, so I don’t have a good answer for you. If they love us, we could just work closer with them and have them do it without payments and without disclosure. But if we’re formally going down the path of using payments, Instagram has rules and we would of course adhere to that. We have a strict filtering process of who could actually be an influencer or affiliate. They need to have a core tie to Shopify and why they use it as opposed to just having a big network. We want to find a reason to tie up with these affiliates so as not to overexpose the brand.

What’s made doing business here difficult?

We’re used to operating at a certain pace and one of the things that makes Japan unique, and that definitely has many benefits such as loyalty, is the longer lead time towards creating relationships. It’s not a simple matter of, this makes sense, let’s build it and launch it and all high-five each other. It’s more of a relationship-building exercise and I believe in the end, this is a much better outcome.

Japanese society is changing. How do you see this impacting your potential?

What we’re seeing is a lot of cultural norms are, I don’t want to go as far as to say being broken, but some things are not being seen as taboo anymore. People are eschewing careers for other ventures. We see signs of it becoming an environment where more people are trying to capture opportunities, whether that’s to travel more, work different jobs, take risks, work abroad, whatever—to being entrepreneurial and within that selling online. This permeates everywhere, in terms of how people shop, what they shop for, that they care more about the brands they are buying and the people running the stores rather than running to the lowest cost alternative. That’s all trending in a positive direction that aligns with our core values.

Responses have been edited and condensed.