As Easy As One, Two, Three?

Now that the Net is starting to really take off in Japan, the key is to work out how consumers in the world's second-largest economy are going to spend their yen online.

But who knows the answer to that? No one is even sure whether online shopping in Japan will take off. And if it does, the equation is bound to differ from that in the US (where, and let's be honest, folks are still trying to turn a profit online -- and we're not talking stocks). There's abundant speculation on e-commerce Japan-style, of course, but in recent years it has been more along the lines of: Consumers here are Internet wary, credit card shy, and will never really shop online.

Still, that view is changing as the Internet finally gains decent penetration levels. And there's no doubt the Japanese have long loved shopping, even if consumer consumption has been in the doldrums for years. One of the few bright spots in the retail downturn has been the boom in computer and communication sales -- Net naturals -- so there is a light shining at the end of the tunnel. But that still doesn't tell you how to get Japanese consumers to part with their yen online.

So we decided to take a fresh approach. Eschewing the highly extrapolated statistics, pundits, experts, hypemasters, and sales pitchers -- in other words, everyone who couldn't possibly have the faintest idea what they're talking about, and no one does, since Japan online is a new, highly undeveloped, highly untapped market - we thought we'd try a more hands-on approach and look at an area of shopping with a strong history both online and off: computers. Have a look at that, we thought, and you can take away lessons for all other etail areas.

Of course, buying computers online has a relatively short history in Japan, but it happens nonetheless. Several major computer manufacturers (although not all) and a few small makers offer some kind of online shopping service in Japanese. And shoppers already online are more likely to be familiar with computers -- and the Internet and its potential -- so their interest in shopping for them online is probably quite strong. (Hypo-thesis yes, but better suggestions may be emailed to the editors.)

So join me as I go through the personal experience of shopping for computers in Japan, both online and on foot.

When I want to buy a computer in Tokyo, which is where I live, I basically have two choices -- I can go online or head to Akihabara, the electric town, home to every kind of electronic appliance imaginable.

When I go online, there are a couple of sites up and running in Japanese - fully functional sites where I can see the choices, check out the details, and click out an order form, delivery guaranteed. Gateway Japan, Compaq Japan, Dell Japan, and Apple Japan all have one. So does IBM Japan, though last time I looked there was only one model (a Thinkpad) available. (Users were advised to contact their nearest retailer for other needs.)

Fujitsu and NEC have information sites with lots of nifty pictures and guides to doing all sorts of (basic) things with my computer, but no order forms (and no links to online retailers that can ship me its products). NEC provides a comprehensive Acrobat PDF of its catalog. Sony has an information site, but Vaio owners can buy peripherals and upgrades online.

Stop. Notice a pattern? It's the foreign computer makers that are selling online in Japan. Selling to the Japanese consumer by Japanese companies online has still barely started. Perhaps there's a reason for that: Unless I'm desperate for a computer that I can buy only on the Web, I, and all other shoppers in Japan, have a far better option: an electric town like Akihabara. And it's not just Tokyo - Osaka has its own version of Akihabara, and smaller electric towns are scattered throughout the country.

Apart from the excitement of Akihabara, there's a huge choice of products. Computers I can touch and feel and, should the whim take me, carry home. But much more than that, there are discounts. Akihabara lives on discounts, whereas the Web, at least Japan-style, doesn't know the meaning of them. Computers, extras, peripherals -- you name it -- are charged at manufacturer's price. No exceptions.

So what does this tell you about getting online shoppers in Japan? Like we said, there are lessons to be learned. Many of them are obvious -- like actually providing an online shopping site (anyone in corporate Japan listening?) -- but most of all etailers need to understand what Japanese customers already have offline.

Offline shopping in Japan is far different -- and in many ways superior -- to the experience in the US. Aside from your ordinary local stores (every suburb still has its own shopping street packed with stores peddling daily necessities), there's a long history of mail-order and catalog shopping. There are even co-ops that deliver groceries to your door. Just about every retailer (including the corner store) ships to the customer if asked.

There are nationwide delivery services, generally faster and cheaper than the post office. It costs ¥2,000 to ¥3,000 ($20 to $30) to ship a desktop. You don't even have to leave home -- if you know what you want, you can call in your order over the phone.

And there are big differences in methods of payment, too: Japanese people rarely use credit cards, and checks are virtually unknown. It's not just that Japan has long been a cash-based society (monthly paychecks can still take the form of new envelopes crammed full of crisp, new ¥10,000 bills), but the banks here have made an art form out of a service underutilized in the US -- bank transfers. From an ATM, you can send money from any account in Japan to any account in Japan, at costs ranging from zero to around $6. I can pay my rent, utilities, plane tickets, and stationery supplier this way -- and often do. The post office provides a similar service. And if you like, many companies let you pay cash at your door.

In essence, Japanese shoppers already have a plethora of conveniences -- and the Net is not really one of them. And for computer shoppers, there are the electronic towns. These sprawling areas are one of the more delightful aspects of Japan's major cities, at least for the first few visits. Blocks and blocks of cramped, crowded, overflowing buildings selling every kind of electronic gadget known to humankind (and then some). In the States, if you want a computer you go to your favorite computer store or site; in Japan, you head to the nearest electronic town, where brand-name and no-name systems and parts are offered at ever greater discounts by salespeople all desperate to outdo their competitors next door, down the block, around the corner, and across the road.

So the big question is: How can e-commerce sites compete with the shopping convenience already in place in Japan? In the US, e-commerce can help you avoid surly clerks, traffic nightmares, lugging stuff from your car, et cetera. In Japan those problems aren't really an issue; things run pretty nicely here, thank you very much. Surely e-commerce will take off in some way in the world's second-largest economy. But what's the right formula? Whoever finds it will profit handsomely, and in the meantime perhaps this snapshot of how shopping actually takes place here will help speed things along.