Japanese Web Users: A Market Profile

by Tim Clark

• More than two-thirds of Japanese Web surfers now access the Internet from their homes, a dramatic shift from just 18 months ago.
• Women account for about 12% of Japanese Web users.
• Microsoft is slowly winning the browser wars, with a 25%-plus (and rapidly growing) overall market share.

Time-conscious users
Internet usage in Japan is expensive. This is not because connectivity service charges are high (in some cases, they are actually lower than US rates), but because Japan's time-based telephone charges mean that users pay a minimum of JPY10 per three minutes for daytime calls.

Japan's Internet users, therefore, tend to be conscious of their "time online" (TOL), and this TOL-consciousness is reflected in attitudes toward Web surfing. "Fast-loading pages" is the Japanese Web surfer's number one requirement for a compelling website, while "slow-loading pages" is the number one turnoff.

The quest for speed is also evident in modem usage. Japan's Internet market is less mature than the US, meaning that more new users started out with faster modems. Today, more than 70% of Japanese who access the Internet from home are using 28.8K-bps or faster modems, a significantly higher ratio than in the US. The clear TOL cost-savings produced by higher speed modems also mean users are willing to upgrade, which has resulted in a strong modem replacement market.

As another way of reducing online costs, Japan's Web surfers tend to rely more heavily on traditional paper media for site information than do their counterparts in the US. A number of paper magazines have appeared over the past year to serve such users. Many, particularly older or novice users, carefully research the sites they want to visit before spending their time (and money) online. This environment underscores the importance of traditional media PR and advertising for generating high levels of traffic for a website.

A highly concentrated market
Internet activity is still highly concentrated in the Kanto region (the Tokyo metropolitan area and its surrounding prefectures). While the Kanto area accounts for less than one-third of Japan's total population, it has about one-half of Japan's Internet users.

Assuming that Internet users represent purchasers of Internet-related products and services, the notion of a Category Development Index (CDI) can be useful for marketers and researchers interested in targeting those geographic areas with the highest potential for sales. Kanto (excluding Tokyo) is the only geographic region in Japan with an Internet CDI greater than 1.0, while Tokyo itself is overwhelmingly the highest-consuming Internet market with a CDI of over 2.0. (Even so, Tokyo's share of the Internet user population has dropped nearly eight percentage points over the past year, reflecting the rapid growth of access points outside the immediate metropolitan area.)

Overseas cyberstores prove popular
Of the over 1,100 users with Internet shopping experience who responded to the TK Associates' 1997 survey, nearly 60% had purchased products online from an overseas cyberstore; only 41% had limited their Internet purchases to vendors in Japan. The questionnaire may have attracted those predisposed to shopping at overseas sites, but Japan-bound sales volumes reported by US cyberstores, and the overwhelming dominance that US firms enjoy in Japan's PC software sector, lend weight to the findings. Computer products - particularly software, games, peripherals, and accessories - account for an overwhelming majority of Internet sales in Japan.

In non-computer product sectors, domestic cyberstores are hampered by both higher prices and a lower level of product availability. Also, since the traditional order-taking and delivery infrastructure in Japan is so highly advanced, and Internet search/ shopping functions are so limited, Japanese Web users simply derive less utility from shopping domestic stores online.

Market insights
These are just some of the topics covered in the report's approximately 160 pages. For those in the industry who have a need to know - and for those who are just curious about the Japanese Web - the analysis addresses such issues as banner ad preferences, television and magazine viewing habits, website rankings, and online purchasing behavior. It also includes interviews with Web- presence managers at such firms as Microsoft Japan, Recruit, Pepsi-Cola Japan, and Toyota Motors.

All-in-all, Understanding the Japanese Web User can offer the discerning reader a wide range of insights into what has so far been an under-analyzed area: the market for online services in Japan.

Tim Clark (tim@tkai.com) is the senior writer for the "Online Opportunities" series of syndicated research reports on the Japanese Internet market, and editor of Japan Internet Report, a monthly newsletter.

Back to the table of contents