Although it may take months, or even years, before we overcome the Covid-19 pandemic, the effects that it will have on the business world will persist long after the threat of the virus has abated.
Companies have had to adapt not only to new ways of working, but, coupled with the difficulties of managing the financial difficulties that have come with the pandemic, they’ve needed to adjust to new trends in consumer behavior and respond accordingly. Some of these changes are specific to Japan, while others apply globally. But either way, businesses that can learn from these developments will thrive, while those that ignore them do so at their peril.
To find out more about how Covid-19 has changed how companies reach out to their customers in Japan, we spoke with three members of the Custom Media team with firsthand knowledge of some of the trends that are shaping the Japanese market, developments within e-commerce, and ways that companies can achieve good results by focusing on specific sales and social media channels.
Only in Japan
Jody Pang, strategic account director at Custom Media, explained that in Japan, just like other countries around the world, consumer behaviors have changed drastically due to lifestyle and workstyle changes brought on by Covid-19. And this has pushed companies that might not have had an e-commerce presence to quickly develop one: “While Japanese consumers have long enjoyed e-commerce with one-to-two-day delivery service, some brands only started exploring e-commerce sales channels in 2020. For Japan, Covid-19 really has pushed businesses to go digital.”
However, she explained, this digital transition has to be coupled with providing what Japanese consumers have come to expect: “Japan is notorious for its extremely high level of customer service standards. Some brands have utilized AI technology to offer counseling services to shoppers to create an interface for their staff to serve their clientele. How they use this product is unique in the way they keep a staff member in control of serving each customer behind the scenes. That’s right—it’s not about replacing the customer service staff at all. This keeps the service level up by being personal, but also gives the consumer the social distance they expect right now.”
When it comes to adjusting to trends and providing Custom Media clients with the best advice for adapting to the Covid era, Pang follows several rules of thumb: “For any brand, we have to make sure we keep ourselves up-to-date with the news and be flexible with our content and marketing strategies. While we try to plan ahead, we need to keep up and avoid sounding tone-deaf with our initiatives.” Looking ahead, she thinks that Japanese brands will continue to rely on digital promotions in 2021, to keep up with consumers’ spending habits.
Shopify, BASE and STORES, for example, are popular in Japan, and although they may have similar services, their business models, features and functionalities differ.
Megumi Okazaki, strategic account director at Custom Media, echoes Pang’s point, in that the most notable changes in e-commerce that the pandemic has generated are in consumer behavior: “The products and services that people spend money on, and where and how they consume them have altered significantly. The priorities in decision-making processes and the motivation to make purchases is shifting. More and more, people are putting a priority on safety, rather than convenience.”
This meshes with the findings reported in Shopify’s report, The Future of Commerce 2021, which finds that, globally, 84 percent of consumers have shopped online since the pandemic, compared with 65 percent who have shopped in-store. And 79 percent of consumers surveyed said that they would shop online regularly in the next six months, in contrast with the 57 percent who plan to shop in-store on a regular basis.
According to Shopify’s analysis, only 50 percent of Japanese consumers have made significant changes in the way they shop—compare with 68 percent in the UK and 65 percent in Spain—and only 34 percent feel uncomfortable with in-store shopping.
However, while these shifts may not be as drastic in Japan as they are in other markets, Okazaki points out that the trends she has recognized have led to a number of changes in shopping behavior. One of them is a noticeable spike in the number of credit card payments made on e-commerce sites in Japan. She also pointed out the findings by a Japanese credit card company that show that consumer spending began to recover as early as last summer, an indication that people in Japan were quickly adjusting to the new normal and making purchases on a more regular basis, rather than saving for an unknown future.
In addition, consumers are more likely to consult within their families before making purchases, a likely result of family units spending more time together. She also commented that Japanese consumers have grown to be more patient with turnaround on delivery, particularly in the case of companies with new e-commerce platforms.
She points out that these shifts are likely to continue, even after the crisis that brought them on has passed: “The pandemic has forced a wide audience, especially those from older generations, to move to online shopping, which will drive businesses to improve their online payment systems and delivery services. Many services are going paperless, which further increases the demands for digitized operations. Finally, more and more people are pursuing healthier lifestyles. I believe these trends will continue evolving, which will require businesses to evolve with them.”
The priorities in decision-making processes and the motivation to make purchases is shifting. More and more, people are putting a priority on safety, rather than convenience.
But she warns, taking a one-size-fits-all approach won’t work when responding to these transformations: “It is worth mentioning that all these behavior changes and reactions to the Covid-19 crisis vary widely across genders, age groups, occupations, living environment, and lifestyle. So it is crucial for companies that are looking to make the most of these trends and behavior changes to identify their most suitable target audiences, and shift their means of approaching them.”
Focusing on Key Channels
One area where careful targeting comes to the fore is in social media and sales channels, where the effects of the pandemic have meant that companies need to cope with budget cutbacks, and they simply can’t be engaged with as many platforms as they might want to.
As Edvard Vondra, business development director at Custom Media explained, making the right choice is crucial: “Many companies are trying different channels and different social media platforms. And there are so many: if you’re talking about Japan, you have LINE, Instagram, Facebook, Twitter, and TikTok, which is also on the rise. Even if you repost the same content, you have different results. And marketers have to face the reality that it’s extremely difficult to manage all of these platforms with the same quality. So companies’ stakeholders are looking to really spend their budget wisely, because of the crisis that we’re all facing.”
“So they decide to put the money in one or two platforms, which perform really well. But it might be a challenge to find which ones those may be,” he added. “Usually the process that we follow with our overseas clients operating in the Japanese market is that they’re looking for Custom Media to suggest what channel would be best for them.”
“They aren’t saying, ‘OK, let’s do Yahoo, let’s do Google, let’s do everything.’ Usually they have the budget for one, two, or three channels maximum,” Vondra said. “And then we do the market research to test the different platforms to see what is ideal for that company. For example, for one brand, Instagram might be the best platform they can consider because of its growth potential, and the overall popularity of visuals in the Japanese market. And of course, this is also where shopping is happening. So if companies who are investing money have good content, good calls to action, and e-commerce apps that link to their Instagram account, they can be successful.”
Some brands have utilized AI technology to offer counseling services to shoppers to create an interface for their staff to serve their clientele ... but it's not about replacing the customer service staff at all.
Vondra added that, particularly in Japan, companies can be very cost sensitive, which puts a major focus on getting a return on investment from content creation and social media: “It’s data driven—clients want to know how many new leads they are getting from this platform, or how many sales they are converting from that platform. With one of our overseas clients, with every email campaign they put out each week, there are specific details they want to know: What was the conversion rate? How many people clicked? How many people buy products? What is the customer acquisition cost? And if they’re happy, they will continue the volume and expand their budget. And If they’re concerned, it means that we need to take a different approach.”
And just as it applies to other market trends, brands focusing on their best-performing channels is a trend bound to outlast the current crisis, Vondra believes. “We cannot go back to the situation we had before Covid. Companies are more sensitive about costs in all areas. This trend is not just temporary—it’s going to last for some time.”
Custom Media CEO and Co-founder Robert Heldt added, “at Custom Media we take an integrated approach to e-commerce and digital marketing, customizing our solutions for every client. The growth of e-commerce has also seen an increase in the number of platforms servicing the market. Shopify, BASE and STORES, for example, are popular in Japan, and although they may have similar services, their business models, features and functionalities differ. With deep insight into how these platforms operate, we are able to strategically advise our clients on which one to choose and why.”
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