Speaking the correct cultural
language on the Web

What are the major demographic differences between Japanese Internet users and their U.S. counterparts?

There are substantially fewer women online in Japan compared to the United States. While some recent surveys had as many as 25 percent women respondents and concluded that women comprise 18 percent to 25 percent of the overall Internet user population, I'm confident the true number is between 8 percent and 12 percent. Women are over-represented in online surveys that rely on prize incentives to attract respondents, and in telephone surveys conducted during the day.
Also, there are substantially fewer users age 20 and under in Japan than in the U.S. This reflects the lower household PC penetration rate and greater restrictions on children's use of the telephone in the home. Geographically, the greater Tokyo metropolitan area is Japan'sequivalent of California紡bout half of all the nation's Internet users live there. As far as occupation is concerned, there is still a heavier skew toward technical professions compared to the U.S., although this is changing rapidly.
The other key difference紡nd this isn't really demographic吠s that, compared to the U.S., Internet usage in Japan tends to be driven more by the desire for entertainment and to indulge hobbies rather than to accomplish practical tasks. But this, too, is changing quickly.

Phone service in Japan is more expensive than in the U.S. How does this effect Internet usage? Is deregulation expected to bring prices down anytime soon?

NTT's monopoly over local telephone service, and the metered rate system (meaning consumers have to pay 10 yen per three minutes for local calls) is the biggest single impediment to Internet usage in Japan today.
Imagine how the average U.S. consumer's use of the Internet would change if he were paying $1.43 per hour just to access an ISP! Consumers in Japan are thus very "time online-conscious." It's not the unlimited browsing environment we take for granted in the U.S. With shopping applications, therefore, you need to strive for search efficiency, maximum navigability and speed. Most Internet shoppers in Japan already know what they're going to buy before they go online. The other dramatic effect that high cost has is that it creates an expectation of gaining some direct benefit from being online. Essentially, Web visitors in Japan are paying to view your content, and they want to see some direct benefit in return. This has resulted in an amazing proliferation of prize/sweepstakes-driven advertising and promotional programs. It's really quite remarkable. Quite a few people, especially housewives and working women, spend a substantial amount of their online time responding to surveys in order to win prizes. And they win quite a few.
As far as deregulation is concerned, let me say that in 14 years of monitoring telecom developments in Japan, I've grown used to being disappointed. But NTT's impending "breakup," scheduled to take place on July 1, 1999, would almost make me throw in the towel if it weren't so laughable. A year ago, the Japanese government and NTT (NTT is still majority-owned by the government) were touting this supposed "breakup" as the "Big Bang" in Japan's telecom sector. Now NTT officials say, and I quote, "the group's holding company will have strong supervisory power over the other segments so that they can operate like a single unit." In other words, back to business as usual. But frankly, it doesn't matter that much. First of all, there's no question that regulations are being eased. Two or five or 10 years down the road Japan might even have free local telephone service. More important, Japanese consumers and businesses aren't letting relatively high costs keeps them from getting online. Japan already has more than 10 million people with Internet access, the world's second largest user base, and that number is growing by 70 percent per year in spite of the local phone monopoly and high costs. That speaks for the nation's incredible vigor and potential as an online market.

Are Japanese consumers more or less reluctant to shop online than U.S. shoppers? Are they more or less reluctant to put their credit card number online?

They are clearly more reluctant紡s a general rule. Japan is a cash society, and while many consumers have credit cards, they generally aren't used for everyday purchases. Japanese people also are very attached to the concept of "anshin"紡 feeling of security or peace of mind. Therefore, they tend to be more concerned with online security issues, especially when purchasing from overseas companies that settle in dollars and don't offer domestic bank-to-bank transfer payment options. So the answer is, in general, Japanese people are more reluctant to shop online. But it doesn't really matter because plenty of individual Japanese consumers are ready, willing and eager to shop online. There are now over a million residents of Japan who have bought products over the Internet using credit cards. And that number is growing very quickly. Also consider that at 1.64, Japan's per capita credit/debit card ownership rate is much higher than either Germany or the U.K., whose rates are 0.56 and 0.90, respectively. And since the population of Japan is 52 percent greater than Germany's and more than twice the U.K.'s, you basically have an incredible base of affluent, credit card-wielding, disposable income-possessing, ready-to-shop Internet users.

Can U.S. companies simply 'translate' their U.S Web site into Japanese or is it more complicated than that?

"It's more complicated than that. Japanese users can immediately tell the difference between a translation and a true localization, and this provides them with a very strong cue concerning the level of the presenting party's commitment to the Japanese market. You must realize that you're dealing with very intelligent, discerning people who are used to extremely high levels of quality and service.
Many U.S. Web sites are written in a casual, or even an offbeat style, but in Japan there is really no such thing as a casual writing style. Japan is not a "casual" kind of place. Therefore you have to start from scratch when localizing an English language site written in such a style.
Japanese people prefer to have explanations presented in a step-by-step, bullet or chart format rather than in paragraph form. You need to spend a lot of time determining the logical structure of your presentation in order to make sure that everything is absolutely clear from the Japanese user's point of view. This sounds obvious, but it's a challenging task that can only be successfully accomplished by professional native speakers working under the supervision of an experienced, bilingual person who "gets it" Internet-wise. Because of the time online-consciousness mentioned earlier, you have less time to communicate your message. Most of the other key online marketing principles apply. For example, memory-intensive, slow-loading graphics are annoying to everyone, but users in Japan are especially sensitive to having their time wasted.

You've helped Amazon.com launch its Japanese Web presence. When did it go online and how successful has it been so far? Was there anything about their site that made it challenging to translate into Japanese?

The Japanese site went live on December 3, 1997. I'm not at liberty to comment on results, but in addition to Web site development, TKAI's role has expanded to encompass banner advertising, market research, certain strategic consulting functions, and other activities. Amazon.com clearly has a serious commitment to the market.
The toughest part about localizing the site was reconciling the need to "start from scratch" with Amazon.com's need to follow very rigorous quality control and presentation consistency requirements. A lot of learning took place.

Do you have any estimates of what percentage of total U.S. online catalog sales come from Japan? And how many U.S.-based catalog companies have so far put an effort into creating Japanese-language pages?

For most business-to-consumer online retailers that ship internationally, Japan accounts for 8 to 15 percent of worldwide sales and as much as 60 percent of international sales, sometimes more. About 100 traditional U.S. catalogers have some sort of Japanese language online presence.

From your study of the Japanese Internet market, which U.S. companies are doing the best job of marketing online there so far?

Among direct offshore retailers, Cyberian Outpost has done an excellent job, and of course Amazon.com is outstanding worldwide. Among U.S. retailers with on-the-ground operations in Japan, Dell Computer is the undisputed online leader. Soon you'll be seeing more non-retail companies becoming active on the Japanese Internet.

Some people see the current recession in Japan as a reason to delay creating a Web presence there. Has the recession stalled the Internet's growth in Japan?

The recession has driven growth in Internet use rather than inhibited it, for two reasons. First, the Internet is primarily a tool for reducing communications costs, and businesses need to reduce costs in a recession. That's a key reason businesses in Japan have embraced the Internet so aggressively over the last three years. Second, consumers go out less and spend more time at home during a recession. They're looking for inexpensive, home-based forms of entertainment, and the Internet is a tremendous source of pleasure. Not only that, more and more people are thinking about home-based businesses, personal development, communicating more quickly and cheaply with friends around the country and overseas, and all the other benefits and money-saving functionality that Internet usage provides. From reading the Wall Street Journal, you might get the impression that Japan has sunk into the ocean. What it doesn't tell you is that there are a lot of U.S. companies that are doing extremely well in Japan right now. Most people have no clue as to Japan's incredible wealth. Consider this: In all of the rest of Asia, there are fewer than 50 companies with sales greater than $1 billion (U.S.). In Japan, there are more than 1,000 such companies. Japan's economy dwarfs all the other economies of Asia combined. Now is the ideal time for U.S. firms to prepare for entry into the Japanese market as costs have never been lower. That's one reason why we're stepping up our market research activities."

Do Japanese consumers have different expectations concerning customer service than U.S. customers?

Absolutely. You've probably heard the old saying: "when a piece of machinery breaks down, the U.S. company sends a fax; the Japanese company sends an engineer." There's a lot of truth in that joke, but many people miss the deeper implication. Japanese companies strive to ship only products that aren't going to break down in the first place. "Let the buyer beware" doesn't cut it in the Japanese market.

How much would it cost a U.S. company to convert its online catalog to Japanese and maintain that presence?

You could just as well ask how much it would cost to buy and maintain a car吠t depends on the level of quality you demand and your commitment to the driving experience. You could get an old Tercel for $850 or buy a brand-new Lexus and spend $40,000. It's the same with a Japanese language online presence. It's possible to maintain a prepackaged presence for about $225 per month, exclusive of production fees. On the other hand, some of our customers invest well in excess of $10,000 per month on Japan-specific online activities. Most of this investment is in marketing, research and site maintenance activity, rather than site development per se. In most cases about $8,500 would be the minimum budget for initial site development.

Sidebar: chart

Japanese Internet market, by the numbers

19.8%........Portion of worldwide computer market Japan accounted for in 1995, according to market research firm IDC. The United States accounted for 37.5 % and Germany 6.7 %.

10 million +.......... Number of Internet users in Japan. Separate studies by the Ministry of Posts and Telecommunications (MPT), market research firm Access Media International/non-profit Internet Association of Japan (IAJ), and Nikkei. The three studies offered different growth projections; here are a few: 14 million by the end of 1998, 20 million by late 1999, more than 41 million in 2005.

29.6%.........Number of Japanese Internet users who have shopped for merchandise online, according to TKAI's June 1998 survey of over 11,000 Web users. More than 13% of the respondents had experience making travel-related reservations via the Internet.

Source: Japan Internet Report