E-Commercein India and Japan
Author: Takashi Tsukamoto, Ph.D. and Ms. Kanupriya Dua

School of Political Science and Economics, Meiji University and International College of Liberal
Arts, Yamanashi Gakuin University

The International Institute for Trade and Development

Introduction
E-commerce or digital commerce refers to all the activities of buying or selling goods
and services through online services or the internet. Despite the pandemic and thedecline of people’s purchasing power, the number of retail e-commerce sales worldwide
stands at around 4.28 Trillion USD. Moreover, the trend of e-commerce is growing,with the average monthly visits to e-commerce websites at about 21.96 billion USD. It
is needless to say that the dynamic potential of the e-commerce market has been growing.
This market potential – axiomatically – helps us witness the two sides of the same
coin at the macro level. The recent study of the OECD portrays the unequal landscapeof digital transactions in which various firms, irrespective of size, eagerly attempt toparticipate. As it illustrates, “large firms are more than twice as likely as SMEs toparticipate in e-commerce in a majority of countries, and this gap is widening on average”(OECD, 2019, p. 9).
On the contrary, the study of international trade in the online platform conducted by
Marcio Cruz, Emmanuel Milet and Marcelo Olarreaga (2020) expound the positive
contribution of online exports to reducing the wage gap between skilled and unskilledworkers. As they conclude, “as the share of online exports increases, the skilledunskilled wage gap declines” (Cruz, Milet, & Olarreaga, 2020). Both studies haveconvincingly shed light on the potentially challenging nature of the e-commercelandscape by employing macro-quantitative analyses. This research attempts to decipher
this challenging nature of e-commerce by primarily focusing on the cases studies drawn
from India and Japan. This research is organised through three themes: 1) analysesof the market share of e-commerce, 2) analyses of possible e-commerce (adoption)
challenges for both vendors and consumers, and 3) lessons learned from Indian andJapanese experiences in the e-commerce market and policy recommendations.

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Market ShareThis section looks at the market shares of e-commerce in India and Japan. In bothcountries, the global e-commerce firm, Amazon, has been a leading figure in the digitalmarket, followed by domestic firms, Flipkart (India) and Rakuten (Japan). Rakuten,
for example, is the largest domestic e-commerce site in Japan, with more than 95 million
registered users. Its annual sales rose from $26 million in 2000 to $31.2 billion in 2018
(Kotabe & Helsen, 2020, p. 265). This section provides a brief quantitative analysisof the e-commerce market structures in India and Japan. The oligopolistic nature of
e-commerce markets in both countries will also be examined.
Just like every other country in the world, E-commerce has taken India by storm, somuch so that the Indian E-Commerce economy is projected to reach US$ 200 billion
by 2026. (Brand India. , n.d.). Much of this incremental growth has come about withan increase in internet and smartphone penetration. Internet connections have soared
to 622 million as of June 2021 (India, Active internet users in India likely to reach 900
mn by 2025: IAMAI, 2021), with 9 out of 10 users spending about 102 minutes surfing
the net. These internet minutes have become a critical platform for E-commerce giants
like Amazon and Walmart backed Flipkart for the Indian market. As a result, India’s
e-commerce orders volume increased by 36% in the last quarter of 2020. The personalcare, beauty and wellness segment was the largest beneficiary (India, E-commerce
grew by 36% in last quarter; personal care biggest beneficiary, 2021). The growth inthese sectors strongly confirms the Pew research, i.e. in all emerging economies, theyounger generations lead the way in smartphone ownership.
What is more, the rapidly ageing demographic profile of the world has opened a massive
window of opportunity for India. Presently it accounts for the largest share of the young
population in the world, and the same trend will continue for the next twenty years.
All this data makes it glaringly apparent that the e-commerce sector will grow at an
unprecedented rate and provide employment opportunities to millions. Furthermore,in its wake by necessity, it will need to employ skilled and unskilled workers and provide
entrepreneurial opportunities to those who wouldn’t have traditionally had suchopportunities. In the past five years, many women have carved a niche for themselvesby launching businesses not only in the metropolitan cities of India but in smaller
towns commonly referred to as tier one and tier two cities. The values of self-sufficiency
that Mahatma Gandhi envisioned for the traditional Indian crafts and artisans have also
found a renewal with the e-commerce ecosystem. In February 2021, Flipkart partneredwith Maharashtra State Khadi & Village Industries Board and Maharashtra Small Scale
Industries Development Corporation to bring local artisans and small and medium
businesses into the e-commerce platform.
Similarly, in February 2021, Zomato, India’s answer to Uber Eats, entered into anagreement with the Ministry of Housing and Urban Affairs to introduce 300 street
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food vendors on its portal. However, one must keep in mind that Indian startups like
Zomato and Swiggy have their challenges laid out for them for example, unlike Westernmarkets such as the U.S., where the value of each delivery item is about $33, in India, asimilar item carries the price tag of $3 to $4. But, as predicted by C.K. Prahalad in his
famous work Fortune at the Bottom of the Pyramid, the magnitude of the opportunityfor Multi-National Corporations is, in reality, much larger than previously thought.
The natural source of market promise is not the wealthy few in the developing world
or even the emerging middle-income consumers: it is instead the multitudes of aspiring
poor joining the market economy for the first time, thanks to internet penetration.
Japan has been one of the world’s most developed markets for online shopping.1 The
e-commerce market in Japan grew dramatically between 2010 and 2018. According to
the “E-commerce Market Survey” by the Ministry of Economics, Trade and Industry(METI), the size of the B2C e-commerce market in Japan is estimated at \7,778 billion(2.8% of total retail sales) in 2010 and \17,984 billion (6.2% of total retail sales) in2018 [経済産業省 商務情報政策局 情報経済課, 2020] (see also the Figure 5 below).
Japanese consumers purchase a variety of goods and services in the e-commerce market.
The Japanese e-commerce market is a place of fierce competition, joined by giant foreign
firms, such as Amazon, as well as Japanese major e-commerce companies, such as
Rakuten (Top 10 e-commerce sites in Japan 2019, 2021). In addition, there are otherspecialised e-commerce platforms in Japan. Founded in 2004, ZOZO Town is an
online fashion and footwear retailer that provides a variety of local and internal brands.
Launched in 2013, Mericari is a second-hand marketplace app through which people
buy and sell a wide range of their products, such as electronics, fashion items, sporting
goods, and toys. It has unique functions, such as a live streaming e-commerce channel
and the Mercari Now service that provides cash with uses immediately after selling its
products (Top 10 e-commerce sites in Japan 2019, 2021).
With that said, the Japanese e-commerce landscape is predominantly led by the twoplayers: Amazon Japan, which opened in Japan in 2000, and Rakuten, which firstlaunched in 1997.2 Fierce competition is taking place between these two. Recently,
Rakuten employed a proactive strategy to compete with Amazon Japan by investing
more in logistics. In April 2021, Japan’s postal service announced that it would takean 8.32% stake in Rakuten (approximately $1.37 billion). In exchange, Japan’s postal
service and Rakuten would build an unspecified number of shared logistics centres andshared pick-up and delivery stations. Rakuten attempts to expand its customer baseby reaching more consumers in remote areas through the logistic centres built withJapan’s postal service (Hensel, 2021).
The internet penetration rate in Japan has increased dramatically in the last twenty years. The rate was 29.99% in 2000
and increased to 92.73% in 2019 (statista, 2021).
2
When Rakuten proposed the free-shipping policy of its online shopping mall starting in March 2020, a group of merchantson Rakuten’s online shopping mall submitted a petition to the Fair Trade Commission, Japan’s antitrust watchdog, asking
it to investigate its free-shipping policy. Those merchants said that the company is abusing its dominant position by forcing
them to shoulder the costs of free shipping for all orders exceeding \3,980 ($36) (Antitrust watchdog to probe Rakutenover free-shipping policy, 2020).
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Figure 1: List of top Japanese e-commerce platforms with estimated traffic (2019)

Source: Top 10 e-commerce sites in Japan 2019. (2021, 9 July). Retrieved 30 July 2021
from DISFOLD: https://disfold.com/top-e-commerce-sites-japan/

Figure 2: Main 3 Japan E-Commerce Sites (2019)

Source: Top 10 e-commerce sites in Japan 2019. (2021, 9 July). Retrieved 30 July 2021
from DISFOLD: https://disfold.com/top-e-commerce-sites-japan

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Historical Backgrounds and Challenges
This section looks at historical developments and e-commerce adoption challenges forboth vendors and consumers in India and Japan. The two countries portray contrastingbackgrounds to e-commerce. The internet penetration rate in Japan stood at 92.7%
in 2019, whereas it was 48.4% in India in the same year. The internet penetration ofJapan has been relatively mature compared with that of India since Japan had alreadyreached 78% in 2009. On the contrary, India has experienced a dramatic increase ininternet penetration over the last decade based on the fact that the rate was 5.1% in2009. This section attempts to describe two different historical development of e-commerce
and identify the two countries’ challenges.

India
In the past two decades, headlines around India’s Economy have been overwhelmingly
positive. Speculations are regularly made about when and if it will overtake China andthe U.S., but India’s economic boom is a relatively recent phenomenon. So perhaps alittle lesson in history is in order to understand how India became a lucrative e-commerce
hub.
Shortly after its independence from the U.K in 1947, India adopted a closed style ofeconomy. For decades, it was essentially a socialist country with all the classic hallmarks
like five-year plans, nationalised banks, and all major industries like mining, insurance,
telecommunications, and most of the banking sector we controlled by the government.
Due to this setup, corruption and bureaucracy thrived overzealous regulation stifled the
production capacity of the country. This socialist-style economy continued till 1991.
The end of the cold war meant that the USSR, which had been a significant trading
partner of India collapsed, furthermore, the Gulf War led to disruption of the cash flow
coming from Indian workers who worked in the Middle East. Until 1991 India was an
impoverished country, India’s economic credit was downgraded to get a loan from theInternational Monetary Fund and the World Bank, so the country implemented a planof economic reform because of which it opened its markets up for competition. Secondly,
the country reduced its budget deficit and thirdly, the government slowly eliminatedforeign investment restrictions, making it easier for entrepreneurs and Indian businesses
to get funding. (Sharma, 2016).
This liberalisation continued till 2004; by this time, most of the command and control
centres were dismantled, so more foreign trade finally opened up. Thus, the economy
grew a lot faster; starting in 2003, for the next 15 years, India grew by about 7.5%.
The primary reasons that the Indian economy took off are too numerous to innumeratebut, one of those reasons is the I.T. sector. After liberalisation, Indian entrepreneurs
quickly realised that the I.T. sector could be a lucrative business. Hence, many private
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engineering colleges started popping up, which enrolled multitudes who aspires to gethigh paying salaries. U.S. conglomerates like Citi Bank and Texas instruments took
notice and were the first to hire Indian talent. By 2007, India was posting I.T. revenueof $23.5 Billion, but by 2018 the same sector was bringing in $167 Billion. This sector
is now India’s biggest employer. Another reason why India’s economy has been growing
at such a rapid pace lies in demography. Most of India’s 1.3 billion people are under
the age of 35. Which has helped India buck the more significant trend of an ageing
population that ails the rest of Asia. Deloitte projects that India might supply half ofAsia’s workforce in the coming decades. It is now the 6th largest economy globally andhas overtaken its former coloniser U.K (Myers, 2020). But it still suffers from a chronic
shortage of employment. In 2014 when Narendra Modi ran as the Prime Minister for
the first time, he promised to create 10 million jobs, but these jobs never came tofruition. On top of this, in November 2016, the government announced that they would
be taking ₹500 and ₹1000 currency out of circulation, which led India’s Economy
into a severe crunch since the country still is and was back then a cash-based economy.
Due to the decision to demonetise the unemployment grew even further by 1.5 million
jobs. Despite India’s reputation as a tech and services hub, most Indian workforce
is employed in the informal economy paid in cash. While the Indian economy was
still reeling from decisions like demonetisation and Goods and Services Tax laws, thesituation has worsened due to the onset of lockdowns due to the Covid 19 pandemic.
Though the decision to demonitise has been overwhelmingly seen as a terrible mistake,it had an unexpected advantage, i.e. a lot of the Indian middle class moved towards
payment apps like Paytm and Google Pay. Thanks to the economic liberalisation,
between 2005-16, 271 million people moved out of poverty, halving the rate to 28%.
Millions have been added to India’s middle class during the same time, making theIndian market a magnet for Amazon and Walmart. Between the years 2007-13, thee-commerce space had hardly any rules, and that’s when eBay had set up shop, andso did many Indian platforms like Snapdeal and Flipkart. However, in February 2019,
the Foreign Direct Investment Policy of the Modi Government banned exclusive sales,
restricting cash backs and discounts, restricting the sale of products that the e-commerce
platforms have equity in.
Between the years 2007-13, the e-commerce space was hardly any rules. However, thepolicy launched in February 2019 has directly benefitted the many Indian e-commerce
platforms chief among them is JioMart, owned by India’s richest man and the headhoncho of Reliance Inc, Mukesh Ambani, recently raised over $7 billion last year for
JioMart. Ambani’s other venture, Jio Platforms, also raised over $20 billion from morethan a dozen investors, including Facebook, last year. The same Reliance family is
speculated to be close to the Indian Prime Minister.
Setting up shop in India was not easy for Amazon has taken the following steps tofirmly nestle itself into the minds and hearts of Indian consumers; for example, it accepts
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cash and no credit purchase. Amazon bombed out of China and is making sure it succeeds
in India. It’s often thought that Flipkart set up and pioneered e-market, but eBay had
been there for years. Amazon came in with a significant investment in 2013. Ali Baba
has come in with some investment; so, India is ground zero for the battle of the next
100 million customers.
As India emerges out of poverty and adds more people to its middle class, the battle for
consumers is on, especially outside major cities. Amazon has launched its website in
Hindi and is about to launch its website in multiple Indian languages. In India, it also
trains local mom and pop shop owners to sell their products on Amazon. It is not one
single strategy for Amazon; there are multiple ways to deliver, distribute and purchasegoods. For example, in numerous locations all over India, customers can pick up things
offered through Amazon at small local shops, newly created distribution centres anddelivery through regional networks of lunch delivery services.
Amazon is taking out the middle man in other countries, but it’s using them in India.
Amazon has ‘easy stores’ like shipping centres with shop assistants who shop with thecustomer. People in India are not used to shopping online, so it’s a trust issue, and allcompanies are fighting to gain it. Most e -platforms in India accept cash but at the sametime are doing a lot to accelerate the adoption of online payment, like give the customers
cashback guarantees on the usage of credit cards issued by partner banks. In addition, if
the customer has loose change left after shopping for a product, Amazon converts that
into credit towards the customer’s next purchase. In addition, Amazon has opened its
second-largest campus of 9.5 acres in Hyderabad, India; it’s called HQ2, making it thelargest Amazon office globally, which can house 15000 workers in a single location.
The company has invested 5 billion dollars as of now; online sales are just over 3% of
the total sales of the Indian economy.
India’s population is 1.3 billion, but only 50% of it has access to online 4G network
which has been instrumental in internet penetration. In one of the most remarkablefeats of monopolizing the market, Reliance industries launched Jio. This move
revolutionised access to the internet by providing 4G all over India in 2016, entirely forfree in the first year. This made Jio the largest internet mobile network in the world.
This access to the internet to all and sundry has brought about billions of dollars ofinvestment to India. Internet penetration has had a cascading effect; for example,
Walmart bought Flipkart when 40% of the market was firmly under its belt. Despite
all the competition between Walmart and Amazon, it is wise to remember that 90% of
India’s commerce is still locked into small corner stores and local retailers, who havesignificant clout with the political party that is presently in power. The same politicalparty called BJP has updated E-commerce rules in India, making it much harder forinternational corporations to take over Indian markets and domestic competitors. Direct
to consumer sales were already banned by foreign-owned companies leading Amazon
and Walmart to set up affiliate companies to sell their products. After Walmart acquired
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Flipkart, regulations were tightened. New rules dictate that Amazon and Walmart canno longer sell any products on their online platform with majority equity. This has
meant that Amazon has had to stop selling many products like Eco, Alexa among others.
Despite these regulatory requirements, Amazon has also taken firm steps to make its
presence felt. It is buying stakes in many brick and mortar establishments in big Indian
conglomerates like Future Retail, which owns about 900 retail stores across India.
Amazon has also taken a hybrid approach. Amazon fresh is making its presence felt
in 5 Indian cities. In this arena, Amazon is competing against indigenous e-commerce
setups like Grofers and Big Basket, and both these platforms have added 1.8 million
and 80%, new customers, respectively. Amazon also runs a service called Pantry in
300 Indian cities, which deals with non perishable goods. All these platforms haveadded millions of customers during the two extended lockdowns that India has seenin the last one and a half years, and the way the Delta variant is taking over the world,
there might be other lockdowns. Amazon has set up small/non-threatening working
stores where Indian customers can go in and learn how to shop on Amazon through thecustomer’s smartphones. Amazon even runs an alternate version of its app designed to
run on phones with little or spotty internet connection. In April 2019, Jeff Bezos confirmed that Amazon’s growth was slowing down in the U.S., and the company would
be putting much capital towards India.
Figure 3: E-commerce Platforms according to Market Share in India (2019)

Source: Flipkart is No. 1 in India but faces formidable foe in Amazon, say experts. (2019,10 October). Retrieved 30 July 2021 from S&P Global Market Intelligence:https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/
ﬂipkart-is-no-1-in-india-but-faces-formidable-foe-in-amazon-say-experts-54083920

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Figure 4: Market Share of the Indian online Grocery sector (FY2021).

Source: Amazon tries Whole Foods-like online grocery delivery at More stores. (2021, 9August). Retrieved 10 August 2021 from The Economic Times:
https://economictimes.indiatimes.com/tech/startups/amazon-tries-whole-foods-likeonline-grocery-delivery-at-more-stores/articleshow/85160834.cms?from=mdr
The Figure 3 shows Flipkart as the market leader, with Amazon closing in. Others include
many players Like Myntra, Jabong etc., in the Online Fashion sector. Snapdeal, Pepperfry
has cornered the online furniture market, and Nyyaka is leading the online beauty andpersonal care market. The Figure 4 shows the online grocery business. With 37% of themarket share, BigBasket is the leader in online groceries. Tata industries have invested in
BigBasket.

Japan
Although “Japan was late and comparatively unenthusiastic in joining the dot.com
revolution” (Caotes & Holroyd, 2003, p. 121), e-commerce has been one of thepotential areas in Japan’s economic landscape, particularly after the collapse of the
bubble economy in the late 1990s. In 2018, Japan possessed the world’s third-largest
e-commerce market with $104.04 billion revenue, following China ($636.09 billion)
and the United States ($504.58 billion) (eShopWorld, 2018, p. 11). Yet, the growth ofthe e-commerce market in Japan has not been without problems. The ratio of online shoppers
per population was 71%, being relatively lower than other large-scale e-commerce markets,
such as the USA (78.9%) and U.K. (79.8%) (eShopWorld, 2018, p. 11). Furthermore, in thecase of the Japanese merchandising sector, the ratio of the e-commerce market scale tothe total amount of overall commercial transactions stood at 6.76%. Thus, even though
the scale of the Japanese e-commerce market has gradually been growing, the ratio of
the e-commerce market scale to the total amount of overall commercial transactions
remains lower than U.S. (approximately 10%) and China (approximately 35%) 【[ 2020年版】国内EC市場のEC化率｜BtoCとBtoBをプロが徹底解説, 2020]. Against this10The International Institute for Trade and Development

backdrop, this section looks at the historical development of the information industry
and the e-commerce market and the obstacles that may hamper its growth.
Figure 5: Growth of B2C (Business to Customer) E-commerce Market in Japan

Source: 経済産業省 商務情報政策局 情報経済課. (2020年7月). 令和元年度 内外
一体の経済成長戦略構築にかかる国際経済調査事業 （電子商取引に関する市場調査）. 参照日: 2020年7月30日, 参照先: 経済産業省: https://www.meti.go.jp/pre
ss/2020/07/20200722003/20200722003-1.pdf;【2020年版】
国内EC市場のEC化率｜BtoCとBtoBをプロが徹底解説. (2020年12月3日). 参照日: 2021年July 月30日, 参照先: ebisumart MEDIA: https://www.ebisumart.com/blog/ec-rate/
Japan’s information industry strategy has carefully been developed by the Japanese
government since the 1950s, firstly by importing technologies from Europe andthe United States and then promoting the self-development of its technology.3 The
government has established the three major strategies since 2000. The first strategy wascalled “e-Japan”. It aimed to “build an environment in which 30 million families4 canaccess broadband Internet, and 10 million families can access ultra-wideband (30–100Mbps) Internet by 2005” (Qin, Chang, Li, & Li, 2014, p. 61). The second was called“u-Japan”. The letter “u” referred to being ubiquitous, establishing the aim of “anyone,
anywhere can access the Internet at any time to find anything” (Qin, Chang, Li, & Li,
2014, p. 61). The u-Japan promoted the development of the broadband infrastructure
and technology and the use of ICTs [ICTとは？ITとの違いと政府が進めるICTの利活用, 2021]. The above two strategies focused on the infrastructure and hardware of
For example, in 1997, the government increased the investment in research and development. The National Institute of
Science and Technology increased the total budget by 14% (\162 billion) compared with the previous year (Qin, Chang,
Li, & Li, 2014, p. 61).
4
In 2005, the number of private households is 49.06 million (Statistic Bureau of Japan, p. 58).
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information technology.5 The third strategy aimed to provide a convenient way oflife by creating the “digital society” (IT Strategic Headquarters, 2009). The government
introduced the “i-Japan strategy 2015” in 2009. It had three priority areas: Electronic
government and Electronic Local Government Fields; Healthcare and Health Fields;
Education and Human Resource Fields. The core aim of this strategy was to promote
Japan’s long-term economic development through the application of digital technology.
In addition, its strategy strived to reform the whole society by promoting values creationand innovation (Bwalya, 2014, p. 352).
E-commerce in Japan has gradually been developed from the information industry.
Particularly after the collapse of the bubble economy in the late 1990s, the government
regarded e-commerce as a driving force to revitalise the Japanese economy. In July
2000, the government established the IT Strategic Headquarters, which promoted
the IT revolution and e-commerce (Qin, Chang, Li, & Li, 2014, p. 64). The Japanese
e-commerce strategies aimed to introduce a competition mechanism to construct anultra-high-speed network infrastructure.6 The ultra-high-speed network infrastructure
helped increase the number of consumers of e-commerce, reduce the cost, and modify
the law relevant to the communication industry. In addition, the government strived totrain highly qualified human resources. It established the plan to increase the number ofmasters and doctoral students working in the IT industry, exceeding that of the UnitedStates in 2005, and recruit 30,000 talented overseas IT technicians to work in Japanby 2005 (Qin, Chang, Li, & Li, 2014, p. 70). The development of e-commerce has
strategically been a significant area of Japan’s long-term economic growth. As e-Japan
strategy states, “In order for Japan to continue its economic prosperity and raise thequality of life for all people, it is vital to promptly establish a national infrastructure,including legal frameworks and information infrastructures, suitable for a new society
where information and knowledge are the sources of added value. … To spur an
increase in IT-driven transactions and activities on such a foundation, we must realize
an electronic government and promote electronic commerce through deregulation andnew rules” (IT Strategy Headquarters, 2001).
The Japanese government has often intervened in the e-commerce market to secure
fairness and transparency—the Act on Improving Transparency and Fairness ofDigital Platforms (TFDPA) a case in point. TFDPA was introduced on 27 March 2020,
promulgated on 3 June 2020, and effective on 1 February 2021. It aimed to tighten
regulations of major e-commerce firms, as Google, Amazon, Facebook, Rakuten

An explicit example of this technology was microchip. Japan became a leader in the information industry, by owning
six of the world’s top ten microchip companies between the late 1980s and the early 1990s. The Japanese informationindustry accounted for 11.4% of the Japan’s total industrial production (\37.52 trillion) in 1996 (Qin, Chang, Li, & Li,
2014, pp. 60-61).
6
The government plan was to ultra-high-speed constant access to 10 million households by optical fiber and high-speed
constant access networks to at least 30 million households by DSL and CATV routes by 2005 (Qin, Chang, Li, & Li,
2014, p. 66)
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and Yahoo (Japan law tightens regulation of major e-commerce players, 2020; Japan- Country Commercial Guide, 2020).7 The law required operators of shopping sites
and app stores with annual Japan revenue of at least \300 billion and \200 billion,
respectively, to report on their business activities to METI. After receiving the reports,
the ministry will request comments from merchants, conduct reviews and publish
the results. The law is designed to improve the transparency of the online commerceindustry and the fairness of designated digital platforms. If these firms are deemed
to have untransparent practices, METI can issue an improvement order. Yet, finesand other penalties will not apply even though those firms violate this law.8 This isbecause the government intends to avoid hindering innovation in a fast-changing
industry (Japan enacts law toughening regulations on tech giants, 2020).9
One of the significant obstacles that hinder Japanese consumers from participatingin the e-commerce market is the uncertainty pertaining to e-commerce. A type of
uncertainty derives from the insufficient protection of consumers’ personal information.
In addition, business operators’ mismanagement of personal data often led to the leakagesof customer data as shown in the table 1. The Ministry of Economy, Trade and Industry(METI) recognised the significance of personal information protection. It argued thatmany Japanese are uncomfortable with their inabilities “to learn who has their personal
information and how it is being used or managed” (Ministry of Economy, Trade andIndustry (METI), 2015). Therefore, due to the anxiety about the protection of personal
information, many internet users in Japan decided not to use e-commerce.
In the eyes of Japanese consumers, there are huge gaps between the real and the virtualworld (Qin, Chang, Li, & Li, 2014, p. 72). Some customers are still sceptical about
the security infrastructure of online payments. As Hendrik Meyer-Ohle, a scholar
in the area of Japanese Business and Management, observed, “While the number of
e-commerce sites has been growing rapidly, consumer acceptance in Japan has for along time been described as poor” (Meyer-Ohle, 2003, pp. 286-7). Online access andsecure payments have been society-specific impediments to e-commerce development.
To overcome these impediments, convenience stores have assumed strong positions.
There are more than 58,000 convenience stores in Japan. Consumers have access to
e-commerce terminals at convenience stores without using their PCs and even credit
cards (Aoyama, 2004, p. 232). Those stores have created an image of convenience,trust and efficiency for consumers and established “overall systems for product

The basic principle of this law is not to place the e-commerce market under the tight control of the government. The Act
stipulates that “the government should secure the minimally-necessary commitments from, and enforce regulations on,
digital platform providers, on the basis that such providers must take voluntary and proactive efforts toward improving thetransparency and fairness of their digital platforms” (Ministry of Economy, Trade, and Industry (METI), 2021)
8
In this case, this law essentially differs from the European Union’s General Data Protection Regulation (GDPR), which
regulates tech monopolies. Under GDPR, fines are designed to make non-compliance a costly mistake for both large andsmall businesses (Moazed, n.d.; Wolford, n.d.).
9
In especially severe cases that violate the antitrust law, the government will ask the Fair Trade Commission to step in.
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procurement, logistics, market research and merchandising” (Meyer-Ohle, 2003, p.
285; 288). Since their physical – not virtual – locations are close to their houses andworkplaces, they have played important roles in overcoming “some of the hurdles
blocking e-commerce acceptance in Japan, such as handling payments … to consumers”(Meyer-Ohle, 2003, p. 283). It is fair to argue that the advancement of e-commerce byutilising convenience stores has partially been the gradual integration of e-commercetransactions into the existing – and successful – retail business networks.10
Table 1: Concerns of Japanese about e-commerce
Concerns

Ratio

Possibility of private data being offered to third parties
Product delivered differs from the product advertised (taste, colour,
quality)
Product is not delivered
Insufficient trust in the Internet store
Difficulties in correcting mistakes after ordering
Non-ordered merchandise delivered and charged
Different product delivered
Possibility of higher prices
Time gap until receipt of product too long
Difficulty in finding a product on the Net

73.4
72.7
52.8
47.8
44.0
43.8
37.4
28.0
27.4
18.8

Source: Meyer-Ohle, H. (2003). Networking Bricks and Clicks: Convenience Stores andthe Organization of E-Commerce in Japan. In S. Park & S. Horn, Asia and Europe in the
New Global System: Intercultural Cooperation and Competition Scenarios. (pp. 283-302).
New York: Palgrave Macmillan., p. 287.
This section has illustrated the historical development and obstacles of the e-commercemarket. In the case of Japan, the state was often involved in its development and promoted
accessibility to the e-commerce market by establishing strategies and introducing laws.
Therefore, my account is ascribed to the developmental state model first developed by
Chalmers Johnson in his seminal work, MITI and the Japanese Miracle (1982). In his
account, Japan’s economic growth in the post-war period stemmed from a state-led
industrial policy that focused on particular industries strategically chosen by thegovernment. The successful developmental state effectively intervenes and strategicallyHendrik Meyer-Ohle argued in 2003 that “The hitherto successful business model of convenience stores evolving
into e-commerce outposts, in particular, offers compelling potential for the future development of e-commerce in Japan”(Meyer-Ohle, 2003, p. 284).
11
There are numerous scholars working on the developmental state model particularly in the East Asian context (see forexample Johnson, 1982; Evans, 1995).
10

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guides private sectors.11 However, the state is by no means omnipotent in the e-commercemarket. Security concerns have been society-specific obstacles that hamper consumers
from having access to e-commerce. Yet, in the case of Japan, convenience stores haveplayed roles in bridging the gap between consumers and e-commerce sites by overcoming
consumers’ security concerns.

Summary and Lessons
In the past five years, nearly a billion people have found access to the internet, halfof whom are Indians. Successful steps that have been taken in the past half a decade
have helped women get access to the internet, which has changed their lives for the
better. However, the COVID-19 pandemic has set gender equity back by a few years.
There is a clear correlation between gender equity, economic participation and digital
inclusion. To help rural and underserved Indians thrive in the digital economy. Google
and Amazon have launched many programs in partnership with Tata Industries’ CSR
wing. One such program is Google Saathi, which has trained about 80,000 women who
have had a cascading effect on millions. Rural women have tangibly benefitted fromthe internet, many have found new ways to support their family’s income, and manyare successfully running these small-scale enterprises. This effort, combined with Tata
Power’s Dhaaga program, has broadened opportunities even further in partnership with
Amazon. Dhaaga provides women with implements needed to bring their traditional
crafts to life, the program started in 2017, and the artisanal work that has come out of
it has already grossed in access of INR 20 lakhs. Amazon has a dedicated storefront
on the website to help display and sell products made by these women. This movehas injected a breath of life into Indian crafts (handiwork of Rabri artisans of Kutch,
traditional tiger grass handicrafts of Maithon of Jharkhand and Warli Art of the tribal
communities of Maharastra). These crafts had been languishing for so long, but now
that these crafts have garnered commercial success, they will be carried into the next
generations and have a far lesser chance of altogether perishing.
India is a multi-faceted heterogeneous market and arguably too big and too diverse fora single-player, so all thoughts of monopoly have to be set aside. It can also be argued
that India’s vibrant democratic setup will inure her from all efforts to consolidate her
on a single e-commerce platform unless that platform miraculously offers everythingthat millions desire. That is why it has already welcomed so many players. Moreover,with the new foreign investment guidelines, more indigenous platforms will have more
fighting chances against giants like Walmart and Amazon. As far as India is concerned,
so many changes are taking place so frequently that it would be wise, to sum up withthe phrase, watch this space.
The study of Japan suggests that the state has promoted the accessibility to and thecompetitiveness of the e-commerce market. National strategies, led by the government,
have integrated e-commerce as an important area of economic development. In thissense, Japan still inherits the tradition of a plan-rational developmental state, which
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effectively intervenes the national development planning and determines the directionof economic development. Nevertheless, critical challenges for e-commerce development
in Japan can be witnessed, particularly from the consumer’s perspective. Insufficientpersonal data protection has been the primary anxiety that hinders Japanese consumers
from participating in e-commerce transactions. This study has shown that convenience
stores and their e-commerce services have played roles in easing such security concerns.
Culturally specific practices may further encourage consumers to utilise e-commerce.
The accessibility to Japan’s e-commerce market is supported by customs and norms,
such as retail calendar (Ecommerce in Japan: The Trends Transforming the Market,n.d.). In addition, there are specific traditional as well as imported annual events thatspur spending in Japan. The marked increase in customer spending usually occurs inthe summer months, in which Japanese workers receive their annual bonuses. The
Christmas holidays and the New Year holidays have also been yearly events marked
by increased customer spending. These calendar events coincide with the two major
gift-giving seasons. People exchange gifts, Ochugen for July and Oseibo for December,with numerous acquaintances. Thus, Japanese consumers are bound by the annual
tradition of spending, and e-commerce transactions provide convenient tools for theirconsumeristic activities.
The International Trade Administration, an agency in the United States Departmentof Commerce, identifies the quality-oriented nature of Japanese consumers (Japan
Growth in Ecommerce , n.d.). Brand and product quality and after-sales supports, suchas warranty and repair services, play significant roles in attracting consumers in Japan.
Online transactions can be used as channels to provide those supports so that consumers
are likely to make purchase decisions.

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