## (2) ICT-driven consumption

### a. Overview of economic contributions

Personal consumption accounts for roughly 60 percent of Japan’s GDP. However, business conditions and economic growth is susceptible to personal consumption. In this context, to what degree can ICT promote consumption? The following paragraphs look at the paths of ICT’s contributions, along with an outline of recent trends.

### b. Growth of Internet shopping and electronic money

Internet shopping is often cited as the ICT service that drives consumption. The online shopping market has expanded rapidly with improved convenience, thanks to the provision of broadband connectivity and more and easier payment methods. The Survey of Household Economy indicates the percentage of households purchasing goods online has risen over time, as has the amount spent per household (Figure 1-2-4-3). Furthermore, mobile devices are increasingly being used for Internet shopping, supplanting computers, which used to be the primary online shopping device.

### c. Examples of initiatives using ICT to promote consumption

The O2O (Online to Offline and Offline to Online) concept has become established in recent years. O2O focuses on correlating Internet spaces with stores and other real world spaces (Figure 1-2-4-4). Interest is strong in O2O marketing, coupled with trends in IoT and big data, which makes use of analyses of customer information and POS data. Effective sales promotions can be realized by mining buried information beyond what products are the best sellers (for example, information on products with high repeat purchase rates and information on products that correlates highly with other data).

As O2O services utilizing big data, location information, and smartphone apps are developed and released for various consumers, the services are expected to encourage consumption and facilitate matching of supply and demand.

### d. Effect of ICT's economic contributions

We used a consumer survey to examine changes in the overall expenditures by consumers on shopping and other routine purchases before and after taking up Internet shopping. Just under half of the respondents (43 percent) said their expenditures increased. The weighted average of the expenditure changes among all respondents worked out to a 12 percent increase (Figure 1-2-4-5).

We calculated the annual economic effect of Internet shopping by multiplying the average amount spent on household consumption items available online with the increase in household spending calculated above. The direct benefits were estimated to be about 7.4 trillion yen, the induced production value to be approximately 14.2 trillion yen (accounting for secondary spillover effects, including income effects, based on the ICT industry's input-output table), and the added value total to be about 8.7 trillion yen. These figures indicate ICT-driven consumption provides significant economic effect from the perspective of demand stimulation.

Figure 1-2-4-2 Economic effect estimates

Connected cars (with insurance telematics)	Potential users*1	Percentage intending to use paid services*2	Amount willing to pay (monthly, in yen)*3	Economic effect (direct impact, billions of yen)
51.84 million households	13.4% ~ 13.7%	661 - 692	= 56.3 - 57.7
Connected cars (with automated driving functions)	51.84 million households	18.3% ~ 19.1%	918 - 1,030	= 104.5 - 119.8
Smart homes (with energy features)	51.84 million households	12.2% ~ 13.0%	1,732 - 1,913	= 131.4 - 154.7
Smart homes (with monitoring features)	51.84 million households	17.1% ~ 18.1%	1,685 - 1,734	= 183.4 - 189.9
Wearable services Wearable devices	47.18 million (smartphone users)	13.4% ~ 13.5%	613 - 617	= 46.5 - 47.1
15,000	= 100.7 - 101.4
Service robots	33.28 million households (households owning smartphones)	10.9% ~ 15.5%	16,693 - 16,995	= 377.1 - 564.9
Personal or household ICT education services	33.28 million households (households owning smartphones)	15.7% ~ 15.6%	448 - 468	= 28.1 - 30.4
Personal or household ICT medical services	33.28 million households (households owning smartphones)	15.7% ~ 16.5%	1,085 - 1,159	= 71.5 - 72.7
Personal ICT financial services	47.18 million (smartphone users)	9.9% ~ 13.3%	645 - 797	= 42.6 - 48.6
Ultra HD video streaming services	51.84 million households	17.3% ~ 18.5%	337 - 359	= 38.5 - 38.8
Sharing services	47.18 million (smartphone users)	8.8% ~ 12.8%	300	= 14.9 - 21.7

$ ^{*} $ 1. This column is the potential user base (households / individuals) according to the nature of the service or application. When services and applications are expected to work with smartphones or other devices, the potential user base is limited to those users.

$ ^{*} $ 2. These figures are based on a survey given to consumers. (The upper and lower figures are the result of multiple functions presented to the respondents.)

$ ^{*3} $ . These figures are based on a survey given to consumers. For connected cars, ICT education, ICT medical, and ultra HD video streaming services, respondents were asked by what percentage their expenditures would increase from their current household expenditures on the same service or application. The figures here were calculated by multiplying expenditures by this percentage.