Department stores, once the bastion of retail distribution in Japan, have suffered a long slide beginning just after the bubble collapsed, with annual sales decreasing from 10 trillion yen in 1991 to 6.5 trillion yen in 2009.

In the 1990s, we saw the advent of outlet malls and 100-yen shops, as well as the proliferation of convenience stores and even flagship luxury brand shops.  While all have contributed to Japan's changing distribution landscape, none has had as big an impact been as online shopping, which has blossomed into a market worth 6.6 trillion yen in fiscal 2009.

Japan now has about half the annual online sales of the U.S., and estimates peg its growth at a much faster rate of up to 20% annually.  This is despite the fact that Japanese consumers still tend to use the Internet more for information-gathering, as opposed to actually making purchases.

It is interesting to compare the motivations of American and Japanese consumers in gravitating to online sales as a distribution channel.  In the U.S., for example, the growth of online sales has very much been driven by price-consciousness, with sellers vying to outdo each other by providing customers the opportunity to "price shop."

In Japan, product pricing tends to be maintained more consistently, so while comparison shopping is certainly a factor, it is not the primary one.  In Japan, convenience appears to be the main driver for consumers.  This might not come as a surprise considering Japan’s cost-efficient and timely delivery services, developed over many years and in part enabled by sheer geographic population concentration.

One important phenomenon in Japan is the rapid convergence of online sales and traditional channels for "everyday shopping," such as supermarkets.  Rakuten Inc. - which runs Japan's largest online mall and reported operating profit growth of 20% on the year for fiscal 2009 ended December - has already teamed up with Maruetsu Inc., Kinokuniya Co. and Tokyu Store Chain Co.  All of them plan to open "virtual supermarkets" on Rakuten’s site to gain access to its 58 million members.

Aeon Co. has also embarked into cyberspace, with its 59 Jusco outlets offering over 6,000 items (primarily food) online, and Seven & i Holdings Co. will build a new distribution location, with its new site reportedly listing some 5 million products.  

Supermarket chain opperator Summit Inc. is venturing online as well, having opened a merchandise-processing and shipping center for its Internet store in late 2009.  The firm is aiming for sales of 1.1 billion yen in 2019.

Many of these emerging online services offer "same day" or "next day" delivery services, thereby providing great convenience to their customers.

Today, we see a more individualistic consumer who is well-equipped to decide where he or she will shop according to their specific needs.  At the same time, we see that online shopping channels have become much more widely accepted, with the fears of shopping online that were expressed in the early 2000s almost nonexistent now.  This is illustrated by the fact that, even amid sluggish consumer spending, online sales in Japan have thrived while other channels have stalled over the past several years.