Rakuten losing in online fashion

Nikkei’s annual ‘Net Life’ survey for 2015 shows a downturn in spending online due to the overall expenditure cut backs over the past year. As Amazon has added new brands and sub-stores, more shoppers are moving away from domestic rival Rakuten, although Rakuten still comes out as number one in apparel and food sales online.

Nikkei’s latest annual survey of B2C e-commerce usage finds that, while online shoppers still flocked to the main portals, Rakuten lost out last year to Amazon and Yahoo. The survey of more than 10,000 people nationwide carried out in September found that Rakuten continues to have the highest usage of all the main e-commerce providers.

Almost half of respondents used Rakuten for fashion shopping in the past year, compared to 32.3% for Amazon and 14.3% for Yahoo. The difference is that while Amazon was up 1.7 points and Yahoo marginally up at 0.1 points on the previous year, Rakuten dropped 1.8 points.

Amazon’s model is more consistent and provides faster fulfillment, and as it adds more fashion vendors to its site, there is a gradual shift away from Rakuten. Younger people were the exception until recently. Being more net savvy than their elders in many cases, younger consumers were more able to juggle shopping across multiple sites and vendors, a behaviour that favoured Rakuten’s multi-vendor model. Now, many younger shoppers can easily find all they need at Amazon alone. More than 78% of teenagers in the sample said they’d shopped at Amazon for apparel, compared to just 29.3% at Rakuten.

While the three shopping portals dominate, and Zozotown’s usage rate was flat, up just 0.2 points on last year, usage of Uniqlo, Cecile, Belle Maison and World Online Store were all down, again in favour of the mixed shopping portals.

A similar, although less pronounced result was repeated for both food and consumer electronics. Rakuten continues to be the leader with in food sales, with 64.6% using the site, but this too dropped 1.4 points.

In food alone Amazon (41.2% usage, up 0.8 points) and Yahoo (20.1% usage, up 1.2 points) have gained ground in the past 12 months, providing a series of new initiatives, such as the integration of Yahoo with Askul’s Lohaco service (taken alone, Lohaco was the fourth most used online food and FMCG site and is growing very fast) and the recent introduction of Amazon Pantry. Aeon and Ito-Yokado also struggled, with usage down 0.2 points and 0.9 points respectively. Seiyu was the only major retailer run site to grow, up 0.7 points

In consumer electronics (CE), however, Amazon remains the overwhelming leader with 72.6% of the sample using the site, down 0.1 points on last year, while Rakuten is a distant second with a 54.6% usage rate, down 1.1 points for the year. 20.7% used Yahoo, an increase of 0.3 points.

The latest survey showed a decrease in online purchases across all categories that is inline with cut backs in consumption generally in 2015. The only area where spending increased was for online travel products, although the average amount spent on food online also increased slightly.

On average, respondents reported loosely defined discretionary spending of ¥1.3 million in 2014, up 3.5% on 2014. Of this, ¥210,400 was spent online, an increase of 17.4% in a single year, or a jump of 2 points to 16.2% of discretionary spending.

The survey also showed the increasing indivisibility between online and offline shopping. More than 36% of respondents said they used online information to research purchases while they were actually in shopping in retail stores, and 31% said they used online sites to check on stock levels before visiting a store to purchase. Only 10.7% said they’d used a click-and-collect service, ordering online and then picking up at a local store, but this will change given the launch of Omni7 and other efforts.

Other trends revealed in the survey show growing interest in omnichannel services from retailers and a shift away from social media towards instant messaging. Although 54.3% said they used the Facebook app on their phones, this was down 2.6 points on 2014. Similarly, Cookpad, used by 19.5%, was down 0.9 points and Skype, used by 9.3%, down 1.1 points. Both Twitter (50.7% usage) and Instagram (16.5% usage) grew, by 1.9 and 5.7 points respectively.

The overall winner, however, was LINE. In 2015 83.5% of respondents were using the locally developed messaging app, and usage had jumped 2.5 points on 2014. LINE usage has grown for every age group, with more than 60% of people aged 60 and above using the app. For younger consumers, over 90% of people aged 10-30 use LINE.

The survey also found that news apps were the single most popular type of app, with the Yahoo News app used by 63% (a seven point decrease on 2014). Fashion apps were also popular. Wear was used by 35.2% of the sample, up 13.2 points, with iQon also having a share of around 24%. Style Look, Coordisnap and Closet were used by 10% of less.