Japan’s established and diverse wine market appears ideally suited to e-commerce, as 90m online shoppers already benefit from high levels of internet penetration, advanced transport infrastructure and sophisticated delivery systems. Japan is the world’s fourth largest e-commerce market, though online transactions represent only 8.7 percent of the total, behind levels seen in China, the USA and UK. Yet as the wine market evolves, the foundations are in place to exploit this channel and all sectors from producer to retailer can play a positive role in its development.
Around a quarter of Japan’s 30m regular wines drinkers already buy online. Women represent more than 50 percent of wine drinkers but many online retailers note that men in their mid-40s to late-60s are the most active buyers. This suggests an area for growth. Wine educator and writer Mari Yasuda has been buying wine for over two decades and online for 15 years. She buys everyday wines from a selection of preferred online retailers, but heads to physical stores when she needs a wine for a special occasion. This kind of multi-channel buying is in step with international norms.
The overall online market
The International Wine and Spirit Record (IWSR) estimates that, worldwide, 3.6 percent of all wine sales by value were through e-commerce in 2018. In Japan, data for online figures are often conflated with other channels such as mail order, so figures from individual companies can be more relevant than a national average. In 2019, major wine retailer Yamaya reported three percent of wine sales were online; leading supermarket chain Aeon stated five percent, while high-end retailer Enoteca gave a figure of 35 percent. Shuhan News reports online sales of wine are more popular than other categories of alcohol, as engaged consumers crave the level information and choice available through e-commerce. Conversely, drinking wine at home is not yet mainstream, storage space is frequently limited and Japanese consumers have easy access to 50,000 convenience stores and supermarkets where most sales take place.
Among established e-commerce platforms, the most prominent are Amazon, Rakuten and Yahoo! Japan. Merchants often work with two or more while also selling through their own standalone sites. Homegrown Rakuten was founded in 1997 and has since expanded internationally. Founder Hiroshi Mikitani’s vision was to create a platform that is more bazaar than shopping mall, allowing for a more personal experience. It vies with Amazon for first place in terms of total sales and traffic, although several retailers report significantly higher wine sales through Rakuten. With a loyalty point system and more than two decades in the domestic market, it has a strong customer base.
The “last mile” delivery challenge is a hurdle for any online business. Fortunately, Japan has one of the most customer-friendly and advanced delivery systems in the world. Courier companies such as Yamato Transport, Sagawa Express and Japan Post make receiving deliveries a painless experience. Buyers select narrow time frames for delivery, often as late as 9pm, including weekends. Refrigerated delivery is available and even mandated by some retailers during the summer months. Established well before the advent of online retailing, the scale of the courier companies makes delivery affordable. While long-term concerns about the availability of labour exist, punctual deliveries in good condition are, for now, a reality not an aspiration.
Auckland-based search engine Wine-Searcher lists 550 Japanese wine merchants from whom it collects up-to-date wine lists and, of these, 450 have secure online ordering. Online retailers first appeared at the end of the 1990s with the advent of Rakuten and many operate online only.
The online retailers
Spanish specialist Winery Izumiya, founded in 1987, was a pioneer and owner Haruhiko Arai says he initially faced little competition so could focus on client acquisition. Today’s market is now fiercely competitive. Jitsuro Takegoshi has 20 years’ experience in e-commerce, founding Y’NS Tokyo in 2008. He offers a wide range of wines, many based on ratings from leading international magazines including Wine Advocate, Decanter and Gambero Rosso. Takegoshi adds lengthy descriptions and comments that appeal to engaged consumers. While he sells through Rakuten, Amazon and Yahoo! Japan, most sales come through Rakuten.
Tuscany, another online-only retailer, founded in 2001 by Ippei and Akiko Yoshida, focuses on Italy and offers up to 3,000 labels. They also import directly from more than 20 wineries including Fattoi from Brunello di Montalcino and Tezza in Valpantena. Tuscany prioritises building credibility and rapport with customers rather than attracting business through an SEO strategy. In pre-Covid-19 times they interviewed 10 winemakers a month, sharing the videos on their website. The Yoshidas note that winning consumers’ confidence is a slow process but the benefit is a high percentage of repeat buyers.
Bricks and mortar retailers understand the enhanced benefits of running online shopping alongside physical premises. Imadeya, an independent importer, wholesaler and retailer founded in 1962, started online sales in 2014. Subsequently, it opened several new shops, including in Ginza Six, a prestigious shopping complex in Tokyo. Shun Sakaguchi, of the online team, explains that Imadeya eschews online marketplaces in favour of its own website, so it can control the presentation of listings and communication with customers. It prefers to explain the value of its wines rather than focusing on offers such as free delivery. Around 10 percent of its sales are online and, while a high percentage are domestic wines, sales of imported wines are increasing.
Aeon is the country’s largest supermarket chain and a leading channel for wine sales. It started online sales in 2013 and offer 5,000 SKUs. According to Yuichiro Sakata, manager for the e-commerce department of Aeon Liquor, online sales have seen double-digit growth in the past three years, while in-store sales have remained static. While Aeon has a national network, most online sales are concentrated in and around Tokyo. He also reports that bag-in-box sales have grown and orders for rosé, previously a seasonal product, are now spread across the year emulating a global trend.
Enoteca has more than 60 shops across the country and started online sales in 2000. This is a significant and fast-growing sector for the company and volumes have doubled in the past five years, with the average value of online orders — ¥14,000 to ¥16,000 ($130.70 to $149.36) — more than double that of in store purchases. Enoteca is also capitalising on the trend of mobile commerce, where Japan is a leading player — in 2019 it introduced its own app and LINE membership cards. LINE is Japan’s most popular messaging app, with more than 80m active monthly users; it can also be used as a digital wallet. Enoteca is simultaneously developing synergies between online and physical stores, allowing members to check store inventory online.
The migration to online
Wine producers are also supporting e-commerce. Florian Boisselet, Japan-based export manager of Bordeaux’s Kressmann, notes that wineries can provide packaging suited to online sales. Traditional wooden boxes are perceived to add value and help distinguish products from competitors. Kressmann is also careful that wines sold online do not compete with those sold to importers whose focus is the on-trade.
Pernod Ricard, owner of popular brands as diverse as Champagne Perrier-Jouët and Jacob’s Creek, states that less than two percent of its sales of the latter are through e-commerce in Japan but plans to expand this channel. Brand director Eiichiro Kuriki notes they have launched an initiative to offer sets of Jacob Creek bestsellers, and wines that won medals at the influential SAKURA Awards.
The Conseil Interprofessionnel du Vin de Bordeaux (CIVB) has worked with online retailers for more than a decade. It coordinates with major merchants such as Yamaya and Kyobashi Wine to run seasonal promotions. While recognising that online sales are still limited, Reiko Otsuka, CIVB Japan country manager, believes they have good potential. Otsuka tailors promotions to meet the CIVB’s objectives, which include publicising the diversity of Bordeaux styles and wines in the ¥2,000 to ¥4,000 ($18.60 to $37.20) range.
Rémi Marty, product manager data at Wine-Searcher, reports that there has been a steady increase in the number of searches coming from Japan over the past three years; altogether there were 1.2m searches were made from January to June 2020, or one percent of the global total. Top searches are for Bordeaux first growths and Romanée-Conti. Bordeaux and Burgundy are also the most popular regions.
E-commerce is not without challenges. One concern is that many retailers are competing on price, especially by offering ever cheaper wine sets. Accordingly, the average price for a bottle sold via online malls is falling, eroding profit margins for the trade and compromising quality for the consumer. Retailers hoping to avoid this trap focus on content to create a connection with consumers and add value. In April 2020, prior to and during the state of emergency imposed in response to the spread of Covid-19, young consumers, fearful for their jobs, initially stopped buying. On a more positive note, there was a climb in sales among older enthusiasts who, unable to dine out, ordered the sort of high-end wines they normally drink at restaurants. The goal now is to retain these new clients.
E-commerce offers all sectors of the supply chain the chance to engage and influence consumers. Although this channel has been available for more than two decades, there is a sense that its full potential is not yet fully realised. Japan has the capacity and capability to unlock the promise of online shopping with experienced retailers, popular e-commerce platforms and proactive producers.
Roddy Ropner
Correction: Online wine store Tuscany was incorrectly called The Tuscany Wine House in the article. This article has been updated to reflect their real name, Tuscany.
