Japan: Getting Insights into the Hosting and Website Builder Market

Because of the cultural differences and its geography, Japan is a unique country in many respects, and that uniqueness transfers also into its market. Therefore, to understand better how the hosting and domain markets in Japan function, as part of our 'Shared Hosting Tips' series, we’ve talked with Hiro Tsukahara, .shop GMO Registry CEO.

GMO Internet Group comprises 106 companies in 22 countries, with 5,500 staff, and $1.4 billion in revenue, so they are by no means a small company. Throughout their years of experience across different industries, the company has an extensive understanding of how to do hosting business in Japan, which Hiro shared with us in the insightful interview below.

Japan and Market Insights

Advertising in Japan

According to Hiro, in Japan, advertising is very unique. 'In Japan, the ads are very different than in the USA, Europe, or anywhere else. In our ads, instead of telling the user to visit our website, our message is usually “search for this keyword” instead. So it’s keyword-based in a way. The keywords are very important. We aim to direct people to Google, where they can see for themselves what the company offers.'

Localisation in Japan

If a company is working in Japan, customer support in Japanese is a must. People understand English, it’s true, but they prefer Japanese. Additionally, localising and translating the website is also important, and automatically done translations (say, using Google Translate,) are spotted easily. 'If a website looks “funny” or doesn’t have a proper translation, people will start having doubts about it, hindering the chance of a purchase.'

The Hosting Speed

In Japan, for hosting, speed is a critical factor. People expect to be provided with super-fast services. GMO Group is investing a lot of resources and effort to make sure that their servers that are located in Japan have absolutely no latency. According to Tsukahara, having one server is alright in terms of speed, as DNS can solve other possible issues.

Entering the Japanese Market

In Japan, people like big brands, and often it may be the case that for new companies, it’s hard to enter the market and get customers. However, Hiro mentions that it is very much individual, and largely depends on the demographic of the customers, their needs, as well as how tech-savvy they are. 'If there is a service that you can provide that’s better than others, there’ll be people who will buy it. People adopt new technologies very quickly if it makes sense for them and is beneficial for them.'

Cash Rules in Japan

'Japan is a very cash-centered society. Around 50% of all transactions are still done in cash.' Hiro mentions that mobile payments are still not a big trend in Japan, credit cards are more popular. However, people have fears about using credit cards online as they are worried about security. For online purchases, people prefer postal payments or payments at convenience stores, so there are quite a few alternatives to online payment systems allowing people to use cash.

The Importance of Domains

In Japan, people have recently started to pick up on domains. Before, domain ownership per population was lower than in countries with much smaller populations, such as the Netherlands, the UK, or Germany. However, people have started to understand the value of domains, so the notion of investing in domains has started to change.

Understanding the .shop Domain

There are many TLDs in the world, but they are losing their primary focus. For example, .com was initially planned to be used by companies, but there are also many individuals today who use it.

.shop is a domain for commerce, both e-commerce and offline shopping. 'It’s simple and intuitive, and we believe it’s the best option for anyone doing commerce. It lets people know that any website with .shop is a store. That’s a call to action to customers. It also saves them clicks, as they’ll know from the domain what type of website they are landing in. This is especially handy for big companies with multiple websites, as they’ll be able to differentiate their main website from the shopping website.'

Market With a Great Potential

'We have 55% hosting and 90% domain market share in Japan, but we’ve been in the industry for a long time, which means there is still some market owned by other players. And those are not necessarily Japanese players,' says Hiro. According to him, many foreign companies, such as Google and Amazon, do great in Japan.

'You don’t have to be a Japanese company to succeed in Japan. If the product is good, priced correctly, and localised correctly, which is a very important part, the product will do very well in Japan.'

However, to successfully run a company in Japan, having a presence in the country is essential.

Final Thoughts

Being a very unique and in some ways isolated market, Japan offers a lot of possibilities and is open to foreign companies. However, it’s important to know the local rules, as well as the expectations of the customers, to succeed. Localising products, translating them, and having Japanese support are great places to start, and if you have a product that offers value, Japan can be a great place for your business.