Sunday, February 4, 2001

Japan's B2B Market to Reach $1.1 Trillion

Accenture; METI, Japan’s Ministry of Economy Trade and Industry; and the Electronic Commerce Promotion Council of Japan today announced findings from a new joint survey that predicts the size of Japan's business-to-business (BtoB) eCommerce (EC) market will exceed 110 trillion Yen (approx. U.S. $1trillion, at 1$=110yen), by 2005, five times its current size. The country's business-to-consumer (BtoC) eCommerce market is projected to grow to more than 13 trillion Yen (U.S. $120 billion) over the next five years, fueled largely by the rapid growth of mobile commerce, as well as the future proliferation of broadband networks.

The latest survey, which updates previous Accenture studies of Japan's EC Market conducted separately with METI (formerly known as MITI, Ministry of International Trade and Industry of Japan) and ECOM, estimates that Japan's total BtoB EC Market amounted to 22 trillion Yen (U.S. $200 billion) in 2000, or 2.5 times its size in 1998. This translates into an annual growth rate of 60%.

The new report, entitled "Market Research on Japanese Electronic Commerce Market in 2000," is a follow-up to two 1998 surveys conducted by Accenture and METI. It also builds on the work of a 1999 BtoC eCommerce survey conducted by Accenture and ECOM.

The survey released today evaluates the predictions made by the earlier surveys and, for the first time in Japan, includes estimates on the size of the mobile commerce market by product segment, such as digital content and music CDs. The survey also includes projections relating to how emerging broadband network services may affect the future of BtoC eCommerce in Japan. It also includes a breakdown of eMarketplaces as a total of the BtoB market by product segments for the first time in Japan.

In addition, the survey points to a growing gap between those industries using BtoB eCommerce to their advantage and those that are being left behind. Industries such as electronic information equipment and automotive-related fields, are showing faster than expected growth in BtoB eCommerce. Conversely, industries such as chemical products, paper and office equipment, electricity and gas are lagging behind the expectations of the 1998 survey. The bottom line is that an "inter-industrial digital divide" is anticipated to emerge, where advanced 'e-Business companies' are enhancing their global competitiveness by using Internet technologies, while those not using the Web effectively are in danger of losing their competitive edge.

Turning to the BtoC market, the survey estimated its size at 824 billion Yen (U.S. $7.5 billion) in 2000. This is 6.6% larger than the estimate published in the 1999 survey, which projected that the market would reach 773 billion Yen (U.S. $7.0 billion). Japanese BtoC eCommerce has expanded by 145% in just one year. The latest survey expects the BtoC market to expand by some 16-fold in the coming five years, reaching 13.3 trillion Yen (U.S. $121 billion) in 2005.

One of the largest factors contributing to the rapid growth of the Japanese BtoC eCommerce market is the current explosion of cellular phone Internet services. The year 2000 alone saw some 60 billion Yen (U.S. $545 million) worth of new mobile commerce markets created. As third-generation mobile telecommunications services kick off fully in 2003, this market is expected to grow further, reaching some 2.5 trillion Yen (U.S. $23 billion) in 2005. On the other hand, the BtoC market via the ‘static’ broadband Internet was $765 billion Yen (U.S. $6.9 billion) in 2000. The rapid spread of “always-on” Internet access services, broadband networks and digital interactive TV should boost this segment of the market to 10.9 trillion Yen (U.S. $99 billion) by 2005.

In addition, the impact of broadband network services, such as IMT-2000 (a third generation mobile telecommunications technology), the static Internet and digital interactive TV, is estimated to reach 3.5 trillion Yen (U.S. $32 billion) in 2005, and push the entire BtoC eCommerce market total to 6.5 trillion Yen (U.S. $59 billion) over the next five years.

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