Competition heats up for online malls in Japan

Pedestrians cross an intersection at dusk in the Shibuya district of Tokyo, Japan. Photo / Getty Images

Competition in Japan's online shopping market is intensifying.

Amazon Japan, which is rapidly growing in the domestic market, has since mid-November expanded the target areas of its Prime Now delivery service, which delivers orders within an hour of receiving them.

Rakuten and Yahoo Japan are offering point-increase campaigns that provide more points in return for purchases, which can later be used to buy goods.

The Prime Now product lineup includes more than 65,000 items, such as food, beverages, daily necessities and home electronic appliances.

Although the delivery service was previously limited to certain areas in the 23 wards of Tokyo, since November 15 Amazon has expanded it to all 23 wards. The expanded service also covers some areas of Yokohama.

Amazon.com operates in 14 countries, including the United States. It has shown its commitment to the Japanese market by making delivery services in the country available later at night than in other countries.

Rakuten, which runs e-commerce platform Rakuten Ichiba, has amplified its sense of crisis against Amazon's offensive move.

Rakuten has started a campaign to increase customer points by up to seven times the usual number if shoppers use a credit card from one of its group companies.

Yahoo Japan, which runs the Yahoo! Shopping e-commerce site, is also offering an increased points campaign to customers that pay a membership fee.

These companies are working to acquire customers, as they expect the e-commerce market to grow further.

According to the Economy, Trade and Industry Ministry, the e-commerce market, including online shopping, was worth 13.8 trillion yen ($120 billion US) in 2015.

That is almost double what the market was worth five years before.

However, there are fears that profits will come under pressure if companies go too far in strengthening delivery services and increasing points.