TOKYO, Japan — Online fashion sales in Japan are growing fast — so fast that it's becoming hard to measure. Japan's Ministry of Economy, Trade and Industry says total online apparel sales hit ¥144 billion (about $1.5 billion at current exchange rates) in FY2011, but this figure omits several key players and therefore seriously underestimates the size of the market. By contrast, Yano Research estimates overall online sales of fashion goods — including apparel, accessories, jewellery and interiors — at ¥636 billion in FY2011, rising to an estimated ¥702 billion in FY2012, and forecasts a figure of ¥950 billion for FY2015. But even these are conservative estimates given the sheer scale of Japan's three largest e-commerce players — Rakuten, Amazon and Zozo — which together sold about ¥480 billion in apparel and accessories in 2011.

The top 20 online vendors alone posted combined apparel sales of ¥865 billion, but this includes some double counting since a few retailers sell through portals like Rakuten and Amazon, as well as their own webstores. Nevertheless an increasing number of fashion and apparel retailers now drive more than 10 percent of their total sales online, with United Arrows at 11.1 percent in FY2011 and Urban Research hitting 25 percent, compared to an average across all product categories of around 2.3 percent.

Our estimate, which includes the main portals and brands, as well as sites owned and operated by traditional retailers, puts online apparel and accessory sales at ¥746 billion for FY2011, rising to ¥892 billion in FY2012. We expect online apparel sales to rise to ¥1.3 to 1.4 trillion through FY2015, around 8 percent of the total apparel and accessories market.

A recent national survey suggests that online sales for the country’s 40 top retailers, including leading fashion chains, could rise by up to 30 percent this year. Similar levels of growth are expected across the fashion and apparel sector. This includes department stores which are finally waking up to the possibility that online sales could help them break out of their two-decade-long stagnation. Isetan Mitsukoshi has invested around ¥1 billion to build a new distribution centre for online sales and, last year, merged the non-store operations of Isetan and Mitsukoshi.

Non-store retailers that have traditionally sold through catalogues or TV broadcasts, are also targeting e-commerce. Senshukai already drives 53 percent of total sales through e-commerce, while Nissen does 49 percent and this is expected to reach 60 percent this year. Both are leaders in mobile commerce, reaching younger customers through specialist mobile stores. Of Nissen’s ¥69 billion in e-commerce sales, ¥21 billion came through mobile phones, making it the leading single m-commerce apparel retailer. Earlier this year, Senshukai launched a new brand entirely for the online market called Embellish, with an emphasis on mobile shopping and targeting women in their 20s. Structured like an SPA (Specialty store retailer of Private label Apparel) chain, Embellish is introducing new merchandise every two weeks, in sharp contrast to the long lead times of a typical catalogue operation.

The mobile fashion market is set to see a further jump in activity following the takeover of Magaseek by NTT Docomo, this spring, and Rakuten’s recent acquisition of Stylife. DeNA has just absorbed Au Shopping Mall, a mobile shopping joint venture with KDDI, in order to increase investment amid growing competition. And further M&A activity is expected as major players look to consolidate share.

Both the leading TV Shopping firms, QVC and Jupiter, are also expanding online broadcasts. QVC now takes a reported 10 percent of apparel sales from online and has just launched a new fashion brand, Chapter One, in a tie up with online fashion store Yumetenbo. The aim is to reach more younger women customers; most Yumetenbo customers are in their teens or 20s and 90 percent of sales come through phones or tablets. The new womenswear brand launched in April on the Dreamvs website and QVC’s shopping network, which reaches 26.5 million households, offering around 70 SKUs in the first year at prices of between ¥5,000 to ¥10,000.

JapanConsuming is a leading provider of intelligence on Japanese retail and consumer markets.