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How To Take Advantage Of The Consumption Tax Rise In Japan

How to take advantage of the Consumption Tax Rise in Japan

In a mere month’s time, the Consumption Tax in Japan will increase from 8 to 10% starting 1 October 2019. This may be just a fraction of what we pay in the UK and the rest of the world, but Japanese shoppers will be scrambling to make purchases before the new tax rate kicks in. We’ve analysed the effects of the last tax increase on 1 April 2014 and compiled a list of everything a business needs to know before the tax increase.

1. Significant sales increase before new tax rate

When the previous tax rise was implemented in 2014, the sales of daily necessities increased by 42.8% YOY, one week prior to the tax increase.

Graph - Daily Necessities YOY Sales - Japan Consumption Tax Rise 2019

Source: https://www.intage.co.jp/gallery/zouzei2014/

2. Products most affected by the tax increase

There are certain product categories that will be in higher demand before the tax increase. These include items with long or no expiration, such as flights, tour packages, cruises, hotels, and concert tickets. Other items include products that have stable prices that rarely go on sale, such as high-end luxury products. Brands that you cannot find in outlet malls will do particularly well leading up to the tax rise.

3. New tax rate does not apply to basic foodstuffs

Keep in mind that the new tax rate will not apply to basic foodstuffs, which will have a tax rate of 8%.

4. Know what the Japanese audience wants to buy

No.1 No.2 No.3
20s (n=44) Car
29.5%
Smartphone
29.5%
House
20.5%
30s (n=163) Car
20.9%
Domestic travel
18.4%
Washing machine
18.4%
40s (n=175) Refrigerator
22.3%
Car
18.3%
Other Electronics
17.1%
50s (n=122) Housing renovation
19.7%
Refrigerator
18.9%
AC
17.2%
Over 60s (n=83) Housing renovation
21.7%
Car
20.5%
Refrigerator
20.5%

A survey was conducted to find out what Japanese consumers would most likely purchase leading up to the consumption tax increase. The categories most interesting for online retailers and PPC advertisers are smartphone, domestic travel and other electronics. According to the latest figures presented in this Jiji Press article, car sales are stagnant but retail purchases are expected to increase.

Source: https://dime.jp/genre/666002/

5. Run promotional PPC campaigns leading up to the tax increase

There are specific changes you can make to your PPC campaigns to take advantage of the sales influx before 1 October. These changes include adding certain keywords to campaign copy, running a promotion and increasing the campaign budget. If you’re already a client of ours, please contact your account manager for further guidance. If not, get in touch with us asap and we’ll help get your account set up and campaigns running in no time.

 

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