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Online Consumption During the COVID-19 Crisis: Evidence from Japan

Author

Listed:
  • Tsutomu Watanabe

    (Graduate School of Economics, University of Tokyo)

  • Yuki Omori

    (Nowcast Inc.; M.A. candidate, Graduate School of Information Science and Technology, University of Tokyo.)

Abstract

The spread of novel coronavirus (COVID-19) infections has led to substantial changes in consumption patterns. While demand for services that involve face-to-face contact has decreased sharply, online consumption of goods and services, such as through e-commerce, is increasing. The aim of this study is to investigate whether online consumption will continue to increase even after COVID-19 subsides, using credit card transaction data. Online consumption requires upfront costs, which have been regarded as one of the factors inhibiting the diffusion of online consumption. However, if many consumers made such upfront investments due to the coronavirus pandemic, they would have no reason to return to offline consumption after the pandemic has ended, and high levels of online consumption should continue. Our main findings are as follows. First, the main group responsible for the increase in online consumption are consumers who were already familiar with online consumption before the pandemic and purchased goods and service both online and offline. These consumers increased the share of online spending in their spending overall and/or stopped offline consumption completely and switched to online consumption only. Second, some consumers that had never used the internet for purchases before started to use the internet for their consumption activities due to COVID-19. However, the share of consumers making this switch was not very different from the trend before the crisis. Third, by age group, the switch to online consumption was more pronounced among youngsters than seniors. These findings suggest that it is not the case that during the pandemic a large number of consumers made the upfront investment necessary to switch to online consumption, so a certain portion of the increase in online consumption is likely to fall away again as COVID-19 subsides.

Suggested Citation

  • Tsutomu Watanabe & Yuki Omori, 2020. "Online Consumption During the COVID-19 Crisis: Evidence from Japan," CARF F-Series CARF-F-487, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  • Handle: RePEc:cfi:fseres:cf487
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    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Economic consequences > Consumption > E-commerce

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    Cited by:

    1. Barbara Baarsma & Jesse Groenewegen, 2021. "COVID-19 and the Demand for Online Grocery Shopping: Empirical Evidence from the Netherlands," De Economist, Springer, vol. 169(4), pages 407-421, November.
    2. Hayakawa, Kazunobu & Mukunoki, Hiroshi, 2021. "The impact of COVID-19 on international trade: Evidence from the first shock," Journal of the Japanese and International Economies, Elsevier, vol. 60(C).
    3. John Gathergood & Fabian Gunzinger & Benedict Guttman-Kenney & Edika Quispe-Torreblanca & Neil Stewart, 2020. "Levelling Down and the COVID-19 Lockdowns: Uneven Regional Recovery in UK Consumer Spending," Papers 2012.09336, arXiv.org, revised Dec 2020.
    4. Guthrie, Cameron & Fosso-Wamba, Samuel & Arnaud, Jean Brice, 2021. "Online consumer resilience during a pandemic: An exploratory study of e-commerce behavior before, during and after a COVID-19 lockdown," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).
    5. Aleksander Aristovnik & Damijana Keržič & Dejan Ravšelj & Nina Tomaževič & Lan Umek, 2020. "Impacts of the COVID-19 Pandemic on Life of Higher Education Students: A Global Perspective," Sustainability, MDPI, Open Access Journal, vol. 12(20), pages 1-34, October.
    6. Takahiro Hattori & Motoki Katano, 2020. "Do fiscal policy news shocks affect JGB yield? Evidence from COVID-19," Discussion papers ron334, Policy Research Institute, Ministry of Finance Japan.
    7. Kikuchi, Shinnosuke & Kitao, Sagiri & Mikoshiba, Minamo, 2021. "Who suffers from the COVID-19 shocks? Labor market heterogeneity and welfare consequences in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 59(C).
    8. Kimiagari, Salman & Asadi Malafe, Neda Sharifi, 2021. "The role of cognitive and affective responses in the relationship between internal and external stimuli on online impulse buying behavior," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).
    9. Mohammad Hoseini & Abolmohsen Valizadeh, 2021. "The effect of COVID-19 lockdown and the subsequent reopening on consumption in Iran," Review of Economics of the Household, Springer, vol. 19(2), pages 373-397, June.
    10. Shinnosuke Kikuchi & Sagiri Kitao & Minamo Mikoshiba, 2020. "Who Suffers from the COVID-19 Shocks? Labor Market Heterogeneity and Welfare Consequences in Japan (Forthcoming in the Journal of the Japanese and the International Economies)," CARF F-Series CARF-F-490, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.

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