What’s the role of e-commerce in the Gen Z experience economy?

Things are out; experiences are in. But what does this mean for e-commerce?

Prominent social critic Tsunehiro Uno serves as editor-in-chief of commentary magazine PLANETS, and has authored numerous publications on modern society. He joined Rakuten’s Ryo Matsumura on the stage of the recent Rakuten Optimism business conference in Yokohama to discuss the changing nature of consumption.

Goodbye things, hello experiences

“The discourse around things has changed quite a lot since our youth in the consumption-driven era of the 80s and 90s,” Uno told the audience. “During Japan’s bubble economy, it wouldn’t be uncommon to see people walking around clad in an Armani suit, with a Rolex peeking out from their sleeve. It was a symbol of the times. If you did that today, people would think you’re stupid or shallow.”

In the 21st century, youth culture has undergone a clear shift away from materialism in favor of something more akin to minimalism, Uno argued. “Today, it’s cooler not to have things… things have lost the power they had at the end of the last century.”

So where did our desire for things go? First, Uno said, one needs to look out how that desire originally came about.

“What defined Japan’s consumption society was that people started buying not just things that they needed, but things that they wanted.”

As the Japanese economic miracle rolled into the 1970s and 80s, many discovered the joys of having disposable income. A similar trend had swept Western economies as early as the 1920s, but in Japan, the idea of shopping as leisure – as a form of self-expression – only caught on as recently as around 40 years ago.

“From there, people drove up demand for better things. The consumer gained influence,” Uno explained. “Consumption became a very powerful force. The idea that you could go into town and buy whatever you wanted was a new thing for people in Japan, and it was special. Today, it’s a given. But then, it was special, and therefore powerful. It was even seen as a symbol of Japan’s economic abundance and freedom.”

Even amid the political movements of the 60s and 70s, Japan’s consumer culture continued to gain momentum.

“The act of consuming things and having fun started being treated as an almost intellectual activity, rather than something mindless. A polished, cultural experience.”

Beyond ownership: The age of experiences in modern Japan

Today, however, everyone carries the entire internet in the palm of their hand, and owning things is going out of style. So what is everyone consuming instead?

“They’re consuming experiences,” Uno explained. “We’re now in the age of social media, and experiences rule. Suddenly, the old obsession with things is considered uncool.”

Travel, concerts, gourmet meals, unforgettable nights out – more and more young zoomers are opting to open their wallets for intangible products. Uno sees a range of factors driving this cultural shift.

“A move towards lifestyle minimalism, sustainability, the sharing economy – these are all ideas that prompt us to reconsider our thing-oriented society of the previous century. A self-examination about how perhaps having too much stuff isn’t good for the soul,” he ventured. “Sustainability highlights how having all this puts a burden on the environment. The sharing economy comes from both of these ideas, suggesting that we should share the things that we have. That’s the philosophy that is taking center stage.”

But the biggest factor? The rise of social media, and how it encourages users to flaunt their experiences.

“Because now everyone can broadcast themselves. Humans are strange – rather than listening to the interesting stories of others, everyone wants to tell their own stories, no matter how boring. It feels good,” Uno laughed. “Before the internet, the only audience you had were your family and friends. The power of the internet lifted that restriction.”

What this means for e-commerce

“What role do things have to play in the information age?”

With zoomers increasingly opting for experiences over material goods, is e-commerce in danger of becoming irrelevant? Uno argued that no, things still have a role to play, particularly among those pushing back against the social media-dominant culture.

“Some people are circling back to things as a way to distance themselves from this new experience-dominated society,” he said. “Powerful things can shut out the social media noise, if only temporarily. There will always be things that can beat out experiences, depending on the situation and quality. I think there is demand for a platform that can offer these things.”

Uno highlighted the ideas of Meiji University philosopher Takashi Kurata, who argues that the intimacy of folk crafts will become more important than ever in a society tired of mass-produced goods.

“He says that we need to normalize making things. This was the ideal of the early internet – anyone could write things, or publish photos,” Uno said. “But there’s no way most people go out of their way to make something. Plenty of people are happy to eat a delicious meal, but they’d never cook. You need serious motivation to make something.”

Rethinking e-commerce for changing values and connections

At the same time, e-commerce platforms must adapt to this changing culture to give shoppers more of a human touch.

“E-commerce is fun in its own way. But today’s e-commerce platforms seem to be focusing all their energy on efficiency,” Uno said, encouraging the audience to remember the excitement they first felt shopping online with vast inventories at their fingertips. “Having that kind of inventory is taken for granted today.”

He compared the e-commerce world with that of physical retail in the 20th century – departments and supermarkets that evolved to suit the needs of white-collar housewives.

“It was a product of the industrial society. Now, with e-commerce, our family values, gender attitudes and working styles are all changing, and I think we need to update how we sell things.”

Uno lamented the overbearing role that recommendation algorithms have come to play in our lives.

“I don’t think these recommendation algorithms are very good. They only ever serve us things they think we already want,” he remarked. “The recommendations we really need are for things we’d never search for ourselves but would want anyway. The AI we have now unfortunately can’t do this. This is somewhere that humans will still have to work hard at.”

It all comes back to human connection

The rise of the experience economy is a product of our desire to feel connected to society, Uno argued. A never-ending desire for online approval from others has left us desperately trying to tame the everchanging algorithms and highlight our grand experiences.

“Part of the problem of how Web 2.0 has evolved is that it connected humans too much,” he ventured. “Social media is a game of satisfying each other’s need for approval. I think the battle lies in whether we can build something that can break out of that game.”

While an algorithm-optimal post on the timeline may perform well in the short-term attention economy, real, long-term change can only be realized by ambitious lifestyle changes.

“Until we all became employees in this labor-oriented economy, it was a lot more normal for people to be making and selling things. It’s a question of how we can reintroduce that into modern society,” Uno pondered. “Today, people talk about the booming gig economy. Everyone says they’re helping out at some smug startup. I’m not talking about that – I’m talking about running your own small e-commerce business. We need more of that.”

While working at a big, global company has its allures, Uno argued that real social connections can be found much closer to home.

“I think it’s crucial that we recognize how people are looking to connect with society once more on a more local level,” he told the Optimism audience. “Running a small business allows you to connect with the world. I think people need to give this another chance.”