CX - LOCALIZATION

Guiding merchants to increase the tax compliance rate in Japan

Client

Shopify

Industry

eCommerce

Services

Customer Experience
Japan Localization

Product Area

Tax Settings
Product Prices
Email and Blog

My Role

Product Designer

Timeline

August 2020 - February 2021

Context

The project aimed to guide merchants in Japan to comply with the new tax regulations for displaying tax-inclusive prices to domestic buyers.

Problem

Japan law required Shopify merchants to comply with the new tax regulations for displaying tax-inclusive prices to domestic buyers by the end of March 2021.

Shopify admin settings defaulted to displaying tax-exclusive prices. We estimated that only 26.78% of merchants in Japan complied with the new tax regulations, whereas 93.7% of merchants in Japan targeted domestic buyers.

Goals

Reach the compliance rate of the new tax regulations by more than 60% before March 2021 to build merchant trust and good sentiment in using the Shopify services in Japan.

Role

I led the design initiatives and worked closely with a local PM and team representative to guide Shopify merchants in complying with the new tax regulations in Japan before the due date.

Design

Data and research
I collected the evidence in merchants’ support tools and validated the core issues of product pricing and tax settings in Shopify admin.

Investigating the experience of product pricing and tax settings on Shopify admin using the experience map.

screenshots shows that Japanese merchants were unsure what product prices they should input to display tex-inclusive prices on their store.

Discoverability of the tax settings
We found a discoverability issue as some merchants were unaware of the tax settings in Shopify admin.

screenshots of merchants in Japan who were not aware of the tax settings in Shopify admin.

Design proposal and split it into 2 phases.

Phase 1
‍I proposed a quick fix for the first phase by changing the default settings to display tax-inclusive prices as soon as possible. The purpose is to stop the growing number of new merchants with the default setting of tax-inclusive prices.

The quick fix to change the default settings to display tax-inclusive prices.

Phase 2
Guided more than 60% of merchants in displaying tax-inclusive prices with banners, improving tax settings’ clarity on price input, publishing an article on the Shopify blog to build awareness, and sending formal emails to inform and remind merchants.

The phase 2 to guide more than 60% of merchants on how to display tax-inclusive prices.

During the design process, I explored two design options to inform merchants of the compliance and guide them on updating the product prices. I moved forward with the simple warning banners to change tax settings with the redirect link to the designated article on the Shopify blog.

Design options to inform merchants on the compliance and guide then on how to update the product prices.

Primary banner
Notify merchants of the upcoming mandatory tax and redirect merchants to the tax settings page.

Secondary banner
Remind merchants to update product prices using the “CustomEdit” app, including a link to the documentation.

Primary and secondary banner to notify of the upcoming mandatory and reminds merchant to update product prices using the "CustomEdit" app.

UX flow diagram to show the banner visibility.

Shopify blog article and help documentation
I worked closely with Shopify representatives in Japan to write an article on the Shopify blog as the complete guide to display tax-inclusive prices and new documentation about "Update product prices using CustomEdit app."

An article on the Shopify blog as the complete guide to display tax-inclusive prices.

Email to inform merchants
I worked with the support team to prepare emails to inform (first) and remind (second) merchants about the new tax compliance.

Working collaboratively with the support team to send the formal email to inform and remind merchants.

Unclear information and expectations
It’s unclear to merchants what product prices they must input to display tax-inclusive prices in their stores. Enabling the setting to display tax-inclusive prices won’t automatically update all prices of existing products, and merchants still need to update prices manually.

I proposed the design initiatives to improve tax settings’ clarity on price input and accessibility to the tax settings. I worked closely with the team to enhance the clarity of the content and the technical feasibility. As it was outside the project scope and a widespread issue (not only in Japan), we decided to hand over the design proposals to the tax team.

The initiative plan to improve tax settings' clarity on price input and accessibility to the tax settings.

The broken third-party app
‍The existing “CustomEdit” third-party app developed by the Shopify partner didn’t work as intended due to an API problem. It left merchants with no option but to update each product's price.

Our team communicated with the Shopify partner to fix the API problem so that it’s ready for merchants to update their product pricing seamlessly.

The unique use case
There were 24% merchants in Japan targeting domestic and cross-border markets in a single store. It left merchants in a weird situation when displaying tax-inclusive prices was the requirement for the domestic market, which wasn’t aligned with the cross-border market.

I proposed to create a tax exemption system to detect and automatically display the tax-exclusive prices for cross-border customers.

screenshot of 24.2% merchants targeting both domestic and cross-border markets in a single online store.

Outcomes

Successfully guided 8,124 merchants to display tax-inclusive prices, resulting in a 63.3% tax compliance rate, representing a 136.2% increase.

Guided 8,124 merchants to display tax-inclusive prices, representing a 63.3% tax compliance rate

Maintained merchant satisfaction and perception of Shopify services in Japan, resulting in a 53.3% increase in new onboarded merchants (from 11,094 to 17,006) in under a year.