While Yahoo! Auction and Rakuten Auction (the Japanese version of eBay) lead the online resale space in Japan, Mercari has grown quickly, acquiring 4 million users since launching last July, and processing more than $10 million in transactions every month. It’s hoping to replicate its success in Japan by targeting young women in the US, with its recent $14 million in funding.
Operating like an online flea market, users post images of second-hand items priced anywhere under $3,000—about half the items posted are women’s clothing and accessories—and buyers can negotiate prices in the comments.
Mercari plans to attract users by taking zero commissions at launch (though it plans to take a cut from sellers in the future), and is relying on its mobile-only focus to differentiate it from other resale sites. “Craigslist and eBay are great services, but they were both founded in 1995, almost 20 years ago, during the desktop computing era,” co-founder Ryo Ishizuka told Quartz. Craigslist doesn’t have its own app (though it licensed its content to Mokriya Craigslist, making it the default Craigslist app), but eBay does, and recently announced an app for Google Glass.
It will be difficult to carve out market share against the major brands, says Brian Blau, a research director for consumer technology and markets at Gartner. “Amazon is one of America’s favorite brands. Craigslist looks old on purpose—but it still dominates.” Also, while the future of ecommerce is on our phones, he says, today “the web platform is much more important, at about a 7:1 ratio.”
In other words, Americans still prefer to buy and sell online via their desktops, but Mercari is betting on the move to mobile ecommerce (“mcommerce”). Last year, 15% of retail sales took place on mobile devices; that number is estimated to rise to 25% by 2017.
Mercari will have to differentiate itself by building a completely new product from the ground up for the US market. The US version is designed for iOS and has a streamlined UI/UX, with less text than the existing version. For example, instead of displaying a long list of “Dos and Don’ts” when users go to upload an image, the US version links to an FAQ instead.
“The biggest single mistake companies can make is thinking that what works in Japan will work in this country,” says Brandon Hill, founder of Asian marketing and consultancy Btrax. “People’s behavior patterns are so different in this country. They need to forget their experience and start from scratch.”