Mercari (www.mercari.com) is an online marketplace that allows individuals to buy and sell new and used items, such as electronics, jewellery, apparel, shoes, books, CDs, DVDs and home accessories. The company was established in Japan and subsequently extendeded its operations to US and UK markets.

The business pitch adopted by Mercari for its mobile app is “Mercari, The Selling App.” In an interview on Cheddar (www.cheddar.com) it’s Chief Marketing Officer, Scott Levitan said “we want to make selling as easy as buying”.

It goes without saying that in any trade there are two parties; buyer and seller. Then why is Mercari emphasising to “selling”? When asked about it, Scott elaborated that “selling is more difficult. Lots of things end up in our closets and garage because we do not know how to sell them”.

The web as well as the mobile interface of Mercari is quite simple compared to many other online marketplaces worldwide. How far they have progressed in their mission to simplify the “selling” part of the trade can be gauged by their phenomenal growth in “online marketplace sector”. Some facts and figures are stated below.

The “seller” focused business model that Mercari adopted gives it a “winning edge” over its direct competitor (eBay). The two most important features “sellers” on online marketplace platforms look for; “selling fee” and “mode of receiving sales proceeds”.

eBay’s “selling fee” structure is complicated, confusing terminologies, rates and percentage deductions that vary frequently. Anyone visiting “eBay community” (www.community.ebay.com) can witness the discussions taking place there and will get an impression that “selling” experience is not smooth.

Mercari, on the other hand, stands by its claim – making the “sell” part easy in the transaction. A flat fee (10%) is charged when the item is sold. There is NO listing fee! For “sellers”, specially those who are new in this sector, it is an ideal platform to start generating good income. They can focus more on their products rather than worrying about cumbersome fee structures.

Where there are “multi-layered selling fees”, “sellers” have to “additionally focus” on “how to save selling costs”. Also, their expected profits are dependent on sudden fee structure changes.

When we look at options for “receiving payments for items sold” on eBay, it offers more choices (Paypal, Credit or Debit Card, Merchant Credit or Debit Card and Payment on Pickup). However, setting-up those options is confusing for many “sellers”, specially the new ones.

Mercari, at the moment processes all the work on back-end itself. “Seller” does not need to worry about setting-up payment methods. All they need to do is provide details of their checking account and make a request for receiving payment. Mercari pays them via “Direct Deposits”.

Mercari’s entry into the corporate world

It took five years of hard work for Mercari to get into the corporate arena.

In May 2018, Mercari got an approval for raising funds through an IPO in Tokyo, Japan. In June 2018, Mercari went ahead with the IPO. It was a big success. A sum of US Dollar 1.2 Billion was raised. On June 19, 2018, Bloomberg reported, “Mercari Jumps 77% in Tokyo Debut after US Dollar 1.2 Billion IPO”.

For Tokyo market Pundits, this IPO had some remarkable features to look at.

• It was Japan’s biggest tech IPO since July, 2016

• Mercari sold 43.5 million shares in the IPO, including additional stock via a green-shoe allotment. Investors in the U.S. and Europe bought 7.9 million of existing stock and 16 million of new shares. This shows confidence of foreign investors in an Asian startup.

• Mercari became Japan’s first startup to reach the so-called unicorn valuation of “$1 billion or more”.

James Riney, the head of “500 Startups”, a start-up accelerator in Japan, says, “What I hope people realize is that you don’t need to be in Silicon Valley to build a unicorn. You can build one in Tokyo. Yamada was able to show that in a pretty short amount of time, which a lot of people didn’t think was possible.” He also said, “Venture capital used to be the ‘ugly duckling’ of private equity in Japan. Now we are seeing way more interest from institutional investors, thanks to Mercari for making a big splash noticeable on a global scale”.

For Entrepreneurs, it is a lesson to learn – never stop working hard, you never know when you will strike gold

Yamada, talking about his exploits said in an interview that he got the idea for the business while travelling around the world on the cheap. As a 34-year-old, he visited 23 countries over six months, staying at $5-a-night hostels without hot water, hitching motorbike rides and hopping local buses between destinations. He saw that even the poorest villages had mobile phones and everyone craved technology for reaching the wider world.  In his words, “It broadened my mind, made me want to make something that could be useful anywhere in the world,”

Though the competition is tough between a mammoth (eBay) and Mercari, social media gives an impression that a paradigm shift has taken place. The gap between the “share market-cap” of these two businesses is large but at the end of the day “user governs the flight direction” of online marketplaces. US “sellers” are finding it easier, on different counts, to conduct their online “selling” business on Mercari.

Mercari with its ambitious plans is certainly here to stay!