Mercari plans to increase investment in the United States! Compete with eBay, Etsy, etc.

It is learned that according to foreign media reports, Japan's second-hand e-commerce platform Mercari recently announced that it will increase investment in the United States to reverse its declining business in the United States and compete with large and small rivals in the US market, including eBay, Etsy, etc.

Mercari's U.S. business has gradually grown in size since its launch in 2014, but its third-quarter 2021 results showed a 6% year-over-year revenue decline. Mercari attributed the quarter's decline to a "high hurdle in the previous year," as its GMV grew 72% to $1.17 billion in fiscal 2020.

But analysts point out that this cannot be explained simply by the high threshold caused by the surge in new crown cases. In the quarter ending June 2020, Mercari's GMV in the United States nearly tripled year-on-year, but growth has been steadily slowing since then.

It’s worth noting that earnings at Mercari’s parent company (which covers only the Japanese second-hand market business, with its U.S. operations and Morpay cashless payment system handled by a subsidiary) have been rising steadily, offsetting losses elsewhere. Operating profit hit 15.6 billion yen ($136 million) in the year to June, 3.5 times what it posted four years ago.

Cuts in advertising and promotional spending may be one of the reasons for Mercari's slowing growth in the U.S. In addition, competition in the U.S. retail e-commerce market is getting more intense year by year, with established companies such as Facebook operator Meta Platforms and eBay coexisting with many emerging companies.

For example, Etsy, which went public on the Nasdaq in 2015, has a market value of more than $20 billion, far exceeding Mercari. Poshmark, a second-hand clothing e-commerce platform that just debuted on the stock market this year, has 8.2 million monthly users in the United States, while Mercari has only 4.8 million.

To stand out from the competition, Mercari is expanding its logistics reach. The platform announced last summer that it was expanding its delivery partnership with Uber Technologies to a nationwide level after a smaller rollout in 2020. It has also been using artificial intelligence to improve its app’s search capabilities.

An examination of the U.S. market suggests Mercari will need to achieve double-digit growth in total transaction value to compete. London-based research firm GlobalData predicts that the U.S. second-hand e-commerce market will expand 3.5 times to $195.7 billion between 2020 and 2030, an average annual growth rate of 13%.

Editor ✎ Xiao Zhu/

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