ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerIcon Opinion QuotePositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Business Deals

Humbled eBay seeks a niche route back into Japan

The once-mighty e-auctioneer to shy away from Amazon's turf

  © Reuters

PALO ALTO, U.S. -- U.S.-based eBay will re-enter the Japanese e-commerce market as a niche player, having fallen behind rival in the 16 years since the then-powerhouse of online auctioning bowed out of the market.

The company said Tuesday it will buy the Qoo10 shopping site in Japan from Singapore-based Giosis.

Japan is the world's third-biggest e-commerce market, following China and the U.S. The market is growing "but still underpenetrated," according to eBay President and CEO Devin Wenig.

The company maintains a Japanese unit, but its current operations are limited to providing cross-border e-commerce support, connecting Japanese businesses with consumers overseas. In 1999, it teamed up with Japanese electronic solutions provider NEC to offer online auctions in the country, but withdrew after being beaten at its own game by Yahoo Japan, which fought back by eliminating handling charges.

Products eBay sells around the world will be made available on Qoo10, whose staff of 250 will move to eBay's Japanese unit. But eBay will be in an undeniably weaker position compared with its prior foray, when it tried to storm Japan as a global leader in online auctioning. Qoo10, which specializes in garments, cosmetics and diet food products, had about 9.6 million members as of December -- far behind domestic king Rakuten, with about 90 million.

In the U.S., Amazon dominates the e-commerce market with a share of 43.5% in 2017, according to research firm eMarketer. Even though eBay ranks second, its share is 6.8%.

California-based eBay now offers set prices for nearly 90% of its goods, making it more like its traditional e-tail peers. It is strong in collectors' items like coins and works of art, as opposed to Amazon's breadth of offerings spanning daily necessities, food products and garments. It figures far less into customers' everyday lives than its rival.

The stock market has reflected the rivals' relative standing. The market cap of eBay was two-to-four times that of Amazon until around 2007, but the latter turned the tables the next summer and is now worth about 16 times what eBay is.

By bringing the full expertise of eBay to the Japanese market, the company aims to "build our place alongside the large competitors," in the words of Wenig. Its path to survival appears to lie in areas outside Amazon's reach.

But Japan is already a fierce battleground for online retailers. Popular new services including flea-market app Mercari have arrived on the scene. In apparel, one of Qoo10's specialties, Start Today's Zozotown holds a high market share and Amazon is bolstering its own business -- part of a wave of players anticipating growth in the area.

You have {{numberReadArticles}} FREE ARTICLE{{numberReadArticles-plural}} left this month

Subscribe to get unlimited access to all articles.

Get unlimited access
NAR site on phone, device, tablet

{{sentenceStarter}} {{numberReadArticles}} free article{{numberReadArticles-plural}} this month

Stay ahead with our exclusives on Asia; the most dynamic market in the world.

Benefit from in-depth journalism from trusted experts within Asia itself.

Try 3 months for $9

Offer ends September 30th

Your trial period has expired

You need a subscription to...

See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

See all offers
NAR on print phone, device, and tablet media