TOKYO -- Mercari will no longer offer its flea market app in Europe starting next March in what amounts to an exit from a money-losing region where it failed to stand out against bigger-name competitors.
Subsidiaries Mercari Europe and payment services platform Merpay, both based in London, will be dissolved by the fiscal year ending June 2020, the Japanese company said Tuesday. High labor and advertising costs contributed to Mercari Europe posting an operating loss of 7.3 million pounds ($9.23 million) in the most recent financial year ended in June.
The company, describing the situation as a "temporary retreat," said it would look at various opportunities in the future.
The roughly 200 million yen ($1.78 million) in extraordinary losses associated with the pullout will be booked either this fiscal year or next. The number of employees affected has not been made public.
Mercari first set up shop in the U.K in 2015, then launched its eponymous flea market app in March 2017. Unlike the Japanese and U.S. versions, which collect fees with each transaction, the European app is free to use. But Mercari, struggling to build name recognition, is facing direct competition from the likes of Craigslist and British rival Depop.
The Tokyo-based company has invested heavily as part of its stated mission to "create value in a global marketplace." In the U.S., where the app rolled out in 2014, Mercari has recruited executives from the biggest names in the American tech industry. But the U.S. business is also bleeding red ink in the face of stiff competition.