Commerce Connected

Mercari US CEO: Modernizing Marketplaces For The Casual Seller

Mercari Online Auction Mines Roots For Growth

If America ever needed a digital estate sale — or even a garage sale, for that matter — it’s right now.

Tens of millions of financially strapped or suddenly unemployed people are seeing rent and bill payments locked in the form of gifts and purchases they’re ready to part with.

What they need is an online auction marketplace. Plenty of those around. But it’s not really as easy as that anymore, is it? Successful online selling, especially on a one-off basis, is tough.

We’re talking lay sellers, not savvy operators with digital storefronts. And folks who may or may not have a clue about eBay or Facebook Marketplace crave a simple, digital channel through which to connect, transact and deliver without in-person meet-ups during the pandemic.

Mercari U.S. CEO John Lagerling said he believes his company and its model, born and perfected in Japan, removes that awkwardness and pandemic-era fear from online auction, helping sellers and buyers monetize perfectly good stuff that current owners simply don’t want or need anymore.

Calling itself “the selling app” Mercari is succeeding in North America as it first did in Japan by going back to basics. That involves simplifying and modernizing the online buyer-seller experience for the mass market, he said, and not just for top-selling reCommerce experts.

“Online auctions is big,” Lagerling said, “[but at] the same time, there was nothing that was mobile-first for casual sellers who don't necessarily want to make selling their everyday thing.”

That’s Mercari’s sweet spot and one that Lagerling said was crying out for innovation as the big online auctioneers like eBay diversified into larger, more complex financial ecosystems.

Modernizing The Marketplace

Marketplaces are a maturing model, which means there’s room for innovators to move in with clever products. Mercari did this in much the same way FinTechs are conquering finance: by breaking out one discrete function — like peer-to-peer (P2P) transfers — and making that the whole business.

For Mercari, it is online auctions as a touchless app experience akin to mobile order-ahead.

“When consumers are making decisions about where to buy and sell, they need to have a frame of reference” as to what their chosen marketplace actually is and specializes in, he said.

Mercari’s strategy from the get-go has been mobile-first, “even though web is increasingly a big presence for us now, with people spending more time on desktop computers,” he said.

Observing that the online auction ecosystem in now dominated by sellers that have grown beyond their humble beginnings into shrewd eCommerce merchants, Mercari bringing back access for small sellers and new players that lack reviews or resources but have the will.

Saying that “competing with people who have thousands of positive reviews [is] kind of tough,” Lagerling explained Mercari seeks to not only increase access to online auctions, but offer a streamlined, COVID-compliant turnkey service.

“Our partnership with the UPS store, where you … bring the item in [and] they pack it for you, that's still up and running and active, but it's not our most popular option,” Lagerling said. “I think most people have a box at home to wrap it up and slap the label on.”

Mercari has gotten big enough to merit discounts from UPS and FedEx — a big draw for small buyers and sellers.

The company is also experimenting in Japan with its Mercari Station retail concept, where packing and shipping materials and other logistical support is offered to platform users. Mercari’s partnership with a large Japanese C-store chain is part of its shipping network.

“The Early Signs Are Quite Promising”

Mercari’s recent earnings report gives a partial glimpse at the road ahead for the company.

PYMNTS reported that “The Japanese shopping platform that allows users to buy and sell almost anything, reported its net sales surged nearly 48 percent for the fiscal year ending June 30, but operating losses grew 58.9 percent. The company said sales reached 76.2 billion yen ($719 million), up 47.6 percent from 51.5 billion yen ($490 million) in fiscal year 2019.”

Spiking sales volumes couldn’t stem operating losses of 19.3 billion yen ($180 million), however, “far worse than fiscal year 2019’s 12.1 billion yen ($110 million) in red ink.”

That’s not stopping the brand’s positive forward momentum in North America, however, as Lagerling said he thinks Mercari shouldn’t try to be all things to all people. The opposite, in fact.

“I don't need to be a part of your everyday life,” he told Webster, “but if I can still earn enough trust with you that I can stay on your phone [for] when you want to sell something, that’s good enough for me.”

And given pushes like Mercari’s partnership with delivery platform Postmates, called Mercari Now, that zips items between buyer and seller same-day via car, bike or scooter, the company is cracking the code on how a next-gen reCommerce marketplace operates post-pandemic.

“The buyer gets the item [within] hours at minimum, often faster,” Lagerling said, “and the seller gets their proceeds pretty much instantly, as soon as the item has been delivered and inspected. It's still in very small scale, but the early signs are quite promising.”

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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