Chad Ghosn joins the online furniture retailer from Expedia.
As Yahoo Japan eliminates sellers’ fees, Rakuten keeps its fees in place.
To increase the number of sellers on Yahoo Shopping and auction site Yafuoku and “be No. 1 in transaction value in the Japanese e-commerce market,” Yahoo Japan Corp. says it will eliminate nearly all fees charged to sellers on those sites beginning this month. “As a result, everyone from major companies to small businesses that had hesitated over opening stores for some reason will now be able to do so,” Yahoo president and CEO Manabu Miyasaka said in describing the company’s new fee policy earlier this month.
The company says it also plans by the end of this year to allow for consumer-to-consumer sales transactions, also without seller’s fees, on the Yahoo Shopping site as well as on auction site Yafuoku.
Yahoo Japan’s biggest competitor, Japan-based Rakuten Inc., has no plans to follow suit with a new seller fee policy. Rakuten chairman and CEO Hiroshi Mikitani told an e-commerce business conference in Tokyo Monday that his company will stick with its fee structure so that it can continue to provide good services to online sellers, resulting in a marketplace populated with good merchants and products.
Rakuten is growing faster in Japan than its rival, putting pressure on Yahoo Japan—a joint venture of majority owner Softbank Corp. and Yahoo Inc.—to build its volume of sellers and buyers, says Scot Wingo, CEO of ChannelAdvisor Corp., a company that helps retailers sell through e-marketplaces. “In Japan, Rakuten is about the same size of Yahoo Shopping, but growing much faster, so Yahoo has to catch up,” he says. “So we’re seeing this ‘battle of the billionaires’, where you have Softbank’s chairman and CEO Masahoshi Son battle it out with Rakuten’s Mikitani.”
Rakuten’s Japan-based Ichiba online shopping mall accounts for 48.9%, or $9.76 billion, of all sales in Japan by the retailers ranked in Internet Retailer’s Asia 500. The Asia 500 guidebook also notes that Ichiba accounts for about 8% of all estimated 2012 Japanese retail web sales of $129.00 billion. Figures for Yahoo Japan were not available.
Yahoo Japan’s former e-marketplace fees included a monthly “tenant fee” of 25,000 yen (about US$250), plus a royalty fee ranging from 1.7% to 6.0% of transaction value. Rakuten charges a similar monthly fee of about $250, plus a percentage of transaction value.
Whose pricing strategy will pay off in the long term, Wingo says, remains to be seen. “There are a variety of business models out there for marketplaces and only time will tell which are the most popular,” he says.
The free model can present challenges by attracting disreputable merchants selling low-quality goods, Wingo says. But free listings have also been known to spur marketplace growth, he adds. He notes that in China, Alibaba Group, No. 1 in the Asia 500, managed to drive marketplace powerhouse eBay Inc. out of China by providing free product listings for sellers involved in consumer-to-consumer transactions on Alibaba’s Taobao e-marketplace. Alibaba went on to grow advertising revenue on Taobao, Wingo says. Alibaba later opened another marketplace, Tmall, aimed at larger brands that pay seller fees. Alibaba’s revenue increased 61% to $1.74 billion and gross profit 74% to $1.29 billion in the second quarter, according to data released by Yahoo Inc., which owns 24% of Alibaba Group.
“The result has cleared worked well for Alibaba, so perhaps Yahoo Japan is taking a page from this playbook,” he adds.