A still from Mercari’s latest television commercial in Japan
There should be no more doubt that investors are convinced that Mercari is the next big thing for ecommerce in Japan. Following a US$14 million round in March, Mercari confirmed today that it had raised a further JPY 2.36 billion (US$21.8 million).
Many repeat investors, like Global Brain, Globis Capital Partners, GMO Venture Partners, and East Ventures*, participated. But the most notable new investor is the World Innovation Lab (WiL). Founded by Gen Isayama, WiL describes itself as a “change agent bridging the US and Japan, startups and enterprises.” Mercari’s ability to secure WiL as an investor shows the company is ready to make an aggressive, determined push into America.
Mercari’s app offers a digital flea market for users, which has caught on in Japan. As of last month, it recorded over five million total downloads and tens of millions of dollars of goods sold every month. The company launched an English-language app in America last month as well.
Spirits at Mercari HQ are likely flying high right now, but cracking the US won’t be easy. Even Rakuten, the leading ecommerce player in Japan, has yet to solve the puzzle of how to export its business to America. In 2010, when it acquired American ecommerce outlet buy.com, Rakuten had just recorded US$2.09 billion worth of goods sold. Even with considerably greater resources, it was not able to transplant those heady numbers overseas.
Of course Rakuten has continued to grow in the years following that purchase, but before the recent acquisition of American discount deal website Ebates its American operations remained a negligible contributor to the company’s profit margins.
That precedent does not mean that all hope is lost for Mercari. Its business model is less complicated than Rakuten’s – Mercari only needs consumers to sign up and sell unwanted clothes, rather create a whole ecommerce ecosystem that can accommodate big brands. Young women make up Mercari’s main consumer base so the company can also focus its energy on a smaller target.
In August 2013, just six weeks after launching, the company nabbed US$3 million in funding. Over the past year, Mercari’s management team have steered the firm on a rapid ascent, hitting numerous download and funding milestones along the way. Yet, if America is indeed in the company’s sightline, their journey to the top is only just beginning.
See: 11 Japanese online shopping startups challenging Rakuten and Yahoo
*Disclosure: East Ventures is also an investor in Tech in Asia. Please see our Statement of Ethics for further details.
Mercari nets an unexpected $21M windfall. Will its new fortune spell success overseas?
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