Auctions in Japan, eBay, Yahoo! オークション, Kijiji

Last week, on the NBR Forum, Calhoun asked about online auctions in Japan.

I've been thinking about auctions in Japan for quite some time because it's a giant, growing market, and one that is interesting because the dominant player in the West (eBay) failed spectacularly in Japan for a number of reasons.

You can find my response to Calhoun here but I wanted to also put it on my blog.

On Jun 2, 2005, at 1:46 PM, Calhoun wrote:
>
1. Have mores/values changed such that second hand purchases are
now acceptable and if so, at what level?

Yes, of course. Since the bubble popped, Japanese people are more than willing to save yen if they can find what they want or sell something they don't need on Yahoo! Auction.

The same reporters who told us that, during the boom Japanese people had no interest in auctions, now tell us during the bust that the Japanese are highly attuned to the auction experience. The numbers support the latter argument.

2. How does trust figure into this situation?

Yahoo! Japan's Auction service uses the same trust metrics that eBay does- how many successful sales has a seller sold, and what kind of comments does s/he have from her buyers.

3. What kind of products are being traded and do their prices compare favorably with the "denden towns" of Tokyo, Osaka and Nagoya? (Ebay prices go up, DenDen town prices are negotiated down)

Anything and everything, literally. Price comparisons? You'd have to spend some time on the auction system and kakaku.com to compare. I would think that overall market forces keep the prices competitive.

4. Does anyone have any personal experience in using one in Japan in Japanese?

Yes, of course.

5. Have there been any studies done on this by Japanese or Westerners?
Yes.

The auction space is one of the fastest growing areas of the Japanese Internet. Therefore it attracts many businesses as well as researchers.

The Wharton Fellows of UPenn looked at why eBay Japan failed and Yahoo! Japan was successful. The paper in both languages, is available here:

http://knowledge.wharton.upenn.edu/weblink/127.cfm

Here's an abstract from a Yasushi Fujita, who also is researching the failure of eBay Japan.

http://tinyurl.com/dkxcb

(http://www.essex.ac.uk/chimera/culturesofebay/Accepted%20abstracts.html)

This whole Cultures of eBay conference may be of interest to you.

http://tinyurl.com/9q5vh

(http://www.essex.ac.uk/chimera/culturesofebay/About%20the%20ebay% 20project.html)

I'm sure there are many Japanese academics in Japan who're looking at the auction space as well, but I am not familiar with any specific studies. I would very much like to know about any research into this area.

There's a lot of news coverage on this topic (both the failure of eBay in Japan as well as the success of Yahoo! Auctions):

http://www.jir.net/jir9_02.html

http://www.businessweek.com/magazine/content/01_23/b3735139.htm

http://www.businessweek.com/magazine/content/03_25/b3838627.htm

6. Are college/high school students involved or interested in this?

Yes, of course.

One of the reasons that Yahoo! Japan's auction service took off was that they did not require a credit card, as did eBay Japan. Plus eBay Japan had fees that Yahoo! Japan's auction service didn't.

7. Are there other similar "vehicles" that perform the same functions as Ebay (i.e. a Mayoshi Son creation) but are Japanese owned/created and that are more popular/reliable?

http://auctions.yahoo.co.jp/

They are the 80,000 lb. King Kong in the Japanese auction market. At 95% of the market, no one even comes close.

However, eBay is not sitting by idly.

eBay has taken a 25% stake in Craigslist, the most popular classifieds service in the US.

http://www.craigslist.org/about/press/ebay.stake.html http://www.cnewmark.com/archives/000265.html

eBay is also launching a Craigslist-type of global classifieds. The Japanese version is here:

http://tokyo.kijiji.co.jp/pages/AreaHome

Give it a whirl and let us know what you think.

8. In the realm of excess inventory, we find "buy.com" and "overstock.com" in the U.S. along with many, many small businesses

Most certainly there are businesses selling unsold items on Yahoo! Auction.

I have yet to see one of those services like Auction Drop in Japan, but with the growth rates of Yahoo! Auction, I wouldn't be surprised if we started to see those soon.

9. Would the Japanese auction Chinese made goods but not Japanese ones on one of these sites?

Anything that is legal is sold.

As you might imagine, this is an area of high interest for me. I'd be delighted to speak with anyone else who may be similarly interested in the Japanese internet auction marketplace.

Sincerely,

Gen Kanai Meguro-ku http://kanai.net/weblog

* * * * *

In addition, I wanted to add a few other resources that might be of interest.

One is an interview with Merle Okawara on chanpon.org, which Mimi and Joi Ito did. Merle was the CEO of eBay Japan, while it lasted.

Another is a recent article in the NY Times by Randall Stross which covers Craigslist and Kijiji: What eBay Could Learn from Craigslist.

Then there's eBay, which is purchasing Shopping.com for $620 million. This is clearly because they need to sustain their growth and they have more cash to do this kind of purchase.

Shopping.com, which went public last October, is a relatively small business that is not expected to have a large impact on eBay's bottom line. Shopping.com earned $12.2 million on revenue of less than $100 million last year, while eBay earned $778 million on revenue of $3.3 billion.

Instead, the deal is seen as a way for the company to expose its sellers to new buyers who come to Shopping .com in search of product information and price comparisons. EBay collects a commission on each item sold on its site.

Finally, Yahoo! Auction (US) has decided to drop listing fees, which is their attempt to gain market share from eBay. I don't know that it will make much of a difference. There's such a huge ecosystem around eBay, as there is around Yahoo! Auctions Japan, that a different service dropping listing fees may not make much of a difference.

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