Yahoo Japan shoots for the stars in e-commerce with Zozo deal

Sep 13, 2019 | News On Japan

Sep 13, 2019 (Nikkei) - Yahoo Japan's acquisition of online fashion retailer Zozo presents an opportunity for the venerable internet services company to bring fresh blood into its e-commerce audience as the business looks to step outside the shadow of Amazon.com and Rakuten.

"Yahoo is focused on advertising, but we want to make e-commerce into a second pillar," Kentaro Kawabe, CEO of the SoftBank Group member, said at a news conference Thursday. "In fact, we want to make e-commerce our [main growth] driver."

Right now, Yahoo relies heavily on earnings from ads. Its media segment -- mainly advertising -- logged operating profit of 141 billion yen ($1.3 billion at current rates) for the year ended in March, well over double the contribution from the commerce business.

A trailblazer when it launched back in 1996, Yahoo Japan now perpetually lags in third place in the country's e-retail market -- to the frustration of SoftBank Group CEO Masayoshi Son, whose philosophy stresses the importance of world-beating market share. The technology conglomerate is throwing its considerable weight behind Yahoo to change this with the 400.7 billion yen tender offer for Zozo.

"Our goal of becoming the No. 1 e-commerce company in Japan by the early 2020s is coming within reach," Kawabe said.

Yahoo's audience skews somewhat older than those of Amazon and Rakuten, toward people in their 30s and 40s. Younger users turn to the service only for certain applications, such as looking up public transit information.

Zozo offers a base of 8 million customers, mostly in their 20s and 30s. Having the apparel seller set up shop on Yahoo's marketplace should bring more of these young consumers to the platform, the thinking goes.

The deal also could draw more women to a platform now used mainly by men. Males constitute 60% of users for Yahoo's online mall, while 70% of Zozo's customers are female.

SoftBank Group chief Masayoshi Son, left, and Zozo founder Yusaku Maezawa at a news conference announcing the deal in Tokyo.

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