Behind flashy IPO of Japan's Mercari lies a thriving thrift economy

TOKYO (Reuters) – When flea market app Mercari makes its market debut on Tuesday, it will mark the appearance of one of Japan’s rarest beasts: a tech unicorn.

FILE PHOTO: The logo of Mercari is displayed at the company’s Tokyo headquarters in Tokyo, Japan, June 15, 2018. REUTERS/Issei Kato

In most countries, a billion-dollar IPO might suggest the return of an equity boom. But in Japan, it sheds light on a “thrift economy” for second-hand items, which is thriving even as the Bank of Japan tries to stoke inflation.

Mercari’s app allows users to buy and sell from each other, swiping and tapping their way through items as diverse as designer clothes and toilet paper tubes.

It has been downloaded 71 million times as Japanese shoppers, faced with weak wage growth and armed with smartphones, have shed their inhibitions about used goods.

“The deflationary mindset is alive and well,” said Marcel Thieliant, senior Japan economist at Capital Economics, citing data showing that households expect incomes to keep falling in the year ahead.

Founded in 2013, Mercari and information technology startup Preferred Networks Inc are Japan’s only two unicorns – startups with valuations above $1 billion – according to data provider CB Insights.

Mercari joins a series of Japanese companies that have made their name by playing the counter-cyclical game. Uniqlo parent Fast Retailing Co Ltd and home furnishings chain Nitori Holdings Co Ltd, both known for affordable pricing, have seen years of expansion.

Mercari, however, reduces costs further by allowing consumers to deal directly with each other, cutting out shops altogether.

Novelty goods are displayed at Mercari’s Tokyo headquarters in Tokyo, Japan, June 15, 2018. REUTERS/Issei Kato

That’s bad news for the country’s retailers, who have been hammered by decades of weak consumption and falling prices despite the central bank’s aggressive efforts.

Jun Shimada, a senior executive at major Japanese fashion company Bay Crew’s Group, said the rise of Mercari could end up to be a bigger threat to retailers than internet retailers like Amazon. Second-hand clothing, except for rarer items sold as vintage, used to carry a stigma, he said.

“Young people in particular no longer have any resistance to buying items that do not fall into the vintage category,” he said.

One woman who bought an Italian leather handbag at one of Bay Crew’s stores turned to Mercari after having second thoughts, uploading Instagram-style shots with her smartphone.

“I made this impulse purchase because I fell in love with the bluish-green color of the leather, but ended up carrying it less than 10 times because it didn’t match any of my clothes,” she said, trying to resell it for around 10,000 yen ($90.56).

Other online businesses are following in Mercari’s steps, with Rakuten Inc’s Rakuma app and Start Today Co Ltd’s Zozoused offering used-goods services. And in February eBay Inc announced it was buying Giosis Pte Ltd’s Japanese operations, including the online shopping platform Qoo10.

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Economists say that in theory, sellers and buyers on such sites can spend the money they save. But users are also more likely to think twice about buying items at full price, pushing down the prices of new goods.

Consumers “can use the internet to compare the prices of goods and services nationwide or even globally,” Bank of Japan Governor Haruhiko Kuroda told reporters on Friday, adding that “recently some people say this is a reason why prices of goods and services are not rising that much.”

The BOJ has been aiming for 2 percent consumer inflation, but has struggled to achieve that despite five years of massive stimulus.

Core consumer inflation peaked at a 1 percent annual increase in February but has since slowed to a 0.7 percent annual increase in April, raising concern among economists inside and outside the central bank that inflationary pressure is waning.

In an effort to understand what is behind the weak numbers, the BOJ is likely to scrutinise several factors, including whether online shopping is driving down prices, according to sources familiar with the central bank’s thinking.

The bank is likely to reveal its findings at a policy meeting in July, when it issues fresh quarterly forecasts on growth and inflation.

It said in a quarterly report in April that “changes in distribution and deregulation have intensified competition for highly-commoditised goods and services.”

But Kentaro Arita, senior economist at Mizuho Research Institute, said that in the long run, Mercari would be a positive contributor to the economy. He said the company would foster innovation and efficiency, forcing retailers to raise their game.

“Mercari and companies like it force bricks-and-mortar retailers to focus more on strengthening their brand and offering something unique to distinguish themselves,” said Arita, who said he uses Mercari.

Reporting by Sam Nussey, Stanley White; and Leika Kihara; Editing by Gerry Doyle

America's Loneliness Epidemic Is More Lethal Than Smoking. Here's What You Can Do to Combat Isolation

As a social work graduate student, I worked in a medical hospital. One of my projects included studying the “revolving door” patients–those individuals who came into the emergency room on a regular basis.

Some of these patients came into the hospital for chronic issues, such as back pain and breathing difficulties. I identified the patients who lived alone. With their permission, I began calling them on a regular basis to check on them.

Sometimes they wanted to talk about their health. At other times, they wanted to share stories about the past. I allowed them to talk about whatever they wanted and just listened.

Then, we tracked their emergency room visits. Once the calls began, their hospital visits were greatly reduced.  

I think there were two reasons those phone calls reduced their visits to the hospital; they felt less lonely which helped them feel better physically and feeling connected with someone meant they were less likely to go to the emergency room simply to have human contact.

That was just a graduate school project with a small sample and not exactly a peer-reviewed study. But, it did give the hospital some interesting feedback about how they might be able to support some of their frequent emergency room visitors.

Clearly, loneliness is a big problem that can lead to a variety of physical health issues, psychological problems, and societal issues.

Unfortunately, loneliness seems to be a growing epidemic. Studies show half of Americans are feeling lonely and isolated.

The Difference Between Being Alone and Being Lonely

Loneliness isn’t the same thing as being alone. Some solitude is good for you.

But, being alone needs to be a choice in order to be healthy. Elderly people who want companionship yet lack visitors, for example, are more likely to experience the physical and emotional effects of being alone.

It’s also quite possible to feel lonely even when you’re around people. If you don’t feel as though those around you truly understand you, or if you fear that they wouldn’t accept you if they knew the ‘real’ you, being around people won’t necessarily resolve your lonely feelings.

Why Loneliness Is Harmful

Researchers have found that loneliness is just as lethal as smoking 15 cigarettes per day. Lonely people are 50% more likely to die prematurely than those with healthy social relationships.

There are several reasons why loneliness can be deadly. First, it reduces your immunity, which can increase your risk of disease. But, it also increases inflammation in the body, which can contribute to heart disease and other chronic health conditions.

Stress will also affect you more if you’re lonely. Financial trouble, health problems, and everyday obstacles may take a bigger emotional toll on individuals who lack social and emotional support.

Quality Relationships Matter More Than Quantity

In a world where many people have hundreds–if not thousands–of social media connections, it’s clear that those connections aren’t a cure for loneliness. It’s not the quantity of connections that matters–it’s the quality.

It’s important to recognize when you’re feeling lonely and isolated so you can take steps to improve your social connections.

Whether you choose to start scheduling more coffee dates with friends or you commit to volunteering for a good cause, it’s important to take action. The natural tendency when you feel isolated can be to withdraw even more–which can be downright dangerous.

Get out there even when you don’t feel like it and purposely try to connect with people face-to-face. If you’re really struggling to combat loneliness, seek professional help. Depression, anxiety, and other mental health issues can cause you to feel disconnected, which can create a self-perpetuating cycle that’s difficult to break.