A Japanese e-commerce platform named Mercari was established in 2013. Users of the company can buy and sell a range of goods, such as clothing, electronics, and household goods. The brand has grown in popularity due to its easy-to-use interface and mobile app. This app has allowed it to grow globally and rank among the top online markets in Japan. Mercari Layoffs effects globally.
Mercari expanded into the U.S in 2014 and the U.K. in 2016. As of December 16, 2017, the Mercari app had been downloaded more than 100 million times worldwide. The company became the first in Japan to achieve unicorn status.
The global I.T.I.T. industry fell into a recession following COVID-19COVID-19, causing several layoffs in the United States and other countries. Japan, on the other hand, has tight employment rules, making it difficult to fire staff. The same goes for Mercari, which worked hard to reduce costs.
Mercari faced a $110 million loss
Even Marie Kondo’s popularity couldn’t help clean up the financial mess at the Japanese online flea market Mercari. The business’s losses have risen due to significant spending to expand its U.S.U.S. business.
The business views the American market as vital to its expansion. However, in 2019, it was projected to announce a group net loss for the June-ended year (2019) of around 12 billion yen ($111 million). It took a bigger hit to its profits than the 7 billion yen loss from 2018. This was the Japanese e-commerce unicorn’s second consecutive annual loss since being listed on the Tokyo Stock Exchange.
More Americans decluttered their homes, motivated by the “Tidying Up with Marie Kondo” reality show. But Mercari needed help attracting American users.
Mercari is one of Japan’s most popular online markets for secondhand items. However, its U.S.U.S. branch must compete with established rivals such as eBay.
The company had been extensively promoting its app. Its goal was to reach $100 million in monthly gross retail sales in the United States, which was considered a benchmark for turning a profit.
In Japan, Mercari was working on creating a new cashless payment solution at the time. Merpay is the mobile payment business in the Mercari Group. Merpay’s strong advertising effort resulted in over 2 million user registrations in just over four months since its launch.
Mercari’s U.S.U.S. and Merpay businesses both experienced another year of operating losses. With mobile payment investments expected to increase in the future, the company faces the possibility of an even larger yearly loss.
Mercari Layoffs 2023
Mercari declared it would lay off 20% of its US-based employees 2023. In addition, 60% of the jobs in the U.S.U.S. Tokyo team would be assigned to Mercari Japan. The decision came as Mercari tried to settle its operations. It aimed to position itself for long-term growth in a fiercely competitive market.
Mercari’s LinkedIn profile stated that the company employed 655 people in the United States in 2023. Based on this data, about 130 positions might be affected by this layoff.
The news was emailed to employees from the U.S.U.S. Executive Team. This indicated the company needed to align its employment requirements with estimated revenue and profit.
The decision to cut staff was seen as necessary to properly staff the company in the future. Yet, Mercari has been striving to improve its value proposition and product experience.
Employees whose jobs had been impacted were given one-on-one meetings to discuss the next steps. Security procedures would terminate their access to I.T.I.T. systems. The email also stated that Mercari would concentrate on expanding the marketplace for under $50. It also talked about retaining and engaging users and developing revenue-generating strategies. This was to drive the company’s growth in the United States.
The email noted that even though the U.S.U.S. Tokyo team will be reduced in size, it will remain a key part of Mercari’s operations. The team will also be vital in helping the company align with its global goal while modifying the product for the U.S.U.S. market.
The email also thanked colleagues who were leaving the company, praised their efforts, and conveyed confidence in Mercari’s ability to seize future possibilities.
The email finished with a message of optimism. It stated that Mercari is on the right track, with a talented and robust team to move the firm forward. Employees were encouraged to contact their functional leaders with any queries.
The layoffs at Mercari are difficult for those affected and the company.
Conclusion
Mercari did its best to cut expenses. This included closing the Sendai office, which many employees were unhappy about. They felt that the firm was looking for an excuse to lie.
They lay off large numbers of employees. In addition, they increase benefit limits and restrict the increase in recruiting and salaries.
The slowdown has significantly impacted secondary firms like Merpay and Mercoin. The secondhand market is the most profitable business system. Thus, resources are allocated there. Other businesses received fewer resources. For example, several Merpay divisions needed help finding even one new hire when they needed more than ten. On the other hand, several teams were unable to secure backup. It hindered the growth of these secondary businesses.
Each company had many things on its roadmap. However, due to limited resources, progress could have been faster. Thus, management duties became “how to cut costs” rather than “innovation.” This is what happened in Mercari.