Company history

Mercari began in February 2013, when Shintaro Yamada — who had founded and sold the web-service company Unoh — set up a Tokyo startup called Kouzou, Inc. (renamed Mercari that November). Convinced that “the quality of the product is what decides who wins,” he built a flea-market app wholly dedicated to the smartphone. Development started in WebView, but in April he threw the existing code away and rebuilt it native, shipping Android in July and iOS soon after; insisting on a design that let a sale be completed on a phone alone, he re-laid the architecture early. Yamada framed the founding around circulating finite resources to make a richer society — a theme of resource circulation that fit naturally with a smartphone-first take on person-to-person trade.

The design broke with the auction. Rather than bidding a price up, sellers set a fixed “buy-it-now” price, and listing, payment and shipping were all completed inside the app. The PC-era auction model, with its listing and trading friction, had confined consumer-to-consumer trade to a narrow band of practiced users; by stripping that friction out, Mercari drew in people who had never traded person-to-person and made the flea-market app a category of its own. A sale that finished on a single phone became the doorway for a user base the online auctions had never reached — younger users and women, for whom the smartphone was the primary device — and that new base became the ground on which later advertising would work.

Then came the scale-first bet. In March 2014 Mercari raised $13.7M (¥1bn) and in May put the money into television commercials — an unusual move for a startup yet to record revenue. Fumiaki Koizumi, newly joined, ran the fundraising, the ad production and the opening of a Sendai support office in parallel within three months, and downloads climbed from five to seven million in the half-year after the commercials aired — the turn from niche to mass. In the year to June 2015 the company poured $33.9M (¥4bn) into advertising — 97.6% of its revenue — and held its ad-to-sales ratio above 50% for three straight years. This was buying the market: reaching the critical point of consumer-to-consumer network effects ahead of any follower, and raising the sum a latecomer would need to catch up.

In March 2016 Mercari raised $76.7M (¥8bn) from Mitsui & Co. and others at a valuation of about $1.1B (¥120bn), aiming to fix the market structure in its favour before rivals entered in force. It listed on the Tokyo Stock Exchange’s Mothers market in June 2018, and its market value briefly topped $6.3B (¥700bn) — but losses widened after the IPO and the share price fell to a third of its peak. Behind the achievement of commanding the Japanese market, a tension opened between the losses of front-loaded investment and the market’s new focus on profitability, and the axis of the conversation with investors shifted from growth to earnings.

The costlier lesson was in the United States. Mercari had set up a US subsidiary in January 2014 and launched there commission-free that September, carrying its Japanese smartphone-CtoC playbook straight over. But in a market where eBay and Facebook Marketplace were deeply rooted, “easy on a phone” was not decisive on its own; the company booked write-downs of $93.3M (¥10bn) in 2018 and $71.1M (¥8bn) in 2021, some $164.9M (¥18bn) in all. Japan’s win had come from an untapped market meeting rapid TV-driven awareness — conditions America lacked — so what was needed was reinvention, not reproduction. Yamada, who had relocated to San Francisco and for a time doubled as the US unit’s CEO, later called the difficulty of running a 2,000-person organization his own shortfall as a manager, and turned from taking first-mover ground in untapped markets toward a disciplined “safe mode” that pulled resources back to where returns were in sight.

Merpay, set up in November 2017, let the “sales proceeds” that pooled inside the flea market be spent on payments outside it — a natural adjacency for a company that already ran its own money loop. When PayPay opened a $91.7M (¥10bn) cashback war in 2019, Mercari concentrated its resources on Merpay and sold off its Merchari bike-share arm, settling into two pillars: the flea market and payments. In November 2022 Merpay launched Mercard, a credit card underwritten by its own AI credit-scoring on transaction data, and deferred payment spread. By the year to June 2023 its bad-debt allowance reached $38.4M (¥5bn), receivables rose $251.2M (¥35bn) year on year, and operating cash flow turned negative — a trading platform taking on the balance-sheet risk of a lender, a kind of exposure its tech-company past had never carried.

From there Mercari set out to wire its flea-market base to one adjacent field after another — a “Mercari economy.” Mercoin, founded in April 2021, let users buy and sell Bitcoin with their flea-market proceeds from March 2023, and the company moved up to the Tokyo Stock Exchange’s Prime market in June 2022. The reach extended beyond goods trading: in March 2024 “Mercari Hallo” pushed the user base into short-shift job matching, and in August 2024 a cross-border feature let buyers in Taiwan purchase Japanese listings directly — having learned from the US write-downs that standing up a fresh local service is hard, Mercari re-chose its overseas path as routing domestic stock to foreign demand rather than rebuilding abroad. In September 2023 it converted from a company with a board of auditors to one with nominating, compensation and audit committees, strengthening independent oversight as it moved into the regulated, credit-bearing territory of finance. How to layer the defensive discipline of bad-debt and funding management onto a base built by aggressive, scale-first expansion is the question Mercari now carries.