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IPO of flea market app Mercari sheds light on Japan's thriving thrift economy
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.
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 US$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.
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 being 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."
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. REUTERS