Yahoo! Japan Corporation
) recently announced that it acquired Venture Republic's
comparison shopping business. While the company has not disclosed
the financial details of the transaction, this deal will bolster
Yahoo! Japan's online shopping division.
Currently, Venture Republic operates price comparison sites and
commerce oriented portals such as Travel.jp, Hotel.jp, and
Coneco.net. However, Venture Republic will be splitting its
properties into two groups: Osenikku, which will handle Coneco.net,
and the remaining Venture Republic that will handle Travel.jp and
Hotel.jp. According to Venture Republic's CEO Kei Shibata, Yahoo!
Japan will acquire the newly formed Osenikku group to accelerate
its online shopping business.
In its earnings call last month, Yahoo! Japan stated that it is
aggressively pursuing the Japanese online shopping space. This
acquisition aims to capture a bigger chunk of the online shopping
market by enhancing user experience for Yahoo! Japan's e-commerce
customers and providing user-generated product reviews on consumer
products. In this article we will discuss Yahoo! Japan's
strategy for its shopping division and how this acquisition fits
into its overall strategy.
See our complete analysis of Yahoo! JAPAN
Strategy To Boost Revenues At Shopping Websites
According to our estimates, online shopping and auction
contributes 15% to Yahoo! Japan's total value. The transaction
value at Yahoo! Japan's shopping division has failed to gain
traction in recent years. However, with more Japanese purchasing
goods online, online shopping can be a key revenue revenue driver
for Yahoo! Japan going ahead. According to e-marketer, Japan's
e-commerce sales grew from $113 billion in 2011 to $128 billion in
2012. Overall, e-commerce sales are expected to grow over 50% in
Japan, and we expect Yahoo! Japan to benefit from this growth.
Yahoo! Japan's shopping division continues to lag in the face of
intense competition from incumbents such as Amazon and Rakuten.
Yahoo! Japan plans to acquire more customers for its shopping
division by expanding its product portfolio. It also plans to
strengthen its footprint in the Japanese online shopping segment by
increasing the number of stock keeping units and distribution
channels. Moreover, it is aggressively pursuing daily
necessities of online shopping domain through its website LOHACO.
However, its growth strategy increasingly hinges on securing
repeat business from customers by enhancing their user
Acquisition To Improve Customer Experience
Venture Republic's Osenikku group operates coneco.net, which
compares a wide range of products. Currently, it has over 30
product categories that range from hi-tech gadgets to daily
necessities and stationary. With the acquisition, Yahoo Japan aims
to provide a better user experience to its e-commerce customers by
equipping them with information on pricing and product review.
Osenikku To Bolster Revenues
Since Coneco.net also provides information on where the product
can be bought, Yahoo! Japan can forge stronger ties with the listed
brick and mortar companies and entice them to list on Yahoo!
Japan's e-commerce portals. As listings across Yahoo! Japan's
properties grow, we expect more users to buy products from Yahoo!
Japan. This will translate into an increase in transaction value
across Yahoo! Japan's shopping division. Currently, we
estimate transaction value from shopping to increase slowly from
JPY300 billion in 2012 to JPY 400 billion by the end of our
forecast period. However, if the transaction value at the shopping
division were to double by the end of our forecast period, our
stock price estimate can increase by 5%.
We currently have a
$15 price estimate for Yahoo! Japan
, which is around 15% below the current market price.
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