Why online auction market is thriving in Japan

By Junji Yamaguchi, Kyodo

Posted at Oct 19 2013 08:10 AM | Updated as of Oct 21 2013 05:52 PM

TOKYO - Japan's online auction market has seen major growth in the past several years, driven by the popularity of smartphones and sellers seeking to offload secondhand goods.

But the National Consumer Affairs Center has alerted consumers to take precautions against troubles concerning payments and product defects.

CyberAgent Inc., a Tokyo-based Internet service company, launched in August last year the Pashaoku auction site for smartphones.

The number of its monthly users surged 10-fold to roughly 1 million from about 100,000 in one year, according to the company that also operates popular blog and social network site Ameba.

"Since it is apparently easy to use the site, it has helped us win new customers," a CyberAgent official said, adding that Pashaoku users are mainly in their 20s and 30s.

Unlike conventional online auction sites, Pashaoku, which can be used by anyone with Ameba membership, does not require monthly user fees or listing fees.

In roughly a decade, the online auction market has expanded to 800 billion yen from the 2002 level of less than 200 billion yen, according to an estimate by the Fuji Chimera Research Institute.

However, Ryohei Sasaki, researcher at the institute, said the market is expected to grow at a slow pace of only 1 percent or less annually over the next several years.

But Sasaki added "the growth pace could be faster if the number of users increases on the back of a further spread of smartphones and tablet computers."

In Japan, Yahoo Japan Corp. pioneered the Internet auction business in 1999, and other major Internet firms followed suit.

In terms of both volumes and value, the items most traded on the Yahoo auction site, also known as Yafuoku, are fashion goods such as clothing and shoes. Many CDs, DVDs and manga comics are also auctioned.

Among less conventional auctions, users can find discount vouchers for shareholders or even services such as interpreting, illustration and event management.

Yafuoku users are mainly in their 30s and 40s, according to a Yahoo official.

"Many of our sellers want to have someone use their items, which they no longer use but still have an attachment to," the Yahoo official said. "They also want to know how much their item will be worth."

In an online auction, a seller posts an auction along with the photograph of the item and explanations. The seller can set the starting price and deadline.

The highest bidder obtains the right to purchase the item and contacts the seller on ways to make payments or receive the item.

After closing the deal, the seller and bidder evaluate each other. The scores are open to the public and can be referred to by other members.

The National Consumer Affairs Center backed by the Consumer Affairs Agency said it received about 7,000 complaints a year concerning online auctions.

Among the complaints, some consumers reported finding defects after having received items, while others said goods they won never arrived, according to the center.

"If you have any questions about the item, you must ask the seller for explanations beforehand and place bids after everything becomes truly clear," an official of the center said.