Mercari US To Cap Buyer Fees At 10% As Platform Tweaks New Fee Structure
Mercari VP Marketing David Lee is making the reselling influencer rounds, taking questions about plans to cap buyer fees, possible international expansion, live selling and more in interview with Becky Park.
The hour-long interview delved into several topics, but unsurprisingly, the number one question from Park's viewers was about the new fee structure introduced earlier this year that shifted fees from sellers to buyers, and how the change has impacted the site.
Park asked:
A few months ago you guys made the decision to switch up how you did fees and so...that fee was passed on to the buyer...and the result from our community I would say has been mixed.
A lot of people including myself were extremely excited at the prospect of zero sellers fees, some people believe that has driven away a lot of potential buyers because fees are a lot more than what they're expecting when they get to the check out and there's a little bit of sticker shock.
I would love to hear from your perspective - has it had an influence on overall profits at Mercari and is this something that's going to stay put?
Lee thanked her for this question, saying it's a really important topic to spend a good deal of time on - which he definitely did.
So when we think about fees - in the previous World our fees were baked into the seller price so the buyers were paying a fee it was baked into the price it just wasn't transparent.
Now that fee was 10% plus payment processing fees and not all buyers knew that, so when we thought about what we could do with fees and a lot of this came from seller feedback as well...one of the most important pieces of feedback that sellers have given us in all of our market research...has been that they wanted lower fees in that previous iteration of our fee structure.
Now if we take that all the way through to...can we take fees to zero for sellers how does that impact our business, how does that impact our sellers, how does that impact buyers?
What we realized is what we'd be really doing is introducing a lot of transparency so buyers can see the fee that they're being charged and know the fee that they're being charged.
And something else that we've really taken into consideration is that the economy has been moving in a certain direction for some time now and it's tough for a lot of buyers, for a lot of Sellers, and so our thinking was we need to have a mechanism to be able to within Mercari take some action to increase transaction velocity by lowering fees.
So overall ever since we changed to zero selling fees, the fees at Mercari have actually gone down from about 10% for everyone to a lower number and that's something that we chose to do deliberately we knew that we'd be discounting on the fees that we collect.
Now there were some edge cases though because when we built this new system to create this lower average fee...there were some edge cases where buyers were charged a lot less or a lot more and it's the buyers that were charged more that is problematic because buyers don't want to have the perception or be in a situation where they're being charged more than they normally would have been...
...so we made a change. I'm really really happy to share...we are, and this is
something we're experimenting with, we're looking for the best way to do it so this is a new reality that we are putting into place immediately for our buyers and sellers for now what we've implemented through to the end of the year is a cap of 10 % on our fees.The most that a buyer would pay in fees is what a buyer used to pay in fees and that really tracks with our original intent which was to have a mechanism to decrease the fees that are levied to the to the buyer thereby increasing transaction velocity increasing Marketplace liquidity...
...we're also experimenting with...there's a lot of discussion around this and and we decided to take the bold move of also setting some other experimental fee caps. we have another experimental fee cap in place for 5% depending on the price of the item so some of these higher ticket items we decided to put in a lower cap in order to really encourage Marketplace liquidity...
As Parks said "that was a lot." Lee danced around the idea of liquidity and velocity frequently, which makes sense as the new fee structure has clearly had an impact on Gross Merchandise Value, as US CEO John Lagerling even admitted in an internal memo to employees when announced a ~45% layoff of US staff in June.
Liz Morton
Lagerling said he took responsibility for "strategic mistakes" and said while the fee change had resulted in more listings on the site, it had not at that time had the hoped for results on the buyer/GMV side.
Today, we are delivering the difficult news that we will be reducing our U.S. workforce by approximately 45%...the reason is simply, our business has not performed well amid macro headwinds and, admittedly, some strategic mistakes...
...we grew too quickly in the belief that our business would have continued post-pandemic lift, which did not occur. We did not successfully navigate the post-pandemic developments, and I feel a strong sense of responsibility for that.
More recently, changes to our fee structure have helped us increase listings, but have not yet delivered the short-term results that we had hoped for on the buyer / GMV side. To remain viable in the U.S. market and ultimately get back on track, we must cut costs and consolidate quickly.
Since then, Mercari has been trying to goose GMV with new seller promotions offering site credits and adding the display of fees to the item page to try to mitigate sticker shock and cart abandonment at checkout.
Liz Morton
Park valiantly tried to cut through the marketing speak to get direct answers, noting that this supposed 10% fee cap did not appear to be on any of Mercari's policy pages and communicated directly to users via email and seeking to clarify it was in effect now or "coming soon."
That was a lot and it was very insightful and...helpful to hear. I want to synthesize for myself and make sure that I'm understanding the things that you said correctly.
So what you just said...is not taking place yet correct? So this 10%
fee cap that's something that is to be introduced in the near future?
Unfortunately despite the excellent clear and direct question, Lee only came back with more marketing speak
So we've implemented this and our users are already starting to see that fee cap of 10% being put into place.
We've been doing market research with...different segments of our customers and I think that one of the best things we can do to drive value for buyers though is ensure that we have really strong compelling inventory inside the Mercari marketplace, inventory that's in many ways just different from what you see on other marketplaces...
Park followed up, piggybacking on a viewer comment asking if this fee cap was advertised or posted publicly anywhere.
..the buyer cap that you mentioned - has it been advertised and if so where can we find details?
And I do feel like one thing Mercari has done a really good job of as they've made changes is Merari was very upfront about it and had lots of information in emails and on the app...so what you have just spoken to has it been advertised in that same way and if so where can we go to find details?
At that point the marketing speak got a little more dodgy with Lee having to admit that it really hasn't been implemented for most users yet but will be "soon" with no specifics as to a timeframe.
Really good question and I also want to clarify earlier...like we've started rolling this out to a segment of our...and this is something that we've now just decided to expand to everybody.
So not everybody is benefiting from this just yet, but it is something that we've decided to do, so hang in there it'll roll out to everybody very soon.
And already I think it's really important to note that the average fees that people are charged is less than prior to the changes to the fee structure at
Mercari and..we haven't rolled out comprehensive Communications to everyone just yet, this is the first group of people that are hearing about it.
The rest of the interview went about as well, with Parks' questions about whether Mercari might consider introducing live stream selling like Whatnot, Poshmark, and eBay, completely sidestepped by Lee turning the question back on Park and asking what her experience with live selling has been like.
Lee also predictably had nothing but great things to say about the recent introduction of products from Japan in partnership with Beenos, but didn't address any user concerns about these items making the site feel less relevant or answer Parks' questions about whether Mercari will be opening up cross border trade options for US sellers to reach international buyers any time soon.
What do you think about Mercari capping buyer fees at 10%? Let us know in the comments below!
