Mercari US CEO John Lagerling Resigns; Will Fee Structure Changes Be Reversed?
UPDATE 12-9-24
Mercari is finally backtracking on fee changes it made earlier this year, announcing new fee structure that splits fees between buyers and sellers will take effect January 6, 2025.
Liz Morton
John Lagerling, CEO of Mercari's US marketplace, will be resigning his position at the end of this year, with Founder CEO Shintaro Yamada stepping in to lead both the Japan and US operations as of January 1, 2025.
Will controversial fee changes be reversed and could a sale of the US marketplace be on the table?
Mercari announced the change in management structure this morning, saying the company will "continue to strive toward achieving its group mission: Circulate all forms of value to unleash the potential in all people.”
Mercari, Inc. (“Mercari”) announces that Representative Executive Officer and CEO Shintaro Yamada will assume the position of Chief Executive Officer of Group company Mercari, Inc. (US), effective January 1, 2025. Additionally, Yamada will continue to concurrently hold the position of Representative Executive Officer and CEO.
After founding Mercari in 2013, Yamada has led the growth of the entire Mercari Group as CEO. Now, by assuming the position of Chief Executive Officer of Mercari, Inc. (US) while concurrently serving as Group CEO, he will further commit to the growth of the US business.
Note that John Lagerling, the current Executive Officer, Senior Vice President of Global Strategy / Chief Executive Officer of Mercari, Inc. (US), will resign from his position effective December 31, 2024.
The company also fielded questions from investors as part of the release of their most recent financial results, hinting at the possibility the leadership change could also lead to reverting fee changes made earlier this year for the US marketplace.
Q6. What exactly will the change in the management structure in the US change? Moreover, are you considering returning to the original fee model?
A6. Starting in January 2025, Group CEO Yamada will assume the additional role of US CEO. Under this new leadership structure, while continuing our current initiatives, we will consider new strategies toward breaking even and getting back on track for growth this fiscalyear.
Regarding returning to the original fee model and other such changes, at present, we have not seen the effects that we had expected. Therefore, we will be flexibly considering options such as revising the fee model as part of our strategy in the US going forward.
Q7. Have the effects of restructuring the organization in FY2024.6 Q4 started to appear in FY2025.6 Q1? If top-line growth has not started to manifest, how do you intend to meet the goal of breaking even?
A7. A portion of the expenses related to restructuring the organization have also been recorded in the results for Q1, but at this point, the effects have generally been reflected.
The current slump in the top line and other losses are greater than what we had expected atthe beginning of the fiscal year, and if GMV continues on the current trend, it will be increasingly difficult to achieve our goal of breaking even.
We would like to aim to break even through GMV growth, but we will explore various options to achieve our goal regardless of this situation.
The writing has been on the wall for months as the already previously struggling US operations continue to experience backlash and abandoned cart problems after shifting the fee burden to buyers in March
Many merchants on the platform say sales have tanked as a result and Mercari has been testing tweaks to the program to try to stem the tide of falling GMV.
Liz Morton
Unfortunately, the fee structure shakeup hasn't been working as well as Mercari had hoped, leading to a mass layoff of ~45% staff in June with US CEO John Lagerling admitting the change had increased the number of listings on the site, but had "not delivered the short-term results that we had hoped for on the buyer/ GMV side."
Liz Morton
A recent survey sent to sellers indicated Mercari may be rethinking the fee structure, with specific concerns about how the fees may be impacting average order values
And pressure to address the failed fee strategy elephant in the room has only increased as competitor Poshmark also jumped on the fee-shifting bandwagon, but reversed course after ~3 weeks of massive pushback from both buyers and sellers, announcing they would be reverting back to the old fee structure on October 27.
Liz Morton
Most recently, Mercari sellers report unannounced changes that have lifted the previous limit of 10 items being promoted per day to an apparently unlimited amount - a move that some thought may be a glitch, but could in fact have simply been a desperate attempt to goose Q4 GMV.
Liz Morton
Some have even suggested Mercari may eventually look to close or sell off the US business if performance does not improve, citing the companies withdrawal from the UK market in 2018 as a precedent.
While Yamada does not go that far, he did tell investors in September there could at least be possibility that entering into a partnership with another company could be one avenue they may explore.
Today's announcement may buy Yamada time to turn things around, but if there aren't significant changes made in the first half of 2025, the fate of the US marketplace could be in question next year.
Stay tuned for updates in this developing story.
Their Japan play (i.e., adding Japan based items to the site) is gonna run up against Trump's tariffs, assuming that happens.
