Try the new FT.com

Last updated: October 11, 2005 11:50 pm

Auction venture to take on Yahoo

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NTT DoCoMo and Rakuten, a leading internet mall operator, are creating a joint venture in internet auctions that aims to take on market leader Yahoo.

Rakuten will spin off its internet auction business, Rakuten Flea Market and form a new company, Rakuten Auction. DoCoMo will pay Y4.2bn ($36.8m) for a 40 per cent stake of the new company, with the rest owned by Rakuten.

The link is aimed at increasing auction transactions on mobile phones, which have a high penetration rate in Japan of about 70 per cent. DoCoMo has about 50 per cent of Japan?s 90m-strong mobile phone market while Rakuten has 17.3m users.

?It is a significant tie-up which will have a big impact on [our] auction business,? said.

Hiroshi Mikitani, Rakuten president, said he hoped to raise the ratio of Rakuten?s auction business conducted on mobile phones from the current 10 per cent to about 50 per cent.

Masao Nakamura, president of DoCoMo, said that the investment was part of DoCoMo?s efforts to increase its non-traffic revenues.

Falling traffic revenue in Japan and the entry of new market participants is fuelling competition among mobile phone operators to hang on to customers by offering new services. Both groups believe the mobile auction business, while small, has significant potential to grow.

In the past three years, the number of mobile phones used for e-commerce has grown from 6.78m in 2001 to 15.28m last year. The number of people who use both PCs and mobile phones for e-commerce has grown from 18.27m in 2001 to 42.96m, according to a government survey.

However, there were few details of the new service DoCoMo and Rakuten plan to launch. For example, the two groups failed to explain what kind of payment system could be used and whether or not the mobile wallet, which DoCoMo has been promoting, will play a part in the new service. DoCoMo has launched mobile phones embedded with a smart chip that allows users to use their phones to make small payments.

?It?s sensible, it?s a growth area but it?s extremely competitive and Yahoo are streets ahead,? said Hiroshi Kamide, analyst at KBC in Tokyo.

Rakuten?s auction business generates less than Y1bn compared with Yahoo?s Y40bn revenues from auctions, he said.

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE