Global Expansion: Taking the Circular Economy Worldwide Requires Incurable Curiosity
As demonstrated by the launch of Mercari US in 2014—the year after Mercari’s founding—Mercari aims to expand its services globally under the company’s mission of “create value in a global marketplace where anyone can buy & sell.”
As a new initiative of Mercari’s global expansion, the company has made a minority investment in Beebs SAS, the France- and Belgium-based company responsible for the planning, development, and operations of Beebs, a marketplace app specializing in products for babies and kids. Beebs has shown steady growth among French C2C marketplaces and is aiming to expand to the entire European market in the future. Such growth is highly compatible with Mercari’s mission and is the background that led to our investment.
Some of our readers may be surprised to hear that Mercari made this investment. To learn more, Mercan sat down with SVP of Global Expansion Hirohisa Tamonoki (@tamosan), who is leading the charge of Mercari’s global expansion, to find out why we chose the strategy of investing in another company instead of launching our own service or product. We also asked what our goal is going forward as well as what his perspective is on the road we’ve traveled thus far. Global Expansion’s Takahiro Masaki (@tak) and Shida Schubert (@shida) also shared their thoughts on the investment in Beebs SAS.
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Hirohisa Tamonoki (@tamosan)After graduating from Waseda University, @tamosan joined GMO Cloud K.K., where he handled CS work, a server hosting business, and the launch of new businesses. In 2010, he began working at pixiv Inc., where he was involved in business supervision, including system development, marketing, and growth, as a company director. He was appointed representative director and CEO of animateLAB, Inc. in January 2016, starting its retail-focused IT business. He joined Mercari as a Vice President in February 2017. He was appointed CEO of Mercari Japan as an executive officer in October 2018 and assumed the position of Senior Vice President and CEO of Mercari Japan in September 2020. He started his current role as Senior Vice President of Global Expansion in January 2022.
Takahiro Masaki (@tak)After university, @tak joined an HR tech company as a backend engineer and product manager (PM), working on a service supporting company recruitment. He joined Mercari in October 2016 and worked on the launch of the UK version of Mercari as a PM. He then worked as a PM for Mercari JP. He left the company for a stint to amass experience working in global business planning for a men’s cosmetics company before returning to Mercari in December 2021. He joined Global Expansion in January 2022.
Shida Schubert (@shida)@shida used to work at the Japan office of a multinational medical equipment manufacturer where he was in charge of web design, administration, SFA development, and the creation of clients’ intranet systems, from the planning to the launch stages. In 2000, he joined Digital Garage, Inc. In his role as the Technical Director, he led an internal incubation project and a large-scale integration project. In 2004, he opened a consulting firm in Canada that specialized in supporting internet strategies, including marketing for small and mid-sized companies by offering a range of services such as website design, system configuration, and SEO (search engine optimization). In 2012, he integrated the development of products and systems as the CTO and co-founder of the photography website Pashadelic (which has since been acquired by Amana). In 2014, he became CTO of Digital Garage US, Inc. (DGUS is a subsidiary of Digital Garage, Inc.), and served as a director for DG Incubation while also taking part in such things as supporting the company’s places of investment and designing internal incubation/projects from the evaluation stage. In July 2016, he joined Mercari US as a product manager. In August of the following year, he assumed the position of VP of Product and integrated our US products. In September 2021, he donned another hat to become VP of Product & Engineering Product Innovation. He joined Global Expansion starting in January 2022.
Field research brought into focus a vision of how to stay competitive globally
──To get started, could you tell our readers about the progress of Global Expansion and what your mission is?
@tamosan：Up until last year, we were operating what was called the Global Strategy Team, and that was the vessel we had used to keep looking into Mercari’s global expansion.
That all changed under the new management structure announced in January 2022, and we made the decision to accelerate a new effort to expand globally. Jeff LeBeau took over from me as CEO of Mercari Japan, and I became the SVP of Global Expansion to focus on selecting a new country for us to enter in order to launch our business. In addition, Mercari, Inc. (US) CEO John (Lagerling) worked with us to promote plans for our international strategy as SVP of Global Strategy. In that role, he worked not only on Mercari’s business in the US, but also on our expansion into a third country and beyond. For our business in the Japan region, Naoki (Aoyagi) fortified the strategy of our Japan business while heightening the autonomy of each business as SVP of Japan Region. This is the structure of our system for creating further growth.
Up until now, to select a new country from which to launch our business, the Global Strategy Team would conduct a preliminary survey with an external partner company. In addition to continuing those activities, we also conducted field research. Everywhere in the world we traveled, we would visit each prospective partner company on site, test out their products ourselves, and speak with a lot of the people who worked there.
We were surprised to see how many products there were in the world that were similar to Mercari. In the US, the market for marketplaces has reached maturity, and it’s interesting to see how many services there are that specialize in one thing or another. For example, to shop for sneakers, you can check out StockX, Grailed, and GOAT; for women’s fashion, you can go to Poshmark; if you’re looking for NFTs, OpenSea; for trading cards, TCGplayer; and so on. However, a trait of the European market is that people are especially concerned about the environment. Marketplace apps are gaining in popularity, but there are still very few players in the game. I think that Europe is at long last getting excited about the market for products like Mercari.
The research we’ve conducted to date with our external partners has given us a lot of insight too, but that’s not the only thing that we’ve been looking at. We also did field research hypothesizing that we could get a better understanding of things by actually going to each candidate country to get the answers we were looking for. We learned a lot by actually using a variety of apps. The situation with payment and logistics processes differs depending on what country you’re in, but the state of affairs of both primary distribution and fashion trends vary as well.
When we actually gave field research a shot, we found a lot of cases where what appeared to be happening on the surface and what was actually going on were different. What we learned from this is that a combination of external research and field research works effectively.
As a part of their field research, Global Expansion also went to the flea markets of each region they visited. In particular, they saw first-hand just how much interest there is in fashion in France. “With a long history of people enjoying elegance in fashion, we spotted a lot of interest in vintage clothing. Everyone enjoyed having their own style,” remarked @tamosan.
──As the field research moved ahead, what roles did each of the team members play?
@tamosan：The three of us covered much of the product side of things. We each have our own strengths in that regard. I was the CEO for Mercari JP, @shida supported the Mercari US product from its earliest days, and @tak was involved with the launch of Mercari in the UK and also worked as a PM for JP. I have a general understanding of management as a whole, @tak has experience working as a PM for both Mercari JP and UK, and @shida has experience working as a PM in the US as well as experience working on the technical side of things. We each leveraged our own strengths and experience in fieldwork.
──Were there any ideas or rules that you set as a team?
@tamosan： Well, we of course all monitored our sleep and our health using Oura Rings (a smart ring sold by Finnish company Oura). We’re all data-driven and product-driven people in one way or another, so when we talk about a new product, we never run out of things to say. (laughs) Seriously, though. I’m only half joking.
There were two things that were really important to us: getting first-hand experience by using products and talking with the people we met. I felt that there were a lot of things that we couldn’t possibly know just by looking at the data; we had to actually use the products. For example, fieldwork allows you to see how apps are listed on the App Store in each country you’re looking at for expansion and to create an account in each country. You can also use each service locally to try buying and listing items to see what sells and how quickly, how items are shipped, how long it takes items to arrive, and so on. I think that it’s important to sample both the online and the offline UX of a product.
Our desire to expand the circular economy to the entire world is what is at the heart of our efforts
──So can you explain why we need to enter a third country?
@tamosan：I suppose that at the heart of our desire to enter a third country is our wish to spread to every part of the globe the circular economy that Mercari promotes. In Europe, in addition to people’s extremely high level of interest in the environment, the pandemic provided a tailwind that drove the spread of e-commerce. I believe that the marketplace that we have built is helping to spread a circular economy that allows people to use our limited resources effectively throughout society. I would like to link our product to sustainability by allowing people to easily buy things and sell items that they no longer need. I think that now is a good time to enter the European market in order to accelerate the pace of this sentiment globally.
──Why did you opt to invest in another company instead of creating something from scratch yourselves?
@tamosan：To be perfectly honest, when we first set out, the mood was that we would create an EU version of the Mercari marketplace app and then charge onto the scene. When we were working at our JP and US offices, we had a strong desire to create and grow our marketplace ourselves. So, it never really crossed our minds to get started through investment or an M&A. Looking back on it now, the sense ingrained in us that we should create something ourselves was really potent.
@tak：We also had in mind a scenario where we launched a product and teamed up with another company either through investment or an M&A. However, there were already some services operating locally, and for the products that were being used most widely, we asked ourselves, “can we deliver a product that is more refined than other services, and can we provide value to the user faster?” We learned a lot from the experience of entering and leaving the UK market, where we were bent on doing everything from the ground up ourselves, and this time we strived to examine more potential routes to starting business without leaving anything out.
@tamosan：Through our field research we got the sense that we shouldn’t narrow our field of possibilities to launching a new business ourselves, and instead consider various possibilities including teaming up with another company through such options as investment or an M&A. We came to that conclusion as a result of speaking with various people on the ground locally and observing the market in detail. When we thought about the cost, time, and uncertainty involved in starting a business from scratch by ourselves, we determined that an M&A would be faster, and have a higher degree of certainty. We definitely had a change of mindset. This is how adamant we were in our wish to contribute to the circular economy in an expedient and sound way.
@tak： I think that working diligently and locally on our research played a big part in seeing how people were actually using the products available in the market and seeing what sorts of companies were the players. I think that our direction changed completely based on whether we chose to look at this or not.
@shida： I think that because we first had a concrete plan to develop a new business ourselves, once we finally started considering investment and an M&A as options, we were able to more accurately evaluate prospective investment partners.
What appealed to us about Beebs was the company’s character and culture
──What was it that made you decide to invest in Beebs SAS?
@tamosan：It was their character and culture. Beeb’s origins gave me a strong sense of kinship with Mercari’s culture and synergy.
The co-founders of Beebs SAS, CEO Morgan Hilmi and CTO Arsène Huot, both became fathers in 2019. They felt that there was an issue afoot after buying baby clothes, toys, and other baby products that they had no use for just a few short months later. They saw that the burden on both parents’ wallets and the environment was huge. So in 2020, in order to resolve this pain point, they launched Beebs as a C2C marketplace that specializes in secondhand children’s clothing.
Beebs SAS is a French company that was founded in 2020 and began operating the Beebs marketplace in November 2020. Beebs has over 400 categories of baby and kid’s products, including clothing, toys, and games. Currently, Beebs has a GMV (gross merchandise value) of 4 million euros (for the period from January 2021 to October 2022) and has amassed roughly a million users to date in France and Belgium.
Furthermore, their goals match Mercari’s mission of creating a circular economy. More than anything, we also learned a lot from them, such as the passion the two creators of Beebs felt for their product, their lean organization management style, and their modern system infrastructure for speedy development. After meeting them, I really got the sense that our companies will grow together and that Beebs will be able to embody our shared mission. Just over two years since they started their company, and regardless of the current harsh economic conditions, Beebs’s GMV is achieving astounding growth.
@tamosan poses between Beebs CTO Arsène (left) and CEO Morgan (right)
@tak：Also, when we started thinking about a scenario hypothesizing what would happen if we launched a product for Europe ourselves, we noticed that how Beebs built and saw their own product fit together closely with our own thoughts. There were a number of times when I’d be listening to their discussion and I would feel like I was having déjà vu. I thought, “didn’t we have this exact same discussion?” (laughs)
@shida：Yes, exactly! (laughs) I think that both the idea and development process of a product are about character. You get a sense of their savoir-faire just by talking with Morgan and Arsène, and their talent drew talented people to work with them. If we hadn’t found Beebs SAS, we’d still be moving forward with our plans to launch a product ourselves.
@tamosan：The system-related elements did not look like the product of a startup; I mean that as a compliment. It was modern and very elegant to the point where I saw no need to make any suggestions.
@shida：We were looking for partners who held the same mission and who knew the layout of the land in France. But more than that, Beebs has established a great system infrastructure. So with all of these elements in place, we thought that teaming up with them would save us time.
──So what are Beebs SAS’s expectations? Did they have any kind of message that made an impression on you?
@tamosan：Well, first of all, they bombarded us with questions. (laughs) They have been very passionate about learning from us. They moved quickly to put to use the advice and knowledge that they received.
@tak：Yeah, they were really frank and straightforward. As for the things that they do not have in place yet, it was good to see that they have an agile attitude that will allow them to fix this straight away.
@tamosan：There is a lot that we could learn from their sense of speed. Usually, a development iteration (a series of procedures in a development cycle that repeats over a short period of time) lasts one or two weeks, but Beebs CTO Arsène said that for them an iteration is one day. That’s just like a startup! (laughs)
@tak：Something we would talk about over dinner one week would be implemented the next week. The pace was astounding.
@tamosan：Now obviously, they are a startup, and Mercari is in a different business phase. However, their uncanny speed is due to the modern system infrastructure that they use, and I feel that it’s something that could allow them to provide our business with feedback. Without a doubt, being able to learn from each other will be a big benefit. We have knowledge about doing business in Japan and in the US, but we have almost none about doing business in Europe. We can learn from them about the latest in system development and how to do business in Europe. And they can learn from us how to scale their business. You could say this is an opportunity for us to contribute to each other’s growth.
Launching a business globally takes an incurable curiosity
──What is Global Expansion aiming for and what do you plan to expand on going forward?
@tamosan：I think that having a foothold in France will give us the opportunity to expand the circular economy globally. I want us to expand to the wider world the concepts that Mercari values.
@tak： I think that rather than Mercari doing all the heavy lifting ourselves, Global Expansion’s calling is to increase the number of like-minded partners planting the seeds of C2C buying and selling culture globally in an end to create the sort of world we are aiming for.
@shida：Our immediate mission is figuring out how to build infrastructure outside of the US and JP businesses. Over the past 10 months, I’ve researched the markets of various countries and acquired a mixture of knowledge of things such as the differences between each country, culture, product, and infrastructure. I’d like to look at how we can leverage our existing business to support others.
──That sounds very challenging but exciting. What are you anticipating from the partnerships you’ll be forming going forward?
@shida：I think what we need is an incurable curiosity. Unless we travel to various places and are curious enough to ask users why they use a product the way that they do, there are some things that simply won’t come into view.
So we can’t just look at information that’s a snapshot in time, but rather we have to go to a locale to observe the overall picture and look at why something is happening the way it is and explore the question from multiple angles. I expect the same level of curiosity from the people we partner with going forward. @tamosan is the type of person who almost has too much of that kind of curiosity, and so his observations are extra sharp, which is why it was so much fun to learn from him by looking over his shoulder.
@tak：We are a collective of product-driven people, so we could always look into how to realize our vision ourselves, but I feel that if Global Expansion only employs that sort of aggressive attitude, it will not be enough going forward. At some point, we have to put the brakes on and take a defensive posture. I think this is true of people with knowledge of finance and the law. I believe that when we see an opportunity to make an aggressive business move, if we have someone on our team who can see what we need to organize in order to achieve the desired result, the gears of the operation will engage with each other nicely.
@tamosan： I guess I’d say it takes someone who can make decisions while keeping their cool. I think that when considerations focus on the product, it’s even more fun. This goes without saying, but the world is a big place, and we are bound to run into a lot of situations where what we think of as common sense is just the opposite. There will be times when we are confused, and looking at the culture comprehensively, it can be difficult to evaluate things without looking through the lens of our own biases. At times like that, it’s important to have an overlying view of the product that is the focus. People who can flexibly accept someone who has a different set of values than them will find that their world opens up astoundingly wide, and they should have fun with this.