The Marketplace Boom   //   March 27, 2024

Mercari eliminates selling fees, heightening competition with ThredUp & Poshmark

Online marketplace Mercari is offering zero selling fees starting Wednesday in an attempt to attract more sellers to its platform. 

The company previously had a 10% flat commission for every sale made on the platform. Now, Mercari is choosing to eliminate that fee entirely for sellers. Mercari is also implementing a new return policy. In the past, all sales on Mercari were final. Now, secondhand shoppers can initiate returns and get a refund within three days for any reason. In return, Mercari will add a service fee from their purchase, which will vary depending on a multitude of factors, but can be as low as 5%.

Online marketplaces in the U.S. like Poshmark, Depop and ThredUp are all competing to attract more sellers to their platform. While some marketplaces have been bumping up their seller fees over the last couple of years, Mercari U.S. CEO John Lagerling said that the company is doing the opposite to attract higher-quality inventory. It also made changes to its return policy — doing away with its previous all sales final rule — to make buyers feel more confident about buying secondhand products.

Lagerling said that Mercari has been seeing a lot of sellers turn to social media platforms to sell their products. “We thought, what do we do to… make it obvious to use Mercari for their transactions?” he said. “We decided that the boldest thing we can do is to simply go ahead and abolish the selling fees.”

Mercari operates in Japan and the U.S., but Lagerling said these new changes will only impact the U.S. market. Mercari allows users to sell and buy products in new and used conditions. In December, Mercari reported its highest-ever revenue. Its marketplace gross merchandise volume (GMV) grew 10% year-over-year to 280.9 billion Japanese Yen or about $1.85 billion, according to its second-quarter report. However, its U.S. GMV declined 12% year-over-year. 

By implementing changes to its fee structure and return policy, Lagerling said Mercari wanted to make selling and buying products easier on the platform. While the buyer service fee can be as low as 5%, Lagerling said it will be based on factors like brand, item category and other specifics around the transaction.   

“I’m not going to mention them by name, but you have marketplaces that have a lot of makers, a lot of people that create things, and the fees around selling on those platforms have just been going up a lot very aggressively,” Lagerling said. “We come to realize that keeping things very simple and competitive is very, very important, and I think the timing is right now in America to really change the game.”

Kassi Socha, director analyst at research firm Gartner, said that selling fees are a major consideration that sellers make before choosing to join a marketplace platform. Acquiring new sellers can be challenging for platforms operating in the U.S. given how saturated the online marketplace industry is at the moment. Additionally, she said that customers aren’t necessarily loyal to one specific marketplace platform.

Marketplace platforms have tried various ways to court more sellers over the years. For example, Poshmark developed its own seller fund in 2021 to reward loyal users with $500 to $5,000 grants when they sell a specific amount of products. ThredUp, meanwhile has tried to make it easier for sellers to send in products through its “Clean Out Kits” which sellers can request online and have sent to their house.

“Retailers and brands alike, whether they’re a marketplace or a seller, are focused on profitability and scale and growth,” Socha said. “There are a couple of different ways to increase profitability as a marketplace. You can either generate more revenue from fees or you can generate more revenue from getting more sellers and brands on your platform.”

In addition to its new fee structure, Mercari is also planning to improve the look and feel of its platform as well as the language it uses to communicate to its sellers and customers in the coming months.

“As long as we make selling easier, everything else follows,” Lagerling said. “It’s really that focus on delighting and valuing and appreciating our sellers.”