Commerce Business

Our View of the Business Environment

According to a survey conducted by the Japanese Ministry of Economy, Trade and Industry, out of the Japanese business-to-consumer e-commerce (B2C EC), the market size of the merchandising sector expanded by 5.37% year on year to JPY13.9997 trillion in 2022, while the EC ratio was up 0.35 percentage points compared to the previous year to 9.13%^*. The market expanded dramatically in 2020 and 2021, due to the increase in e-commerce users as a result of the effects of stay-at-home demand during the COVID-19 pandemic. However, as the consumers returned to the brick-and-mortar stores in 2022, stay-at-home demand slowed, resulting in a moderate growth compared to the previous year. In addition, the slowdown in the growth rate was also affected by a decline in demand due to rising sales prices, particularly for durable consumer goods.

The scale of the B2C EC market in the service sector was JPY6.1477 trillion (up 32.43% year on year)^* due to the increase in consumer demand to go out and the recovery in the travel and dining services. However, the recovery did not meet the level before the pandemic in 2019 (JPY7.1672 trillion)^*.

The market size of C2C EC including Internet auctions and flea market apps is estimated to be JPY2.3630 trillion (an increase of 6.8% year on year)^*. The population of reuse users is expected to continue to grow in the future, driven by the growing awareness towards sustainability in recent years.

Although stay-at-home demand has slowed and consumers are returning to brick-and mortar stores, the use of various types of e-commerce is continuing to increase. In addition, the EC ratio in Japan remains low compared to other countries, and the Japanese e-commerce market is expected to expand in the future.

* Ministry of Economy, Trade and Industry, FY2022 E-Commerce Market Survey

Competitive Edge

We offer a variety of commerce experiences to a wide range of users, leveraging our diverse business portfolio.

1. *1 Number of monthly active users (Japan) of LINE app as of March 31, 2023.
2. *2 Calculated by the Company based on "Nielsen NetView/Mobile NetView Custom Data Feed." Monthly average from January 2022 to December 2022. Figure for smartphone access to Yahoo! JAPAN (brand level, includes use of app). Rounded to two significant digits.
3. *3 Number of PayPay registered users as of June 2023.

Growth Strategy

Balancing Growth and Profitability

In the Commerce Business, we will strive to expand the e-commerce transaction value using Group assets, and aim to secure a sustainable growth through cost optimization and concentration of management resources on highly profitable services.

1. Optimization of Sales Promotional Strategies

Under the goal we upheld in 2018, to become No.1 in domestic merchandise e-commerce transaction value in the early 2020's, we have expanded the transaction value of the Commerce Business through sales promotional strategy based on large-scale sales promotional campaigns. However, we withdrew the said target in the second half of FY2022, in light of subsequent changes in market conditions and the sustainability of the strategy. In the future, the LY Corporation Group will balance growth and profitability, and aim for a sustainable growth. Especially, for the online shopping mall, "Yahoo! JAPAN Shopping," instead of the traditional large-scale promotions, we will implement measures to promote daily use which will lead to user stickiness. In addition, as described later, we will promote the cross-use of the Group's services to efficiently expand the user base. By redistributing the streamlined management resources to more profitable services, we will improve the profitability of the entire Commerce Business.

2. Expansion of Group Ecosystem Utilizing Group Assets

The LY Corporation Group will aim for a sustainable growth by connecting the three action points: LINE, Yahoo! JAPAN, and PayPay, whose user bases are among the largest in Japan, to promote the cross-use of Group services and to expand the Group ecosystem.　

• Launch of cross-Group paid membership program

  We will maximize the user base of the Group utilizing the paid membership program provided across the Group. The program provides benefits which combine the benefits provided in the Group's services. From before, we have operated a monthly membership service, Yahoo! JAPAN Premium, which allows users to save at various services of Yahoo! JAPAN, such as Yahoo! JAPAN Shopping. Yahoo! JAPAN Premium boasts a membership of 23 million, and serves as an important user base for our e-commerce services. In fact, approximately 70-80% of transaction value of Yahoo! JAPAN Shopping is derived from the repeated use by Yahoo! JAPAN Premium members. By adding the benefits of Group services such as those of LINE with monthly active users exceeding 95 million^*1, and PayPay with registered users exceeding 58 million^*2 to Yahoo! JAPAN Premium, we will promote the cross-use of Group services, increase the users of the commerce services, and enhance user stickiness.

• Promoting cross-use in the reuse business

  Reuse business has two services with differing characteristics: YAHUOKU!, an Internet auction service, and PayPay Flea Market, a flea market app. By reinforcing the linkage between the two services, we will aim to increase the transaction value. Among competing services, the average transaction price in YAHUOKU! is relatively high, and the heavy user base, including overseas users, accounts for the majority of the transaction value. Meanwhile, PayPay Flea Market, launched in 2019, has succeeded in attracting many new users by taking advantage of the reasonable commission price, the simplicity of the app, and the flea market format that allows sellers to set the selling price, unlike the auction format. We will reinforce the linkage between the two services to promote users of PayPay Flea Market to use YAHUOKU!, and will aim to covert these users to heavy users as well as to increase the average transaction price.

1. *1 Number of monthly active users (Japan) of LINE app as of March 31, 2023.
2. *2 Number of PayPay registered users as of June 2023.

Sustainability Initiatives

Converting Energy Used in Logistics Bases to Renewable Energy

In the Commerce Business, the LY Corporation Group works to reduce greenhouse gas emissions throughout the supply chain, particularly at subsidiaries, such as ZOZO, Inc., and ASKUL Corporation, which have their own logistics bases.

ZOZO, Inc. ("ZOZO") made its "2030 Carbon Neutral Declaration" in February 2022, which aims to reduce greenhouse gas emissions from its business activities to virtually zero by FY2030. In addition, in January 2023, it made a declaration named "Net Zero," which aims to reduce supply chain emissions, including greenhouse gas emissions by business partners, to virtually zero by 2050. To achieve this, ZOZO has introduced 100% renewable energy derived from biomass and solar energy with FIT Non-Fossil Certificate with Tracking, etc., to its logistics bases: ZOZOBASE Narashino 1 and ZOZOBASE Tsukuba 1 from January 2022; ZOZOBASE Tsukuba 2 from June 2022; ZOZOBASE Narashino 2 from September 2022; and ZOZOBASE Tsukuba 3 from March 2023. As a result, more than 95% of ZOZO's electricity consumption is derived from renewable energy, resulting in the company's achievement of its interim goal of "more than 80% of the electricity used by the company will be generated from renewable energy sources by FY2025," approximately two years ahead of schedule.

ASKUL Corporation ("ASKUL") announced the "2030 CO₂ Zero Challenge" in 2016. Its target is to reduce CO₂ emissions from its business sites and logistics bases to net zero by 2030, and is proactively promoting the introduction of renewable energy mainly in its logistics bases. ASKUL introduced renewable energy-derived electricity in one of its logistics bases, "DCM Center" in April 2022, and converted all of the electricity used in its head office to renewable energy-derived electricity in the following May. As a result, ASKUL has achieved a 65% renewable energy usage rate among its electricity usage.

• Introduced 100% Renewable Energy-derived Rlectricity to Logistics Centers. More than 90% of Our Bases are Now Powered by Renewable Energy
• ASKUL Switches All Electricity Used in Toyosu Head Office to Renewable Energy. Achieved 65% Renewable Energy Usage Rate for the Entire Group (Japanese Only)（231KB）

Initiatives to Realize a Recycling-Oriented Society

LY Corporation contributes to the building of a circular economy through its reuse-based e-commerce business, which consists of YAHUOKU! and PayPay Flea Market. We are actively working to help create a recycling-oriented society by promoting "reuse," in which unused items are given to those who need them and reused. The reuse of items reduces the consumption of new resources, as well as CO₂ emissions from the production of goods and disposal of waste. Each platform also focuses on charity projects and social contributions.

• YAHUOKU! (Japanese only)
• PayPay Flea Market (Japanese only)

To utilize limited resources effectively, reduce CO₂, and fulfill its responsibility as a supplier, ASKUL works on the resource recycling of clear plastic folders, which ASKUL has one of the highest sales volumes in Japan. Used clear plastic folders collected from nationwide participants are sorted, recycled, and reused as raw materials for new products. LOHACO, ASKUL's BtoC service, also cooperates with brands and companies to reduce waste to zero by selling good products at outlet prices that would otherwise have been discarded without reaching customers for a variety of reasons.

• ASKUL Report 2022（4.08MB）
• ASKUL Resource Recycling Platform (Japanese only)
• LOHACO “GO Ethical Project" (Japanese only)

To solve the problems of mass production and mass disposal in the fashion industry in recent years, ZOZO provides ZOZOUSED, a reuse business that buys used clothes from users and sells them, and "Replacement Discount," a trade-in service that promotes the recycling of used and new clothes. Furthermore, to address one of its materiality issues, "Highlight sustainable fashion choices to improve users' experience," ZOZO operates a permanent content, "elove by ZOZO" in ZOZOTOWN, which presents sustainability information on fashion. ZOZO also works to realize a sustainable fashion world by operating "Made by ZOZO," a production support platform business that aims to eliminate inventory risk for fashion brands.

• ZOZOUSED's Sustainable Framework
• "elove by ZOZO" (Japanese only)
• “Made by ZOZO” -- Production support platform (Japanese only)

Major Services and Products

Merchandise E-Commerce

Shopping Business

Reuse Business

ASKUL Online BtoB Business

Services E-Commerce

Other