Yahoo Shopping In Japan Is Growing 30% YoY, Sales Benefiting From Discounts For Loyalty Shoppers

• Shares of Yahoo! Inc. YHOO have declined 31 percent year to date from a high of $50.15 on January 2.
• Morgan Stanley’s Tetsuro Tsusaka has maintained an Equal-weight rating on Yahoo Japan Corporation, with a price target of ¥500.
• Yahoo Shopping, which has an annual GMV of ¥370 billion, is now achieving year on year growth of 30 percent.

Analyst Tetsuro Tsusaka believes that “Japan’s e-commerce market growth rate is holding at a certain level – period in which huge GMS-type EC malls drive growth is coming to an end.”

Tsusaka explained that GMS-type malls are fast approaching maturity, amid a struggle to sign on retailers. Going forward, the battle for a share of a more limited market is likely to face the larger GMS-type EC malls.

“Loyalty points also represent a burden of resources to fund price cuts by EC mall operators, and so are likely to weigh on margins,” Tsusaka stated, given the signs of “spreading discounts as loyalty points are awarded to win consumers.”

Yahoo Japan’s priority at present is to expect the B2C ecommerce business through continuing investments. Therefore, it is likely to be difficult for the company to build synergies between its existing/focus businesses and the B2B ecommerce business.