Making online auctions easier

With Internet access rapidly spreading through the mobile phone network in Japan, many people are getting involved in online auctions. But Japanese people are still suspicious about the security of online trading.

One company that is having success is U.S. company Snappy Auctions, which now has a branch in Japan. Acting as an intermediary online auctioneer on behalf of individuals, the company says that 91% of items it handles receive successful bids.

Heading the company is President/CEO Akira Tsuchiya. Born in Kobe, he obtained his BA in law at Doshisha University. He started his career at a trading company, and then became a business consultant. In 1995, Tsuchiya launched his own franchising company for the Gyukaku yakiniku restaurant. Leaving his franchising company, he started Snappy Auctions in 2007, which currently runs shops in Akihabara, Shimo-meguro and Komazawa in Tokyo to collect items for auction.

Japan Today reporter Taro Fujimoto visits Tsuchiya at his main office in Akihabara to hear more about his business strategy for online auctions in Japan.

What does Snappy Auctions do?

Have you ever used any online auction? It’s actually very complicated. You have to sign in, take photos of items, write copy, answer questions from people, pack the items and ship them. We do all this on behalf of customers. People just need to drop by one of our shops with items they want to auction. We estimate possible prices based on our database of past auction history, and take a commission once the items are sold. We place items on Yahoo Auction in Japan, eBay in the U.S. and Taobao in China.

What’s your corporate philosophy?

Our corporate philosophy is “discovering value.” We don’t buy items from customers. The company and customers share the same goal of selling the items for higher prices by discovering their value together. Through what I call “borderless auction,” I would like to introduce the value of Japanese items worldwide.

Do you accept anything?

We don’t accept some items that we cannot legally deal with. Typically, our bottom line for expected prices is 5,000 yen, because of some internal costs. However, if we think some items can be auctioned at a good price, we will accept any items even if we haven’t dealt with them before.

What kind of people use Snappy Auctions?

About 60% of our customers are women aged between 30 and 40. This could be partly because our shops are located in residential areas. We target richer people in residential areas because they tend to have valuable items.

However, we’ve found potential customers, who are elderly people. The elderly, who cannot use the Internet, would like to sell culturally valuable items because many pensioners are anxious about their financial situation after retirement. I think our service can contribute to society that way.

How successful is Snappy Auctions Japan?

About 91% of items get successful bids through our services, while 20% of total items placed by individuals on Yahoo Auction are bid for. This high bid rate is the result of our services, such as taking good photos, writing copy and setting a proper starting price.

What if items are left unsold?

If customers don’t want us to return the items to them, we will dispose of them, use them for charity or sell them at our shops over the counter.

Do you have any other services?

We also have a service for corporate clients. For example, some companies need to sell unnecessary equipment. But they don’t want to sell it online by using their company names. Another service for companies is aimed at their employees. We visit their offices and collect employees’ items to sell through auctions. In this case, we simply take a commission from individuals like ordinary customers, not from companies.

What made you import the Snappy Auctions business from the United States?

In November of 2006, I went to the U.S. looking for a new franchise business to import to Japan. I saw Snappy Auctions and thought its service would be popular in Japan because we hadn’t had anything like it. Online business models in the U.S. often take five or six years to come to Japan. In the U.S., Snappy Auctions currently has 280 million users through its partner services, while Yahoo Auction in Japan has 6.8 million users. So I thought there would be potential business opportunities in Japan.

What's your relationship with Snappy Auctions U.S. like?

We have “master franchise rights” with which we can exclusively localize Snappy Auctions services in Japan.

What's the online auction market in Japan like?

According to our survey, people in Japan have a sense of insecurity about online auctions because they worry about money troubles and disclosure of their personal information. These factors make people reluctant to make use of online auctions.

In the U.S., online auctions are used by people on a daily basis. PayPal service contributes to such frequent use of online auctions. Although PayPal operates in Japan, bank transfer is still the major payment method in Japan which is not as smooth as PayPal. In Japan, trust building through face-to-face communication is also very important.

Do you have competitors?

Yes, we do. But they don’t have shops like us. They ask customers to send items to their offices which are often apartments. Their reputation is totally different from ours.

Tell us about your foreign customers.

Foreign residents in Japan, such as business people and embassy officials, can speak and understand Japanese to some extent but they can’t read it well, which is important if they wish to sell anything through an online auction. So I think these foreigners are virtually similar to old people who cannot use the Internet.

What kind of services do you have for foreigners?

We have English-speaking staff at our shops as well as English information on our website. Chinese is available at the Akihabara shop, as well.

How are sales going?

Each shop generates typically 4.5 million yen in sales a month. A typical bid price is 15,000 yen. What we have noticed is that frequent customers buy new items with the objective of selling them one day through our services. They keep the boxes the items came in, for example, for better pricing for future auction.

What was the most difficult thing when you got started?

The pawnshop culture in Japan creates a negative image about our services for many people. It was difficult to make people understand that our shops are a place for them to bring items for auction, not for us to buy them. We want people to enjoy auctions.

What’s the future prospect for the business?

I’d like to franchise Snappy Auctions nationwide. In the future, we would like to pay customers by cash at our shops. Since customers currently have to pay bank transfer fees, we would like to reduce such costs somehow to improve customer satisfaction.

What’s your management style?

We train our employees based on our corporate philosophy. I try to place the right staff in the right jobs, which is very important. I also encourage staff to learn to “think” by themselves and not to be passive.

What’s a typical day for you?

I get up at 6 a.m. and work at home for about one hour. I come to the office between 7 and 8 a.m. I go home around 9 and 10 p.m. By home, I mean a hotel when I am in Tokyo, because my house is in Kobe.

How do you spend weekends?

Since our shops open on weekends as well, I work on Saturday and Sunday. But when I don’t work, I play with my daughters, 12, and 6. _For further information, visit:_http://snappyauction.jp/ or http://snappyauction.jp/english.html

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