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 4.83% year on year to JPY14.6760 trillion in 2023, while the EC ratio was up 0.25 percentage points compared to the previous year to 9.38%^*.
Following the trend from last year, the market continued to expand steadily, even though the stay-at-home demand eased as consumers returned to physical stores. Meanwhile, the role of physical stores in retail is evolving, and efforts to integrate e-commerce with brick-and-mortar stores are advancing. The trend of leveraging the unique characteristics of physical stores to enhance their synergy with e-commerce and improve customer experience is expected to accelerate.

On the other hand, the scale of the B2C EC market in the service sector largely increased to JPY7.5169 trillion (up 22.27% year on year),^* finally exceeding the pre-COVID level. This growth was fueled by further increase in consumer demand for outdoor activities, with travel services, dining services, and ticket sales all continuing to show strong growth following last year’s trend.

The market size of consumer-to-consumer e-commerce (C2C EC), including internet auctions and flea market apps, is estimated to be JPY2.4817 trillion (an increase of 5.0% year on year).^* The population of reuse service users is anticipated to grow further, driven by factors such as higher cost of living, greater environmental consciousness leading to the revaluation of reused items, diminished reluctance to purchase reused goods among younger generations, and an increase in purchasing behavior that considers resale value.

With the full-scale arrival of the post-COVID era and evolving consumer behavior, the use of e-commerce in Japan continues to increase, suggesting a steady growth in the Japanese e-commerce market.

* Ministry of Economy, Trade and Industry, FY2023 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, 2024.
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 March 2024.
4. *4 LINE Brand Catalog is a shopping website that rewards users with points for purchases made through the listed shops.

Growth Strategy

Balancing Growth and Profitability

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

1. Reinvigorating the Commerce Business Using 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.　

• Promoting cross-use by LYP Premium members

  We will maximize the user base of the Group utilizing the Group-wide paid membership program which provides a combination of benefits from Group services. The number of members of LYP Premium, a program launched in November 2023, amounted to 24.44 million as of March 31, 2024. Benefits available on LINE services were added to the existing benefits on Yahoo! JAPAN services, enhancing the convenience and value in using the services of LY Corporation. As a result, more than half of the new LYP Premium members who joined the program in between December 2023 and March 2024 came via LINE.

  Strengthening the acquisition of LYP Premium member also contributes to the increased use of Yahoo! JAPAN Shopping. The transaction value of Yahoo! JAPAN Shopping in FY2023 Q4 recorded a YoY growth of over double digits despite the ongoing optimization of sales promotional costs—a testament to the outcome of cross-use.

  We will continue to increase the users of the commerce services and enhance user retention by strengthening the loyalty program leveraging Group synergies and reviewing the benefits.

• LINE revamp

  From FY2024 onwards, we will gradually revamp the LINE app and introduce various touchpoints within the app that connect to services offered by LY Corporation, such as commerce and local services. This initiative aims to promote cross-usage of services. In e-commerce, we will newly add a shopping tab in the LINE app to provide shopping experiences starting from LINE. This represents a unique e-commerce platform offering a new purchasing experience within the LINE app, which is typically used for communication with friends. Through this measure, we aim to enhance our Group's overall e-commerce transaction volume.

2. Optimization of Promotion Strategies

In the Commerce Business, we revised the promotion strategy from the second half of FY2022 to optimize sales promotional costs, resulting in an improvement in profitability. We will continue to aim for a sustainable growth by balancing growth with profitability. Especially in Yahoo! JAPAN Shopping, instead of large-scale sales promotion campaigns, we will aim to retain users by implementing promotional measures that encourage more everyday use, and will also aim to expand our user base efficiently by promoting cross-use between Group services. In addition, we will aim to improve the profitability of the Commerce Business as a whole by redistributing our streamlined management resources to more profitable services.

Sustainability Initiatives

Addressing Diversified Delivery Needs

At present, the Japanese transportation and logistics industry is urgently seeking solutions to the so-called “2024 logistics problem” due to the restrictions on overtime work for truck drivers, etc., in accordance with the Work Style Reform Laws that came into effect in April 2024.
In tandem with the "Redeliveries Reduction Month"^*1 implemented in April 2023 by the Ministry of Land, Infrastructure, Transport and Tourism (“MLIT”) and the Ministry of Economy, Trade and Industry of Japan, Yahoo! JAPAN Shopping has worked to reduce redeliveries by encouraging users to place orders with a specified delivery date, checking the delivery status, and utilizing various delivery methods such as convenience store pickup, home delivery lockers, and package-drop service, as well as designing an ordering flow that makes it easy to use these methods.^*2
“Otoku Designated Delivery” (Value-Added Designated Delivery Services) enables users to receive PayPay Points by selecting this shipping method when ordering items that do not need to be received immediately, thereby decentralizing and equalizing shipping and delivery operations. Users can choose the most reasonable delivery method according to their needs while stores and delivery companies can expect to see a reduction and dispersion of shipping and delivery workloads during sales periods, etc. Through this, we aim to benefit all three parties concerned. To promote the effective “package-drop service” for deliveries that are not received when the recipient is out, which are the cause of redeliveries, we also launched a campaign where users can earn PayPay Points just by specifying the package-drop service as a delivery method, in the hope that this would encourage users to recognize and use this delivery option and serve as a catalyst for future behavioral change.

For ZOZOTOWN, ZOZO changed the default setting for the delivery method selected by users when ordering products to the package-drop service. Compared to deliveries before the change in the default setting, the number of orders for the package-drop service more than doubled, and of the orders that can use this option, about 70% are now delivered unattended.^*3 In the past, ZOZO has worked to improve loading efficiency during deliveries by reducing the volume of goods through measures such as selecting appropriate packaging materials for each product, increasing the number of orders that can be combined into a single delivery (Order Consolidation), and improving the efficiency of trunk line transportation by utilizing Yamato Transport Co., Ltd. Relation Center.^*4
ZOZO is working to improve user experience by recommending the use of the package-drop service by introducing Yamato Transport’s EAZY service and expanding the range of orders that can specify the package-drop service as a delivery option. ZOZO is also working to reduce the burden on delivery drivers and CO₂ emissions by reducing the number of re-deliveries. ZOZO expects further benefits from the introduction of these measures.

By responding to diversifying delivery needs and holding campaigns to reduce the number of redeliveries, we aim to reduce the burden on delivery drivers and contribute to solving environmental issues by reducing CO₂ emissions.

1. *1 MLIT (external website) (Japanese only)
2. *2 Yahoo! JAPAN Shopping, Notice to users (Japanese only)
3. *3 The percentage of orders delivered using the package drop service was calculated based on all orders received during September 1-27 and October 1-13, 2023, that offered this delivery option. For details on eligible orders and other information, please refer to “What is Package-Drop?” (Japanese only)
4. *4 For details, please refer to the following.
   ESG/CSR News dated February 1, 2021 “Packaging Materials Changed to Environmentally-Friendly Materials“ (Japanese only) 」
   ESG/CSR News dated April 1, 2023 “Streamlined Deliveries by Expanding Eligible Items for Order Consolidation“
   ESG/CSR News dated June 7, 2023 “Streamlined ZOZOTOWN’s Deliveries in Hokkaido and Kyushu Using Yamato Transport’s Relation Center“
5. *5 “A First in Japan! Non-Face to Face Pickup Available from June 24 for Purchases in ZOZOTOWN Using “EAZY,” a Service by Yamato Transport” (Japanese only) (Press release, June 16, 2020)

Initiatives to Realize a Recycling-Oriented Society

LY Corporation contributes to the building of a circular economy through its reuse-based e-commerce businesses, Yahoo! JAPAN Auction and Yahoo! JAPAN 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.

• Yahoo! JAPAN Auction (Japanese only)
• Yahoo! JAPAN 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 2023 （2.47MB）
• 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.

“Replacement-Discount” service, offered on ZOZOTOWN, creates a system that circulates clothing, helping to reduce the disposal of fashion items.
Most items that cannot be resold on ZOZOUSED are purchased by multiple clothing buyers that ensure appropriate processing. These items are generally sold on domestic e-commerce platforms and in stores. In addition, when collecting trade-in items from customers through the Replacement-Discount service, ZOZO encourages the use of ZOZOTOWN's original non-woven fabric reusable bags, which can be used repeatedly.
By utilizing AI to set buying and selling prices, ZOZO strives to offer the most beneficial evaluations to its customers, thus promoting the circulation of fashion.

Over the past approximately 10 years since its inception, ZOZOUSED has made improvements to provide better services to its customers, which has also contributed to reducing environmental impact. By redistributing items collected from customers through ZOZOUSED, ZOZO has been able to prevent CO₂ emissions that occur from the production to disposal and incineration of newly manufactured items. Assuming this, since the start of the service, ZOZO has cumulatively reduced CO₂ emissions by about 140,000 tons.^*2 Additionally, the CO₂ emission reduction achieved in FY2022, when converted to the absorption capacity of Japanese cedar trees, is equivalent to approximately 1.3 million trees.^*3

• ZOZOUSED's Sustainable Framework

1. *1 Replacement-Discount : A service in which customers trading in items previously purchased on ZOZOTOWN receive an immediate discount equivalent to the trade-in value.
2. *2 From November 2012 to March 2022. Assumes mitigation of CO₂ emissions from the production process to disposal and incineration of newly produced items. The number of collected items was converted to weight (Source: Ministry of the Environment, “Sustainable Fashion – Fashion for the Future” (Japanese only) ) and multiplied by the CO₂ emissions per kilogram of item (Source: Ministry of the Environment, “Method of Calculation for 3R Unit Value” (Japanese only) （3.9MB）).
3. *3 Assuming that one Japanese cedar tree absorbs about 14 kg of CO₂ emissions (Source: Kanto Regional Forest Office, “Carbon Dioxide Absorption Capacity of Forests”).

Major Services and Products

Merchandise E-Commerce

Shopping Business

Reuse Business

ASKUL Online BtoB Business

Services E-Commerce