EX Marks the Spot in Japanese Classifieds

I lived in Japan for a few years and still maintain a few networks there. For a little while I even had some fair facility with the language. Well, at least enough to understand the original Dragonball anime (Dragonball Z was still manga at that time). This by no means makes me an expert--indeed I'm far from it--so please excuse the few liberties I take in generalizing my experience there. Consider the five pillar categories of Classifieds: goods, autos, jobs, real estate, and services. Win any two of these, and you'll probably win your Classifieds market. Let's talk about goods and autos. Goods in Japan = Electronics and Media (books, music, movies, and video games). Most mainstream users in the West will change technology every 2-3 years. Early adopters perhaps 6-9 months. Innovators 3-6. In Japan, technology changes every 30 days. 30 days! The Japanese consumer wants it compact, personalized, and jam-packed with every feature imaginable even if they aren't going to use those features. It's just good to know that biometric scanner is on your toaster if you ever need it. The electronics mainstream in Japan is shifted to the left, closer to the early adopters and innovators. So there isn't much of a market for second-hand electronics goods. By the time you tire of it and get around to selling it, next month's crop of hot, new gadgets will be out and no one will bother with an old model. The majority of used cars from Japan are actually exported. Some 1.5M cars were exported from Japan in 2007 (ref: Japanese Used Motor Vehicle Exporting Association). These are mostly to neighbors, namely Russia, New Zealand, and South East Asia. So if second-hand goods don't play well locally, what might a Japanese Classifieds strategy take? I can think of three:

• exports
• exchange
• expat

Providing a Classifieds experience that simplifies the export process, for electronics or cars, will position that player well in the lead. These would include considerations like: payment escrow, car inspection/verification, export duties, and shipping. Further, this kind of play will require local expertise and a local sales team to bootstrap the business. Video games rule. 32% of Japanese play video games regularly and spent about $2.5B in 2009. 64% of Americans play video games regularly and spent about $22B in 2009. (ref: Computer Entertainment Supplier's Association, Enterbrain magazine). That's a whole lot of gaming. There are opportunities for an export market here, but this is complicated by compatibility issues as well as language translation problems in the games themselves. So perhaps an exchange/swap model is a viable Classifieds play. Finally, there are about 2.2M registered expats in Japan (ref: Ministry of Justice). 40% of surveyed expats in Japan have income in excess of $200,000/year (ref: Expat Explorer survey). This is a potentially large and loyal market. Imagine a local offering available in several languages. This would be uniquely positioned to win loyal expat customers. Traditional local Classifieds have not done well in Japan. There are several niche plays that could be an interesting play for a local Classifieds player in Japan: exports, exchanges, and expats.
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