Yahoo Japan, a subsidiary of tech and investment conglomerate Softbank Group, agreed to buy Zozo, Japan’s largest online fashion retailer, for $3.7 billion to help compete against Amazon and Rakuten. Zozo’s mall Zozotown controls about 50% of the market for mid- to high-end fashion.
Zozo has recently struggled with falling profits, and investors have grown concerned about Zozo’s growth prospects. Zozo also made a failed attempt at made-to-measure clothing, and later closed its European and U.S. operations.
Japanese billionaire Yusaku Maezawa (pictured above with SoftBank Group chairman and CEO Masayoshi Son) announced his plans to sell about 30% of his stake to Yahoo Japan, bringing him a windfall of around $2.3 billion and leaving him with about 6% stake in the company. This comes after a series of missteps which have diminished the company’s market value by more than half from a peak of $14 billion last year.
Best known for his extensive art collection and space travel ambitions tied to Elon Musk’s SpaceX, Maezawa will step down as chief executive. He recently sold part of his art collection at Sotheby’s auction house amid reports that his finances are low.
Maezawa is given credit for creating a trendy, user-friendly website during the past decade, a time when there was great doubt over whether Japanese consumers would purchase clothing online.
The site’s early stores, including A Bathing Ape, Hysteric Glamour, and United Arrows, still has little competition. Zozo was hit by the departure of several of its brands, some of them displeased with its discounting policies, and others preferring to start their own e-commerce services.
Initially, Zozo primarily sold products from popular high-end select shops, receiving hefty commissions of more than 30 percent of the sales.
The newly appointed CEO is Kotaro Sawada said he is “the direct opposite” of his predecessor. In a statement, he promised to keep the company interesting, while at the same time bringing “much-needed stability” to its management.
The Yahoo-Zozo deal comes at a time of change in the Japanese tech industry, in which Rakuten is launching wireless telecom services in a direct challenge to Softbank’s cash-cow business and Amazon has embarked on an aggressive fashion push.