The Yomiuri daily earlier reported that Amazon Japan, which currently sells goods directly to consumers via its website, planned to start a virtual mall later this year to allow retailers to sell products such as clothes and food on its site.
Shares in Rakuten, operator of Japans biggest web-based shopping mall, and Yahoo Japan both dropped nearly 8% by the close, against a 0.8% fall in the broader market. Rakuten currently holds a 43% share of Japans $4 billion virtual mall market, followed by Yahoo Japans 17%, according to research firm Fuji Keizai Management.
Fuji expects the market to grow by 47% in the next two years. Web-based shopping malls generate nearly 40% of total sales done on the Internet or on mobile phones in Japan.
Amazon Japan also aims to mirror the success of its US parent, which has been operating a virtual mall on its website since November 2002, offering products from other retailers ranging from clothing and kitchenware to electronics. The virtual mall now accounts for about 30% of the products sold on Amazon.coms website, a spokeswoman at the Japan unit said. The spokeswoman said no details on its virtual mall had been decided, including launch timing.
The companys president Jasper Cheung is scheduled to hold a briefing on a new business on August 3, but she said this would not be about a virtual mall. Ichiyoshi Research Institute analyst Hiroshi Naya said he did not expect Amazons entry to have an immediate impact on its rivals. Unless they build up a competitive business model with somewhat strict operational rules and policies that allow them to become profitable, it will be difficult to grow big enough to shake rivals, he said.