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Why eBay Singled out Japan in Deal with Giosis

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Mar. 13 2018, Updated 9:01 a.m. ET

As much as $700 million for the deal

Of Giosis’s many operations in Asia, eBay (EBAY) singled out the Japan business for purchase. The financial terms of the deal were not disclosed, but Bloomberg reported that eBay was paying $700 million to acquire the assets of Giosis in Japan. Those assets include the online shopping platform Qoo10.

The investor reaction to eBay’s deal with Giosis was largely muted, with shares of eBay falling nearly 1.6% on the day it disclosed its purchase of Qoo10 and other Japanese assets of Giosis. By comparison, Amazon.com (AMZN), Alibaba (BABA), and JD.com (JD) fell 0.66%, 3.04%, and 3.60%, respectively, that same day. PayPal (PYPL) shares jumped 0.14% on the day eBay announced the asset transaction deal with Giosis.

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A lot of runway in Japan’s eCommerce industry

While the market may be struggling to understand why eBay decided to take over Giosis’s Japan business and subsequently relinquish its stake in Giosis, eBay has portrayed its transaction with Giosis as a strategic move that it hopes will pay off handsomely in the future.

Chief executive Devin Wenig said in a statement that “the acquisition of Giosis’ Japan business significantly expands eBay’s footprint in Japan, one of the largest e-commerce markets in the world.”

“There is this perfect convergence of growing wealth and technology adoption…We think there’s a lot of runway,” Wenig said in an interview with Reuters.

Japan’s retail eCommerce sales exceeded $95 billion

Japan is the second-largest eCommerce market in Asia-Pacific, with retail eCommerce sales of more than $95.3 billion in 2017, according to eMarketer. Retail eCommerce sales in China reached more than $1.1 trillion last year. Overall, retail eCommerce sales in Asia-Pacific are forecast to exceed $3.0 trillion by 2021.

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