Zawatt snags $2M to attract Asian consumers with authentic second-hand from Japan

From the left: Zawatt CEO Daisaku Harada, CTO Nobuaki Suzuki

Tokyo-based Zawatt, the company behind an online auction site for branded items called Smaoku, announced today that it has fundraised 250 million yen ($2 million) from IMJ Investment Partners (IMJ-IP), China’s SIG Asia Investments, and its intimately partnering VC firm MS Capital in Japan. Upon the funding, Zawatt will expand their second-hand transaction business for the Japanese market in partnership with T-Media Holdings, the parent company of IMJ-IP. Meanwhile, the startup will focus more on international transactions exporting second-hand items to Asian countries (including mainland China), in partnership with SIG Asia Investments and MS Capital.

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Since its launch in May 2011, Zawatt has released several web services including WishScope (social list bulletin board) and Ohako (karaoke companion finder). The company launched Smaoku in October 2013 and won KDDI Mugen Labo’s 5th batch demo day with the “real-time auction” concept that makes users feel as if they were in a real auction site when buying items online.

There are many rival C2C (consumer-to-consumer) apps in Japan such as Mercari and Minne, not to mention Yahoo Auction. Furthermore big companies like Rakuten and Zozotown have recently launched flea market apps, triggering a fierce competition in this space. But Zawatt found an interesting insight from a survey that they conducted on buyers using the Smaoku app.

Zawatt CEO Daisaku Harada explained:

Our survey found that many foreigners have purchased items using our platform dozens of times. When you go to a real auction site, you will see a number of buyers from China, Taiwan, Thailand, India, and other Asian countries, where they typically fetch items for a very high price that average Japanese people can’t pay at all. There’s a need of appraised Japanese second-hand products rather than Made in Japan products.

That’s why we decided to make the platform more focused on delivering second-hand items from selling users in Japan to buying users in the overseas, enabling sellers to sell at a higher price but buyers to obtain rare items with ease. However, many Japanese users can’t speak English so we provide users with back-end support in logistics and communication with their counterpart.

There are a number of barriers in language, payment solutions, and logistics in transacting with unfamiliar and different markets, so new businesses have come up to help people overcome these obstacles. Seeing how much wealth trading merchants in the world have successfully made through their business, it is obvious that moving intelligence or products to a different market in higher need can create a great value.

For Japanese users who want to sell their items overseas, we have seen more than a few platforms including eBay and Taobao as well as FlutterScape that Japanese startup Monoco had been running before their pivot. However, what is different from the past is that C2C services have penetrated the general consumer market globally. Leveraging the high advantage of the Japan brand, the interface entertaining users with the realistic feeling of auction sites as well as lowering the stakes of international transactions, it will be interesting to see how the Smaoku app attracts consumers in Asia.

Prior to this funding, Zawatt fundraised about 10 million yen from unnamed angel investors and CyberAgent Ventures (CAV) in a seed round in 2011 and about 40 million yen from Mizuho Capital and SMBC Venture Capital in 2012, followed by securing about 50 million yen from CAV and Adways in a series A round in 2013.

Edited by Kurt Hanson
Proofread by “Tex” Pomeroy