While it is true that Yahoo has fallen way behind the tech giants of the day, its joint venture Yahoo Japan remains one of the world’s biggest internet companies in the world. At this point in time, Yahoo Japan is the most dominant internet company in the Asian country and continues to consolidate its position through high-value acquisitions. It owns a slew of highly profitable online businesses and is now trying to stave off challenges in the e-commerce space by companies like Amazon. To that end, the Japanese internet giant has decided to acquire fashion e-commerce company Zozo in a deal worth $3.7 billion. Zozo is the biggest fashion e-commerce company in Japan, and Yahoo Japan is going for this particular acquisition in order to build its portfolio so that it can battle harder against Amazon.
The fashion e-commerce space in Japan has grown at a breakneck pace over the years and has grown into a 1.8 trillion Japanese Yen industry. However, other e-commerce companies like Rakuten and Amazon have not been able to make major headway into this space as yet. Zozo remains the leader, but the company has had a tough time over the past year and has seen its valuation erode significantly from the heights of last year. At one point in 2018, the company had a valuation of $14 billion, but currently it is worth less than half of that. Hence, this could prove to be a crucial deal for Yahoo Japan. Not only is the company able to get the biggest fashion e-commerce firm at a reduced valuation but it is going to get into a space in which its rivals have not been particularly successful so far.
That being said, Amazon has made it clear that it is going to be a name to be reckoned with in the fashion business and it goes without saying, that Yahoo Japan has its task cut out over the next few years. Founder and the Chief Executive Officer of Zozo, Yusaku Maezawa, is going to step down from his position after the deal is finalized. However, the deal will certainly prove to be a massive reward for the work he has done at the company so far. After selling around 30% of his stake in the company, he will get a payment of $2.3 billion. He will still have a 6% stake in the company.