Efforts to improve security in its services helped major Japanese flea market app operator Mercari Inc. post a record net profit in its consolidated financial results for the fiscal year ended June 2026, according to Masato Yamamoto, the company's chief of Japanese operations.

The flea market app, also named Mercari, recently introduced features such as item authentication and anonymous returns, and the company will continue to make efforts to ease users' concerns, Yamamoto said during a recent interview with The Yomiuri Shimbun.

The app operator will also focus more on its cross-border e-commerce business, according to Yamamoto. Mercari now offers a "Global App," which allows overseas users to directly purchase items from its Japanese version. The company plans to expand the number of countries and regions where this service is available from three at present to more than 100 in the medium to long term, Yamamoto said.

The following is excerpted from the interview.

The Yomiuri Shimbun: Mercari posted a record net profit of 35.4 billion yen in its consolidated financial results for the fiscal year ended June 2026, up 36% from the previous fiscal year. What are the factors that drove this growth?

Masato Yamamoto: We believe that our efforts to improve the security of our service have enabled our customers to list items and shop with peace of mind, and that this contributed to profit growth. We saw an increase in transactions involving higher-priced items and in our number of repeat customers.

For example, until recently, any buyer who wanted to return an item had to exchange addresses with the seller, but now we have introduced a system that allows customers to return purchases anonymously.

We are now using AI to identify suspicious sellers, transactions and listed items based on historical transaction data. We are also strengthening cooperation among our specialized AI, customer support and anti-fraud teams.

Strengthening measures against counterfeit, stolen goods

Yomiuri: How do you plan to deal with people listing counterfeit or stolen goods?

Yamamoto: In September 2025, we established the "Mercari authentication center," which is directly operated by our company, and introduced a service to check whether listed items are genuine. We have also made various efforts to reduce fraudulent transactions, including requiring identity verification for high-value transactions. We further strengthened our security measures in July 2026 by entering into an agreement with the National Police Agency to share information regarding fraudulent transactions.

Yomiuri: Which specific AI models are you using?

Yamamoto: We use a proprietary AI model developed in-house, as well as external models from sources like OpenAI and Anthropic. For each task, such as fraud detection or authenticity verification, we use a combination of the most appropriate AI systems. We have data from billions of past listings, and we aim to leverage this information to improve the accuracy of the AI models we use.

Huge demand for items 'used in Japan'

Yomiuri: What potential do you see for cross-border e-commerce, which allows overseas users to directly purchase items from Mercari's Japanese version?

Yamamoto: Items related to Japanese content -- such as anime, manga and video games -- are very popular. However, separate from that, I feel that Japanese people enjoy an exceptionally good reputation and high level of trust among overseas users. There's trust that if an item was used by a Japanese person, it will be of high quality, authentic and well-maintained. Items made in Japan are popular and well-trusted overseas, but so are items used in Japan.

Japanese people have the virtue of taking good care of their belongings, and this trait is reflected in Mercari. Since our company was established in 2013, we have aimed to achieve global success as a Japanese startup. However, at the same time, we want to serve as an ambassador for Japan, conveying the values of our nation and its people to the world.

Yomiuri: What are your targets for cross-border e-commerce service?

Yamamoto: External proxy services enable international customers across about 100 countries and regions to indirectly purchase items listed in Japan. On the other hand, Mercari currently provides direct cross-border e-commerce service only in the United States, Hong Kong and Taiwan. We want to expand this service to more than 50 countries and regions by 2028, and to more than 100 in the medium to long term. The ongoing depreciation of the yen will also serve as a tailwind for us. We plan to use AI to translate listing information so that we can support the languages used in each country.

Targeting 'hidden assets'

Yomiuri: In light of rising prices in Japan, what trajectory do you expect the reuse market to experience going forward?

Yamamoto: The reuse market is growing both in Japan and abroad, but we believe there are still 'hidden assets' in (Japanese) households. Last year, we released a report estimating that the hidden assets of Japanese households are worth about 91 trillion yen in total -- an average of about 715,000 yen per person. People might think this figure is too high, but on Mercari you can sell things you personally don't see the value in.

Wireless earbuds are a good example. It's common for people to lose just one of a pair of them. From the owner's perspective, there might be no worth in a lone right earbud, but it could hold great value for someone else who has lost their own right earbud.

I believe that the more awareness grows that Mercari is a safe, secure and easy platform for people to list items on, the more of these hidden assets will be listed through Mercari, causing circulation of value.

Yomiuri: Mercari currently sees about 24 million users per month. How will you increase this figure?

Yamamoto: We want to expand our user base both domestically and internationally. Too many items that could be reused or valued overseas are simply thrown away.

Prices are steadily increasing, but not everyone is seeing their income rise. Secondhand items are, of course, cheaper than new ones. People can sell things they no longer need and use the money they make to start something new. We want to circulate value of all kinds in this way, expanding the possibilities for everyone.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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