After the Groupon fiasco over New Year that saw the reputation of the foreign daily discounts site plummet (a feat that the U.S. service managed almost to repeat domestically with its recent Super Bowl ads too), another imported money-saving style of retail is in crisis too.
Penny auction websites started in Germany in 2005 and came to Japan fairly recently via sites such as YasuOku.jp, often provided by Hong Kong, American or Singaporean companies. Over the last few months, though, increasing consumer anger has been mounting against what could almost be perceived as a fraudulent system.
It all sounds great at first. The auctions generally offer expensive electronics items like TVs and computers offered at discounted prices. An iPad for 855 yen (about $10) is tempting, right? However, people who places bids have to pay non-refundable fees, usually between 50 and 100 yen. Still not a lot of money, of course, but when you consider that bidders can number in the thousands, you can see how the auctioneer makes profit.
Though the press exposure over the last few weeks has changed matters, originally participants were not aware of the fees and if you’ve been bidding for lots of items then your account is going to give you a nasty surprise.
Consumer complaints to the government about the services increased steadily throughout 2010, peaking last month at nearly two hundred. That may not seem like a vast number but in a culture that values customer service as highly as Japan, it’s a serious trend.
What makes the situation more emotive is that many celebrities have endorsed the auction system and even taken part themselves, announcing this on their popular Ameba blogs. Numbers of participants in the auction sites increased following the example set last autumn by models and celebrities like Aki Hoshino (pictured).
As we know, people in the Japanese entertainment industry tend to be pretty clean-cut and enjoy pure relationships with their fans, with drug-taking and other misdemeanors often destroying careers overnight. As such, being associated with a controversial service that has been criticized for non-transparency is not good and reflects on the mainstream media. Major e-money service Edy was also dragged into the mire by running ads for an auction site and by allowing its e-money to be used with at least one provider, 99Off.jp which ostensibly offers bidders the chance to get products at 99% discounts.
Cyber Agent, who run Ameba, has denied responsibility for the blog recommendations and many of the high profile celebrities have since deleted the posts where they pushed their own auctions. A minor scandal, perhaps, but coupled with the Groupon farrago, could we be about to see a serious backlash against overseas services like this? So far, at any rate, other foreign auction services like brands4friends seem to be free of controversy. It could just blow over: many of the Japanese penny auction sites have already closed or will be closing at the end of this month.
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