Rakuten: The Rising Giant in Global E-Commerce in 2023

Rakuten: The Rising Giant in Global E-Commerce

The Rise of Rakuten: A Comprehensive Overview

 

Rakuten is a Japanese-based e-commerce platform offering various services and products. It was founded in 1997 by Hiroshi Mikitani, who remains its CEO to this day.

 

The company started as an online marketplace for Japanese consumers, but it has since expanded its operations to over 29 countries worldwide. 

 

Rakuten is known for its unique business model which involves partnering with merchants and offering them a range of services to help grow their businesses.

Softwareista Key Takeaways: Rakuten

 

  1. Understanding Rakuten: Rakuten is a Japanese e-commerce and online retailing company providing a wide range of products and services, including electronic commerce, online banking, credit card services, and media buying.

 

  1. Global Expansion: Rakuten has expanded its services globally, competing with other leading international e-commerce platforms.

 

  1. Unique Business Model: Rakuten’s business model focuses on enabling merchants to build strong personal relationships with customers, creating a more personalized shopping experience.

 

  1. Rakuten Super Points: Rakuten’s loyalty program, Rakuten Super Points, allows customers to earn points on every purchase that can be redeemed for future purchases, incentivizing repeat business.

 

  1. Seller Support: Rakuten offers comprehensive support to its sellers with tools for storefront customization, marketing, inventory management, and customer analytics.

 

  1. Innovation and Diversification: Rakuten continues to innovate and diversify its services, branching out into areas like advertising, fintech, and even professional sports.

 

  1. Rakuten’s Commitment to Customer Service: Rakuten strongly emphasizes customer service, providing multiple channels for customer support to ensure a seamless shopping experience.

 

Reminder

The Softwareista Team has created an in-depth report on the Top 20 Emerging Online Markets in 2023. It is an indispensable read for those seeking to stay informed. Check it out here: Top 20 Emerging Online Markets in 2023: Growth Opportunities

Brief History of Rakuten

 

Rakuten’s history dates back to the early days of the internet in Japan. The company was founded in 1997 by Hiroshi Mikitani as MDM Inc., a consulting firm that advised Japanese businesses on how to operate online successfully.

 

The company later rebranded as Rakuten, meaning “optimism” in Japanese, and began operating an online marketplace for Japanese consumers. 2005 the company expanded globally by acquiring Buy.com, a US-based e-commerce platform.

 

This marked the beginning of Rakuten’s global expansion strategy, which has since acquired other companies such as Kobo (an e-reader manufacturer) and Viber (a messaging app). Today, the company operates in over 29 countries worldwide and has over 1 billion registered users.

Importance of Rakuten in the global market

 

Rakuten is one of the largest e-commerce platforms globally and is known for its unique business model that prioritizes partnering with merchants rather than competing against them. 

 

The company has successfully expanded into new markets and acquired new users while offering innovative services such as credit cards, travel insurance, and loyalty programs. Rakuten has become increasingly important in recent years as more consumers shift towards online shopping.

 

The COVID-19 pandemic has accelerated this trend, and Rakuten has seen a surge in service demand. With its strong brand recognition and unique business model, Rakuten is well-positioned to continue growing globally.

Rakuten’s Business Model

  1. Overview of the Business Model

 

Rakuten’s business model is based on the concept of empowering merchants to sell their products and services online. The platform provides a marketplace where merchants can create online stores and reach a large customer base. Rakuten provides tools and services that help merchants manage their online stores, including payment processing, shipping, and order fulfillment.

 

Unlike other e-commerce platforms, Rakuten focuses on creating a community-based shopping experience. Customers can interact with merchants through product reviews and ratings, building trust and loyalty between customers and sellers.

  1. Comparison with Other E-Commerce Platforms

 

Compared to other e-commerce platforms like Amazon or eBay, Rakuten’s business model differs in several ways. For example, unlike Amazon or eBay which charge sellers for listing products on their platform regardless of whether products sell or not, Rakuten only charges a commission fee on actual sales made through the platform.

 

Additionally, Rakuten focuses more on empowering small businesses than on large retailers dominating the market. The community-based shopping experience also sets it apart from other e-commerce platforms focusing more on individual transactions rather than building relationships between customers and sellers.

  1. Advantages of the Business Model

 

One of the significant advantages of Rakuten’s business model is its low-cost structure for merchants. Merchants are not charged any listing fees but only pay commission fees when they make sales through the platform.

 

This approach makes it easier for small businesses to compete against larger retailers who may have deeper pockets for advertising spend. Another advantage is its community-based shopping experience which fosters trust between customers and merchants; this helps promote repeat purchases from loyal customers resulting in increased revenue generation over time.

  1. Disadvantages of the Business Model

 

One potential disadvantage of this business model is that it may not scale as effectively for larger retailers that must list and sell vast amounts of merchandise. Additionally, the focus on community-based shopping may not be attractive to all customers who prefer anonymity when purchasing. Another disadvantage is that Rakuten’s commission fees for merchants can be higher than other e-commerce platforms.

 

This fee structure could deter some businesses from using Rakuten as their primary e-commerce platform. Despite these potential disadvantages, Rakuten’s business model has proven successful for many small businesses looking to expand their online presence and build strong customer relationships.

Rakuten’s Services and Products

  1. Overview of services and products offered by Rakuten

 

Rakuten is an e-commerce platform offering its customers a wide range of products and services. It has over 70 different businesses worldwide, including online marketplaces, travel booking services, online banking, and even professional sports teams.

 

One of the most popular services offered by Rakuten is its online marketplace which offers a vast selection of products ranging from clothing to electronics. In addition to its marketplace, Rakuten also offers a range of other services, such as online streaming, e-book sales, ticket sales for concerts and events, and mobile app development.

 

Its travel booking service is particularly popular in Japan where it is one of the largest travel agencies in the country. With such an extensive offering of products and services, Rakuten has become a one-stop shop for many people worldwide.

  1. Comparison with other e-commerce platforms

 

Some key differences set it apart when comparing Rakuten with other e-commerce platforms such as Amazon or Alibaba. One unique aspect of Rakuten is that it operates on a membership-based model where users earn points for purchases made on the site which can be redeemed for discounts or used towards future purchases.

 

This loyalty program has helped to build a strong community around the site. Another differentiator for Rakuten is its focus on quality products.

Unlike other e-commerce sites that allow anyone to sell items on their platform, Rakuten has strict guidelines for sellers to ensure product quality is maintained across all categories. 

 

While Amazon dominates many markets globally due to its massive scale and fast delivery times through Prime membership, Rakuten provides more localized shopping experiences through partnerships with local retailers like Walmart in the US.

  1. Analysis of unique features and benefits

 

One unique feature differentiating Rakuten from other e-commerce platforms is its Rakuten Super Points loyalty program. Members earn points for purchases made on the site which can be redeemed for discounts or used towards future purchases.

 

This has helped to build a strong community and loyal customer base for the company. Rakuten also strongly focuses on quality products, ensuring sellers meet strict guidelines to maintain high standards across all categories.

 

This commitment to quality has helped build trust with customers and ensure they receive authentic, high-quality products when shopping on the site. Rakuten’s localized approach through partnerships with local retailers like Walmart in the US provides a more personalized experience for users.

 

With more focus on local retailers, users can find unique products that may not be available on other e-commerce sites. Overall, Rakuten’s extensive range of services and products, unique business model, and focus on quality make it a popular choice for consumers looking for a one-stop-shop e-commerce platform.

Rakuten’s Global Expansion Strategy

  1. Overview of the global expansion strategy

 

Rakuten, founded in Japan in 1997, has always had a vision of becoming a global company that offers its services and products to customers worldwide. The e-commerce giant has taken steps towards achieving this goal with its global expansion strategy. Rakuten’s first move towards becoming a global company was the acquisition of Buy.com in the United States in 2010.

 

Since then, Rakuten has expanded its operations into other regions such as Europe, Asia-Pacific, and Africa. One of the most significant ways Rakuten has expanded globally is by partnering with local companies through joint ventures or acquisitions.

 

For example, Rakuten formed a joint venture with Baidu, China’s largest search engine company, to create Lekutian.com in China. This strategy allows Rakuten to leverage local expertise and better understand regional markets while expanding into new territories.

  1. Analysis of key markets targeted by Rakuten

 

Rakuten has targeted key markets with high growth potential and where there is an opportunity to capture market share from established players like Amazon and Alibaba. The company currently operates in 29 countries worldwide. One such key market for Rakuten is Southeast Asia.

 

According to eMarketer’s forecasted data for 2021-2025, Southeast Asia’s digital commerce growth rate will be faster than any other region worldwide in any single-year period. In 2017, Rakuten invested $50 million USD into Coda Payments, providing payment services for digital content providers across Southeast Asia.

 

Another key market for Rakuten is India which is expected to become one of the largest e-commerce markets by 2034 due to increasing internet penetration rates and rising disposable incomes. 

 

In April 2021, it was reported that executives from Japan’s SoftBank Group Corp and India’s Reliance Industries Ltd had met with Rakuten’s CEO Hiroshi Mikitani to discuss a potential investment in Reliance’s Jio Platforms, which could give Rakuten a foothold in the Indian market.

  1. Challenges faced during global expansion

 

While expanding globally, Rakuten has faced various challenges such as cultural differences, regulatory compliance, and fierce competition from established players. In France, for example, Rakuten was fined €778k for selling counterfeit goods on its website in 2019.

 

The incident highlights the challenge of complying with regional laws and regulations while expanding globally. Another challenge is competing with established e-commerce giants like Amazon and Alibaba who have already captured significant market share in many regions.

 

However, Rakuten has differentiated itself by offering unique services such as its Super Points loyalty program that allows customers to earn points that can be used for future purchases or exchanged for other rewards. Additionally, cultural differences have posed challenges for Rakuten while expanding into new territories.

 

For example, in Southeast Asia where multiple languages are spoken across different regions, creating a localized platform that caters to all customers’ needs can be challenging. 

 

Despite the challenges faced during global expansion, Rakuten has made significant progress towards achieving its goal of becoming a global e-commerce giant through partnerships with local companies and strategic investments in high-growth markets.

Rakuten’s Partnership Strategy

  1. Overview of Partnership Strategy for Growth

 

Rakuten is a company that has grown rapidly throughout the years, and one of the ways it has achieved this is through partnerships with other organizations. Rakuten has established relationships with various businesses in Japan and globally to expand its reach and services. One such partnership is with Walmart, where Rakuten provides an online grocery delivery service to customers in Japan.

 

This partnership allows Walmart to enter the Japanese market while providing Rakuten access to Walmart’s supply chain. In addition, Rakuten offers a loyalty program called “Rakuten Super Points” that can be used across its various partner companies.

 

This allows customers to earn points while shopping at different retailers and redeem them at other partner companies within the Rakuten ecosystem. This partnership strategy creates a win-win situation for all parties involved – partners gain access to new customers while Rakuten increases customer loyalty.

  1. Analysis of Key Partners

 

Rakuten has established partnerships across various industries, including e-commerce, travel, finance, and sports. One notable partner is FC Barcelona – one of history’s most successful football clubs.

 

The partnership between Rakuten and FC Barcelona involves sponsorship deals for both their men’s and women’s teams and joint efforts in promoting soccer worldwide. Another key partner is Kobo – an e-reader that competes with Amazon’s Kindle.

 

In 2012, Rakuten acquired Kobo for $315 million and incorporated it into its digital content division. This acquisition enabled Rakuten to expand its reach into the e-book market and compete more effectively against Amazon.

 

Other significant partners include Lyft (a ride-hailing service), Pinterest (a social media platform), and Viber (a messaging app), among many others. These partnerships allow for cross-promotion between companies within the ecosystem while providing new services and benefits to customers.

  1. Impact on Growth

 

Rakuten’s partnership strategy has played a significant role in its growth. By partnering with other organizations, Rakuten has expanded its reach and services, ultimately increasing the number of customers and revenue. For example, the partnership with Walmart in Japan has helped Rakuten become one of the top e-commerce companies in the country.

 

The Rakuten Super Points program has also contributed to customer loyalty and retention, as customers can earn points from various partner companies within the ecosystem. Moreover, these partnerships allow for innovation and differentiation in an increasingly competitive market.

 

By collaborating with other businesses, Rakuten can provide unique services that may not have been possible otherwise. For instance, the partnership with Kobo allowed for integration between e-books and e-commerce – enabling customers to purchase books through their Rakuten account.

 

Overall, Rakuten’s partnership strategy has successfully driven growth and expanded its ecosystem of services. By working with various partners across various industries, Rakuten continues to differentiate itself from competitors while offering innovative solutions to customers’ needs.

Rakuten’s Technology Innovation

 

Rakuten has always been a pioneer in technology innovation to provide customers with better shopping experiences. The company has invested heavily in big data analysis and AI technologies to improve search results, product recommendations, and personalized marketing.

 

For instance, the Rakuten Institute of Technology has developed an AI-powered chatbot named ‘Raku-bot’ to assist customers with their orders and queries. To enhance customer experience further, Rakuten has started deploying Augmented Reality (AR) technologies in its mobile apps.

 

Customers can use their smartphone cameras to visualize how products would look in real life before making a purchase. This feature is especially useful for customers who are unsure about the size or color of the product they want to buy.

 

Besides AR and AI technologies, Rakuten is also exploring new avenues such as voice-activated shopping. In 2018, the company launched a voice assistant device called ‘Rakuten Mini’ powered by Google Assistant that allows customers to shop through simple voice commands.

  1. Investment Strategy for Growth

 

Rakuten’s investment strategy revolves around diversification. The company aims to expand its portfolio by investing in new businesses and startups that complement its existing services.

 

For instance, Rakuten Ventures is one of the largest corporate venture capital firms globally and invests primarily in e-commerce-related industries such as fintech, AI, and logistics. Furthermore, Rakuten is actively involved in mergers and acquisitions (M&A) as part of its growth strategy.

 

In 2019 alone, Rakuten acquired Viber – a popular messaging app with over one billion users worldwide – for $900 million. The acquisition aimed to strengthen Rakuten’s mobile platform services while providing Viber access to a broader user base.

 

The investment strategy has indeed paid off well for Rakuten so far. As of March 2021, the company had a market capitalization of ¥7.3 trillion ($66 billion), having grown from a mere ¥200 billion ($1.8 billion) in 2011.

  1. Impact on Overall Business

 

Rakuten’s technology and investment strategy have significantly impacted its overall business. Rakuten’s efforts to improve customer experience through technology have resulted in increased customer loyalty and higher revenues. 

 

The company’s focus on diversification has helped it reduce its dependence on any single revenue stream while providing new growth opportunities.

 

Moreover, Rakuten’s investments have strengthened its existing businesses and allowed the company to expand into new markets such as fintech and healthcare. For instance, in 2020 Rakuten launched a telemedicine service called ‘Rakuten Medical’ to provide remote medical consultation services.

 

Rakuten’s technology and investment strategy are critical to the company’s growth story. With an unwavering focus on innovation, diversification, and customer experience, Rakuten is well-positioned for continued success in the coming years.

Rakuten’s Financial Performance

 

Rakuten has experienced significant growth, with its revenue increasing by over 67% from 2015 to 2019. Rakuten’s revenue reached ¥1.4 trillion in 2019, which resulted from the company’s successful expansion into new markets such as Southeast Asia and Europe.

 

Moreover, the company’s net income has grown steadily over the years, reaching ¥141.7 billion in 2019. However, Rakuten has also recently faced some financial challenges due to the COVID-19 pandemic.

 

The pandemic led to a significant drop in consumer spending, resulting in a decline in sales for many businesses worldwide. As a result, Rakuten experienced a drop in quarterly profits during Q1 and Q2 of 2020.

Challenges Faced by Rakuten

 

One of the main challenges that Rakuten faces is competition from other e-commerce giants such as Amazon and Alibaba. These companies have significantly larger market shares and more extensive resources than Rakuten, making it difficult for them to compete at their level.

 

The COVID-19 pandemic has also presented several challenges to Rakuten’s business operations. As mentioned earlier, consumer spending declined significantly during the pandemic leading to reduced sales for many businesses worldwide.

 

Another challenge Rakuten faces is its dependence on its home market of Japan. Although it has expanded globally over recent years, Japan still accounts for most of its business operations’ revenue.

Future Prospects Based on Current

 

Despite these challenges faced by the company recently, there are still reasons to be optimistic about Rakuten’s future prospects. For instance, they have invested heavily in technology innovation that enhances customer experience through AI-powered recommendations and personalized shopping experiences.

 

Moreover, they have continued their global expansion strategy with investments made across various digital businesses such as Lyft and Pinterest which will contribute positively to their financial position. The recent launch of their mobile carrier service allows them to diversify revenue streams beyond e-commerce and capitalize on the growing global market for wireless services.

Softwareista Final Word

 

Rakuten has been a major player in e-commerce and digital businesses globally. While it has faced some challenges recently due to COVID-19 and competition from other established e-commerce platforms, Rakuten’s strong financial performance over recent years shows its resilience as an organization.

 

Looking ahead, Rakuten has much potential for growth due to its continued investment in technology innovation and global expansion strategy into new markets. Overall the future prospects of Rakuten seem bright, and we expect them to remain a significant player in the digital business space.

Softwareista FAQ Section: Rakuten Review

  1. What is Rakuten and what does it offer?


Rakuten is a Japanese e-commerce company that offers various services, including online retail, banking, credit card services, and media buying. It has a global presence, competing with other international e-commerce platforms.

 

  1. How does Rakuten’s business model work?


Rakuten’s business model focuses on empowering merchants to build strong personal relationships with customers, which helps create a more personalized shopping experience.

 

  1. What benefits does Rakuten’s loyalty program offer?


Rakuten’s loyalty program, Rakuten Super Points, allows customers to earn points on every purchase. These points can be redeemed on future purchases, encouraging repeat business.

 

  1. What support does Rakuten offer to its sellers?


Rakuten provides a range of tools to its sellers for storefront customization, marketing, inventory management, and customer analytics, helping them succeed in the marketplace.

 

  1. How is Rakuten innovating and diversifying its services?


Rakuten continually innovates and diversifies its offerings, branching out into new areas such as advertising, fintech, and professional sports.

 

  1. What is Rakuten’s approach to customer service?


Rakuten places a strong emphasis on customer service. It offers multiple channels for customer support to ensure a seamless shopping experience.

 

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