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WHAT IS RAKUTEN?
The Company
Rakuten Inc is an e-commerce and internet business originating from Tokyo, Japan.
The company was created by Hiroshi Mililani in 1997 as MDM Inc. He still serves as the
Chief Executive. The Rakuten Shopping Mall or Rackuten Ichiba began operations in
May 1997 and is the largest such site in Japan. It is also the largest in the world by
sales figures. In 1999, the company name was changed to Rakuten Inc. The name itself
derives from the Japanese word for optimism or Rakuten.

By 2012, the company was earning US$4.6 billion and bring in operating profits of

US$244 million. By 2013, the number of employees were over 10,000 globally.

Rakuten focuses primarily on the complete shopping experience for the buyer
influenced by the Japanese principle of Omotenashi. This concept means providing high
quality and personal service. This is translated online by allowing sellers to customize
pages through unique layouts, photos and promotional campaigns. Vendors update
these pages regularly and can create a line of communication directly with the
customer. The idea is to avoid a standardized approach and create an experience.

Expansion
During 2005, the company began its international expansions through acquisitions and
joint ventures. One of the biggest ones was the acquisition of buy.com which has since
been rebranded as Rakuten.com Shopping within the United States. In other countries,
the company has acquired Priceminister in France, Ikeda in Brazil, Tradoria in
Germany, Play.com in the United Kingdom, Wuaki.tv in Spain and Kobo Inc in Canada.

Another means of expansion has been investments in different businesses. These

include a $50 million investment in Pinterest. Other companies where Rakuten Inc has
invested include Ozon.ru, AHA Life and Daily Grommet.

Business Model
The company has significantly expanded the types of businesses that it operates
through its various acquisitions. Some of these are:

 Online Retail: The company has retail operations within Japan and in many
countries globally. These include Rakuten.com (formerly buy.com).

 Banking, Credit and Payments: Services offered in this area include personal

consumer credit services such as card loans, mortgages and other banking
services.

 Portal and Media: Services in this area include management of portal sites such
as internet gateways etc.

 Travel: This includes websites that manage hotel bookings and other travels
services.

 Securities: Services include brokerage of online securities.

 Professional Sports: The company manages a professional baseball team as

well as the planning and sale of related merchandise.

 Entertainment: This includes services such as an online video club.

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  Business Model of Rakuten.com

Though Rakuten sells items in a multitude of categories much like its competitors do,
the company does not want to be seen as the next Amazon. Instead, the company
wants to stand apart from traditional standardized ecommerce sites and instead
encourage customers to buy from people, not the internet. According to former CMO
Bernard Luth,
“We don’t throw a cloak over the merchant but instead
introduce you to the shop owner. We want you to discover
who the merchant is.”

The vision for Rakuten.com is to convert it from an ecommerce site into an online
version of a physical marketplace. The stores in this marketplace remain autonomous,
with storeowners free to customize their storefronts and communicate with the
customer. The site also attempts to equip the sellers with tools and techniques to
become profitable rather than compete directly with them.

Market Place
 Target market

The company has partnerships with several thousand merchants and sells
close to 14 million products across multiple categories. This means that there
is something available for everyone. The basic audience is from mostly
metropolitan areas and comfortable with shopping online. These people are
not in a hurry and enjoy browsing for undiscovered items
 Virtual market

The vision for Rakuten.com is to convert it from an ecommerce site into an

online version of a physical marketplace. The stores in this marketplace
remain autonomous, with storeowners free to customize their storefronts and
communicate with the customer. The site also attempts to equip the sellers
with tools and techniques to become profitable rather than compete directly
with them

Customers relations
Rakuten’s customer relationship with merchants is primarily of a personal assistance
nature; the company offers various forms of personalized support. It provides
eCommerce consultants who give vendors guidance on how to increase sales and
solve everyday challenges. It also maintains Rakuten University to provide training for
merchants who are new to the Internet commerce world. Lastly, it operates Rakuten
Travel College to provide education for travel companies with services on the site.
Rakuten awards the best-performing retailer “Rakuten Shop of the Year” (SOY), an
award that involves travel abroad with company representatives to study industry trends
in other locations. Rakuten’s customer relationship with consumers is primarily of a self-
service nature. Customers utilize the website while having limited interaction with employees.
That said, there is a personal assistance component in the form of e-mail support.

Revenue stream
Rakuten has three revenue streams:

Hosting Fees – Revenue generated from monthly fixed fees charged to merchants for
the privilege of having their products/services hosted on the site.

Transaction Fees – Revenue generated from the commission Rakuten charges for
each purchase transaction that occurs on the site.

Advertising Fees – Revenue generated from the fees the company charges to third
parties for advertising their offerings on the site.
Comparative advantage

 Marketplace is Not a Competitor: The Rakuten business model encourages

merchants to grow and develop their stores. The website itself does not sell any
products but instead it provides tools and services to help merchants grow their
own business. In this way, merchants only have to compete with other
merchants.

 Access to Massive Audience: Marketplaces are among the fastest growing

ecommerce websites in the world. Amazon, eBay and Rakuten are among the
top marketplaces in the world with millions of visitors browsing through listed
items every month. Selling on these marketplaces allows access to an
established base of customers with very little extra spend on advertising.

 Variety of Products: Because Rakuten allows sellers to list items in multiple

categories, a seller has the freedom to list practically anything they want to sell.
The range of prices for these items is also very vast.
  Pricing Flexibility: Since Rakuten.com focuses on creating a link between the
seller and the buyer, the merchant has the opportunity to create a strong
relationship with a customer based on excellent service, quality and reliability.
This bond can help establish repeat buyers and can help a merchant sell at a
slightly higher price than competitors.

 Low Investment in Infrastructure: Since the fees charged by the website to list

are not very high, it is not a huge investment to begin selling items online. If one
was to attempt to create their own website, it would require more work and more
commitment than selling through an established marketplace.

 Access to International Customers: Millions of customers from all over the

world visit Rakuten.com. This means that by listing your items on the website,
these international customers are more likely to visit your storefront.

Marketing strategies of Rakuten

Strategic marketing at Rakuten is very closely aligned to our businesses. It is not a
mere support function that sits behind the business, but an important lever that runs
beside the business. As part of our strategy, we are focused on building a strong brand
in global markets. We just completed phase one of a rebrand and brand unification
initiative, which will bring all of our services and businesses together under the Rakuten
brand name.

As of July 1, Rakuten became the Main Global Partner and Official Innovation and
Entertainment Partner of the world-renowned football club, FC Barcelona. We also
announced our partnership with Shakira, making Rakuten the main presenting sponsor
of Shakira’s upcoming El Dorado world tour.  All of this has happened in the past 4-6
months.
This should give you a sense of all the action. This is just the beginning and we have a
long way to go. We are also making significant investments in building our marketing
infrastructure and technology. What is important is that we have a clear business vision
and we, as a marketing unit, are all set to enable and support that vision. 
 Rakuten Marketing today announced that Purple, a growing direct-to-consumer comfort
product company, has selected Rakuten Marketing to drive its affiliate marketing
strategy across the customer journey. Rakuten Marketing’s unique offering will allow the
team at Purple to focus on the company’s rapid growth opportunity, while experts at
Rakuten Marketing help develop Purple’s affiliate marketing program to best meet its
business goals.
“In our search for the right affiliate network, we sought a partner who could work with
the resources we have available now and scale with us as we continue to grow,” said
James Brohamer, Purple’s Director of Omnichannel Marketing. “We knew we needed
more from a partner than just a transactional platform. We needed a partner who could
deliver at both the top of the funnel and the bottom of the funnel, and who could further
our one-on-one connections with publishers and affiliates through events and other
opportunities to bring us face-to-face with their network. The clear choice for our
business was Rakuten Marketing.”

During this time of growth for Purple, Rakuten Marketing’s strong relationships with
publishers will allow the company to more easily and proactively access new, growing
affiliates that it hasn’t worked with before. To ensure publishers are always up-to-date
on industry trends and technology, Rakuten Marketing’s publisher development team
offers dedicated account management and analytics to source, surface and connect
brands and publishers.  Additionally, the network maintains a constant feedback loop
through its publisher advisory boards and other in-person networking opportunities.

With more than 20 years of industry experience, Rakuten Marketing will help Purple
achieve its affiliate marketing goals, including building first touch and last touch
commission structures depending on the publisher’s position in the shopper’s journey.
Through the partnership, Purple will leverage Rakuten Marketing’s industry-leading
affiliate marketing network, which has been voted the #1 affiliate network for eight
consecutive years by mThink and recognized as the Best Affiliate Network, among other
recognitions, by the International Performance Marketing Awards.
Purple is an innovative brand that is willing to test and learn by activating data to power
its affiliate campaigns and optimizing based on insights and learnings.  By tapping into
Rakuten Marketing’s AI and machine learning technology, Purple can capitalize on this
culture of innovation to better personalize experiences and improve efficiency and
performance of its campaigns.

“Purple has grown into a market leading position by utilizing smart, targeted and unique
marketing strategies,” said Julie Van Ullen, Managing Director of Rakuten Marketing for
the U.S. “We’re thrilled to help them continue on this growth path by aligning affiliate
campaigns that map to their business objectives, helping them to scale, reach new
audiences and build stronger brand affinity.”

To learn more about Rakuten Marketing’s affiliate offering,