Rakuten is a Japanese e-commerce company that has succeeded in becoming profitable through its innovative business model and strategies. It operates Japan's largest online shopping mall, Rakuten Ichiba, which hosts over 40,000 merchants and sees high traffic of over 3 billion page views daily. Through strategic acquisitions globally, Rakuten has expanded its operations internationally and aims to become the world's largest internet services company. Key to its success is a loyalty points program and an ecosystem tying together its various business units.

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One of the only Profit Making Retail E-commerce
In the E-commerce sector, B2B and B2C transactions themselves have the capacity to generate multi-
trilliondollarbusinessglobally. Whatishard inthese businessesistogainprofits. Earningprofitevenfor
the world’s largest e-commerce giant, Amazon.com becomes difficult. Japan based Rakuten, Inc. is a
companywhosucceededinmakingprofitthattoo in a veryshortspan due its innovative businessmodel
& strategies.
Rakuten, Inc. (4755: Tokyo), is one of the world's leading Internet service company. Founded in 1997,
the conglomerate current CEO is Hiroshi Mikitani and is headquartered in Tokyo-Japan. Since 2012,
Rakutenhas beenrankedamongthe world’s‘Top 20 Most Innovative Companies’ in Forbes magazine’s
annual list. The conglomerate comprises of more than 40 main business groups with a prime focus on
retailing,internetservice,internet finance and advertising. Rakuten is competing for online sales with
Yahoo Japan Corp.
Rakuten Ichiba isJapan’slargestonline shoppingmall andisone of the largestin the world by sales. It is
a platform for individual merchants to sell their products to individual customers online.
Key Figures
In the year2014, RakutenIchiba& Rakuten Travel recorded the sales of JPY 188.5 billion ($1.59 billion)
and earned an operating profit of JPY 93.7 billion ($790 million). As of 31th Dec, 2014, about 97.75
million buyers were registered member of the e-shopping mall. It hosts more than 40,000 merchants
sellingapproximately 100 millionproducts to 85% of the Japanese Internet population. The company’s
websites receive 3 billion page views daily. It is estimated that 7 out of 10 of all Japanese owes a
Rakuten account.

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Operations:
Rakutan Ichiba allows merchants to build their virtual shops on the site. They have a Multi-language
customer service with more than 7,000 participating stores. They have a collection of over 12 million
rare and popularitemsin stock. Rakuten conglomerate comprises more than 40 main business g roups
providing online banking, travel, credit cards, securities services, ebooks, and more—with a point-
basedloyaltyprogramtyingthemall together. Butdespite the rapid diversificationin different sectors,
Rakuten is still known mainly as an online shopping site for the Japanese.
TheirmainUSP (unique sellingProposition) of internetshoppingmall isthat, incontrastto Amazon they
can get anything on Rakuten, from used $70,000 four tonne-trucks, Gucci handbags, digital content,
down to apples and oranges directly offered by regional farmers, everything! Japanese-style items,
fashion items, electronics, toys, hobbies, collectibles, household goods, outdoor gear and more are the
well-knownproductsthatare soldonthe site. The price level is relatively low for many items, as many
shopson the site offeridentical products and the collected setting allows for users to quickly compare
prices. Shipping is generally free on all books, DVDs, CDs and similar media.
The retail internet site’s growth is mainly driven by their merchants and their ability to effectively
convertshopperstobuyersontheirproperties. Rakuten’sdedicated staff themselves offers consulting
serviceswithamissiontohelpmerchants overcome challenges and grow their sales. They provide the
data, skills,andsolutionsnecessaryforeachbusinesstosucceedto their merchants by helping them to
improve their sales.
Rakuten Ichiba Merchants are even offered with “Rakuten Super Logistics,” which is an integrated
fulfilledservicesolution like incoming/outgoing inventory management, storage, packaging, delivery,
customer service and various other value-added services. This service started in Aug, 2012.
Global Expansion
Rakutenhasgrown rapidlyandisnow constantly expandingintonew business areas, new markets, and
new regions outside Japan. They are expanding worldwide and currently operate throughout Asia,
Europe,the AmericasandOceania. Rakuten'sexpansionhas gone internationalwith localizedversion of
Rakuteninthe US, UK, Brazil,Malaysia, Austria, France, Spain, Thailand and no doubt more to go! They
have fastest and affordable shipping facilities directly from Japan for all over the world.
In 2012, to increase Rakuten’s global competitiveness they adopted English as their official language.
Theyalso adopted a strategy of starting an overseas shipping service. Their main motto is to make the
Japanese product reach across the world in an affordable cost. So they allow & promote Japanese
merchantsto sell productsabroadto customersall over the world. As results, now customers have the
options of the products ranging from rare collectible items to hard-to-find artisans’ craft directly from
Japanas easilyoverthe internet. ThismeansthatapersonsittinginUS or anywhere inthe world, as the
customer, have access to millions of unique products direct from Japan.
Innovative Business Model

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Rakuten's businessmodel isone-stopaccesstoa wide range of servicesviathe Internet. Rakuten offers
a business-to-business-to-consumer (B2B2C) sales and marketing Platform Company without a
warehousing function. They provide manage marketplace to their merchants & consumers, where
logistics & payment is taken care by Rakuten themselves. They only provide the virtual space on the
website to the merchants to setup their virtual shops. At the moment, the company generates the
majority of its revenues from Japan. It offers its merchants lower user fees compared to other online
malls.
Rakuten, as we discussed earlier has not only succeeded in their e-commerce business but also in
making profits out of their operations. Apart from their global operations and availability of varied
productson theirwebsite,otherfactorsforwhichtheygainedprofitsistheirinnovative businessmodel.
This model has already being acknowledged by Forbes magazine.
Rakuten Ecosystem
The Rakuten Ecosystem, which is formed by various services offered by Rakuten Group, is a one-of-a-
kindmember-basedbusiness model that connects Rakuten services through the Rakuten Super Points
reward system.
 Super Points Reward System
Rakutenmembers receive a Rakuten ID upon registration that is common to various Rakuten services.
Basedon that ID,Rakutenrewardtheircustomerswithsuperpoints.These pointsare utilized to reward
loyal users and encourage the patronage of other Rakuten Group services. Furthermore, Rakuten's

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convenient settlement services, such as Rakuten credit card and e-money service, Rakuten Edy (Web
Money Service) create a perfect mix of online and offline services.
The main profit sources are fixed fees from merchants and fees based on each transaction and other
services. Rakuten Ichiba offers a proprietary system called RMS (Rakuten Merchant Server) which is a
development platform for running shops on the Internet through Rakuten Ichiba, and e-commerce
consultants (ECCs).
Othere-commerce sitesare more productcentric,andemphasize efficiencyandpassive interactionwith
consumers, but at Rakuten Ichiba the merchants themselves design their own sites and can show the
originality of their stores, and can directly engage users through e-mail and SNS (Social Networking
Services),resultinginamore pleasingshoppingexperience.Thisisanattractive feature tobringinusers,
compared with other e-commerce sites. They train their vendors through Rakuten University.This in
return also helps Rakuten to grow extensively.

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Strategic Acquisitions
2005-Linkshare
RakutenboughtNewYorkCity-basedLinkshare(now "RakutenLinkshare") offering performance-based
online sales and marketing programs for $425 million. It helped them to gain access to 500 clients
including Dell Inc. and American Express Co.
2010-Priceminister, Buy.com
To spreadtheirbusinessgloballytheybought USbased e-commercecompany Buy.cominall cashdeal of
Rs. $250 million. This deal offered Rakuten its first major direct-to-consumer platform in the world's
largeste-commerce market. One monthlater,theyacquired French onlineRetail Priceministerfor about
€200 million. To create online shopping mall in China they had a Joint Venture with Chinese search
engine Baidu worth $50 million deal.
2011-Ozon.ru
Theytooka minorityequitystake in Russia’sleading onlineretail,Ozon.ru byfundingthem$100 million.
2012-Alpha Direct Services
In November 2012, Rakuten announced the acquisition of Alpha Direct Services, a major French
warehouseautomation and logisticsprovider,withthe goal of building out the company’s e-commerce
logistics capabilities across Europe and Japan, and eventually to all its markets globally.
2013-Webgistix
In 2013, Rakuten acquired U.S.-based Logistics Company, Webgistix. Webgistix was a Las Vegas-based
logistics and services company specializing in providing cloud-based technology for e-commerce
retailers. It was a move by Rakuten which helps them expanding their global logistic portfolio.
2014-Viber

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On Feb 13, 2014, Rakuten announced its largest aggressive acquisition of acquiring Viber for $900
million.ViberisCyprusbasedmessagingplatformandappmaker,whohad a userbase of approximately
300 million registered users. This acquisition resulted in combining messaging with shopping.
Rakuten's future goal is to become the world's biggest Internet services company. In order to realize
this, the company has already started its expansion in Asia-Pacific, the Americas and Europe by
deployingdifferentbusinessmodelsineachregion. Aninnovative strategyforRakuteninvolvesfocusing
on untapped countries or niche segments.
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http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_zVVD0HQltQ
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m0na006000c.html
http://techcrunch.com/2010/06/17/rakuten-to-acquire-frances-priceminister-for-approximately-e200-
million/
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http://www.webgistix.com/rakuten-acquires-u-s-based-logistics-company-webgistix/
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viber-message-app
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