From Regional to Global: The Rakuten Story

By そらみみ [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], from Wikimedia Commons

When the defending NBA Champion Golden State Warriors announced a deal to wear a patch with the Rakuten logo on their jerseys beginning next season, it marked a significant step in a long journey from regional to global presence for the Japanese company. The e-commerce giant which has often been referred to as the Amazon of Japan has long had its eye on breaking out beyond the Asian market.

Their partnership with one of The United States’ premier sports franchises is certainly evidence they are on the right track. As part of the three-year, $60 million deal, the Warriors training facility will soon become known as “Rakuten Performance Facility”.

An E-commerce Pioneer

The September 2017 deal with Warriors could likely not even have been dreamed of when Rakuten was first launched twenty years ago. Founder and current CEO Hiroshi Mikitani, began his career with the Industrial bank of Japan. When the Kobe earthquake hit in 1995 it became a call to action for Mikitani who felt compelled to help rebuild the Japanese economy.

With the internet in its infancy stages, Mikitani saw an opportunity to get in early in the field of online commerce. When he launched his online shopping mall MDM in 1997, he made sure he avoided the mistakes that the bigger players in the space made in their efforts.

“I decided Rakuten’s mall would offer the opposite of the big companies’ malls. It would offer not a controlled storefront, but rather virtual empowerment,” Mikitani wrote in his 2013 book Marketplace 3.0: Rewriting The Rules of Borderless Business. “From the start, Rakuten’s mall was different. We offered our services for a monthly price of fifty thousand yen ($650) payable in two installments based on an annual subscription. This was a fraction of what the big Internet malls charged. We offered merchants the opportunity to customize their web presence, rather than to fit into one designed by us. In fact, we were so committed to this process of customization that we developed special tools to give these merchants (many of whom had limited computer skills) the chance to make their virtual storefronts look just as they wanted.”

Era of Expansion and Acquisitions

Within 10 years of existence, Rakuten’s strategy paid off handsomely thus allowing them to dominate the e-commerce space in Japan. Midway through the 2000’s Mikitani set his sites on expanding their reach outside Japan. This process began with the 2003 acquisition of MyTrip.net which was folded into the Rakuten Travel division. In the subsequent years, Rakuten would also acquire Buy.com, PriceMinister, Ikeda, Kobo Inc. Viber just to name a few.

The company also created Rakuten Marketing to get in early on the hot new start-ups hitting the market. Through this division, Rakuten has been an early investor in such notable ventures as Pinterest, Lyft, and Careem.

Laying the Groundwork for A Western Presence

At the beginning of the current decade, the company made what was then seen as a bold and curious move by conducting all meetings in English. When the announcement was made in May 2010, the company offered their assurances that there was a method to the madness.

“In order to globalize the company, everybody from top management to regular employees should be able to speak English,” Rakuten Public Relations Chief Megumu Tanefusa told The Japan Times. “Even if meeting participants are all Japanese, they will still have to speak English.”

That plan seems to be reaping rewards as Rakuten purchased Slice, an American e-commerce app in August 2016.

“We have a vision to grow our business in the U.S.,” Yaz Iida, CEO of Rakuten Marketing said in an interview with the Wall Street Journal.

Rakuten Today

Rakuten’s play for their share of the American market will see them go head to head the e-commerce alpha dog, Amazon as well as eBay and others. But if any company is well positioned to take a run at Amazon, it may be Rakuten.

As of May 2017, Rakuten boasted a market cap of $15.2 billion, sales of $7.2 billion and an international workforce totally more than 14,000 people. And perhaps more importantly, a leader whose vision and instincts have proven to be spot on at every turn.

Consider yourself warned, Amazon.