Careers at Rakuten
Rakuten’s mission is to empower people and society through the Internet.
Rakuten is a Japanese Internet service and eCommerce company. The firm operates three reportable business segments:
- Internet Services – Includes eCommerce sites such as travel booking sites, online cashback sites, portal and digital content sites, and Internet retailer Rakuten Ichiba
- Internet Finance – Includes sites providing financial offerings/services such as credit cards, electronic money, banking/securities, and life insurance
- Others – Includes communication and messaging services
In the late 1990s, as the Internet was beginning to grow in prominence and utilization, Hiroshi Mikitani dreamed of starting his own online retail business. His goal was motivated by an encounter with mail-order shopping – he ordered Japanese noodles from a local retailer and his purchase arrived by mail. He reasoned that the convenience of the exchange would appeal to many consumers, which would probably encourage them to try Internet shopping in large numbers.
Mikitani faced skepticism from his friends and colleagues, who did not believe that many people would buy things over a computer. However, he forged ahead, and launched eCommerce company MDM in 1997 with a staff of six. The site included an “online shopping mall” called Rakuten Ichiba that featured 13 merchants. Mikitani planned to charge them a monthly fee to host their products, with an additional fee for the provision of advertising and general promotional services.
Mikitani proved his doubters wrong when the company became a huge success, generating revenues of ¥25 million by the end of its first year. This achievement was followed by many major milestones. In 1999 it changed its name from MDM to Rakuten, a Japanese word meaning “optimism”. In 2000 he established Rakuten University, a program designed to train vendors on how to run their business online. The same year the firm went public and got listed on what is now known as the JASDAQ.
The next few years saw significant expansion. In 2001 the company launched Rakuten Travel, an Internet hotel reservation service, and Rakuten Books, an online retailer for books. In 2002 the firm established “Pay As You Go”, a fee contract system for merchants, and “Super Points”, a loyalty program for consumers. By the end of that year, Rakuten had 6,000 merchants on hand. In 2003 it began operations overseas by acquiring many firms, including U.S.-based LinkShare Corporation.
Rakuten’s many acquisitions and joint ventures helped it to expand its product lines, branching out into financial services such as banking, and to increase its global reach to countries such as Canada, Austria, Taiwan, and Spain. These moves enabled it to become a dominant player in the B2C and B2B space. It is now the largest online retailer in Japan, with over 44,000 merchants, and among the world’s largest eCommerce firms in terms of sales. Mikitani attributes his company’s good fortune to “omotenashi” – a Japanese principle meaning personalized and high-quality service.
Business model of Rakuten
Rakuten has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:
- Consumers: Individuals seeking to order products and services online.
- Merchants: Businesses seeking customers to purchase their products and services online.
Rakuten offers four primary value propositions: customization, cost reduction, risk reduction, and brand/status.
The company enables customization by allowing merchants to design their pages on the website so they can showcase their stores’ originality. This feature contrasts with other multi-sided retail sites that try to have retailers’ page branding and look mimic that of the host brand. Merchants are also given the ability to communicate with customers directly through social media and e-mail.
The company offers cost reduction through its Rakuten Super Points loyalty program. The program enables consumers to earn points through shopping (1 point per JPY 100 of purchases) and the use of various services in the website’s ecosystem. One point equals JPY 1 that can be used for another purchase or travel reservations. Points can also be obtained when customers use the Rakuten credit card or its Edy electronic money at physical locations.
The company reduces risk through its strong vetting of potential merchants. All vendors go through a thorough screening process in which company staff members ensure that their products comply with general laws and Rakuten’s specific guidelines. In addition, Rakuten conducts daily checks to remove items that are non-compliant. Moreover, it offers a phone line for the reporting of such goods. Beyond these features, the company ensures payment security and provides settlement options.
The company has established a strong brand as a result of its success. It is Japan’s biggest online retailer with over 95 million products from more than 44,000 vendors. In addition, it has 700 million users in over 170 countries, with over 108 million being members of its loyalty program.
Rakuten’s main channel for merchants is its sales/business development team, through which it acquires most vendors. Its main channel for consumers is its website. The company also promotes its offerings through its social media pages, as well as the hosting of Rakuten-branded conferences and expos twice a year in Japan and once a year at 13 other locations.
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.
Rakuten’s business model entails maintaining a common and robust platform between two parties: consumers and merchants.
Rakuten’s partners include the shipping and logistics companies that help it deliver its products to consumers; the financial institutions that enable it to carry out transactions that occur on the site; and travel associations from whom it receives advice on how to manage the travel portion of the site. The specific associations include Japan Ryokan Association, Japan Hotel Association, and Japan City Hotel Association.
Rakuten’s main resource is the proprietary software platform it uses to run its website. The company also depends on human resources in the form of its technology staff to maintain and update the platform, customer service staff for support, and training staff for merchant instruction.
Rakuten has a value-driven structure, aiming to provide a premium proposition through significant personal service. Its biggest cost driver is cost of merchandise and services, a variable expense. Other major drivers are in the areas of advertising/promotion, customer support/operations, and administration, all fixed expenses.
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.
info: Hiroshi earned a Bachelor of Commerce from Hitotsubashi University and an MBA from Harvard Business School. He previously served as Founder and President of Crimson Group, a consulting firm, and President of Fusion Communications.
info: Masayuki previously served as Executive Vice President of Rakuten. His other past roles include Executive Officer and General Manager of the Personal Finance Department at ORIX Credit Corporation.
info: Yasufumi graduated from the Faculty of Mathematics at Kyushu University. He previously served as President and General Manager of Cisco Japan, SVP of Cisco Systems, and Senior Managing Executive Officer at Microsoft.
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