Formerly Buy.com, Rakuten.com is an online marketplace run by Rakuten Inc a successful Japanese e-commerce platform.

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© Wikimedia commons | Rakuten, Inc.

In this article we will look at, 1) what is Rakuten?, 2) Rakuten.com (Formerly Buy.com), 3) how to sell successfully on Rakuten.com?, 4) advantages and disadvantages of selling on Rakuten.com, 5) taking precautions on Rakuten.com, and 6) Rakuten.com success stories.

WHAT IS RAKUTEN?

The Company

Rakuten Inc is an e-commerce and internet business originating from Tokyo, Japan. The company was created by Hiroshi Mikitani 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.

Types of Businesses

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.

RAKUTEN.COM (FORMERLY BUY.COM)

The Company

The online retailer formerly known as Buy.com was created by Scott Blum in 1997. It is based in Aliso Viejo in California, USA. The company began as a seller of computers and electronics but eventually expanded to several other categories.

The company’s initial revenue model was to sell items below cost and make up the difference through other revenue streams. These other streams included services like advertising, warranties and equipment leases. In 1998, the company’s first complete year of operation, goods and services worth $111 million were sold.

Blum sold his stake in 1999, before the company filed to go public. Stock values fell following the IPO and Blum bought the company again in 2001. The following year, expansion began with moves into other categories of items. The company has moved from 100 marketplace sellers on launch to thousands of sellers offering 11.5 million products. The company, which also sells through eBay, is only the second company in eBay’s history to receive 1 million positive reviews and a satisfaction rating of 99.7 %.

Acquisition by Rakuten Inc

Rakuten Inc acquired Buy.com in May 2010 at a value of approximately $250 million. Following the acquisition, the company changed the industry standard of 30-day returns to a 45-day return policy.

Following the change in ownership, the company reported its best Black Friday and Cyber Monday performance ever in November 2010.

The company was officially rebranded as Rakuten.com in January of 2013.

 

The 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 Luthi,

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.”

Virtual Marketplace

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.

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.

Mobile Strategy

As of 2012, mobile traffic accounted for 10 to 15 percent of Rakuten.com visitors. The site sees this figure continuing to grow as the trend towards online shopping increases. This is why the company is investing in this channel and giving it due importance.

Revenue Stream

The company has a three part fee structure for merchants who want to sell on the website. This includes a membership fee, a commission and a fee per item. Membership is about $99 per quarter or $33 per month. The commission is between 8 percent and 15 percent depending on different categories. And the fee per item is 99 cents which is charged when the item is actually sold. There is no fee to list items on the website.

Other channels of revenue are different packages for sellers. The professional level can sell as many as 50,000 products while the professional plus allows the sellers to list unlimited items on their stores. In addition, the professional level has limited access to Buymail, a service that allows the merchant to communicate directly with the customers. The professional plus allows unlimited access to this service. This is a key differentiating factor for the website as other platforms such as Amazon.com does not allow merchants to market directly to the customers.

Shipping and Returns

Shipping costs and return policies are created and communicated by each individual seller on their storefront.

HOW TO SELL SUCCESSFULLY ON RAKUTEN.COM

Though it is relatively simple to start selling through an online platform such a Rakuten.com, there are still some extra steps that can be taken to ensure success. These include:

Customize Your Store

This option is available to all Rakuten.com merchants and is one that should be utilized to its full capacity. A customized storefront allows the merchant to attract customers and create a link with them. It also allows the seller to appear more professional or speak to the target audience. Merchants have the option to add logos or images that help create synergy across different platforms the merchant might be using to sell. The merchant can also create customized product pages for special products that need to be highlighted. Managing all this content is easy to do through management tools offered by the website.

Create Interesting Content

Many sellers make the mistake of listing their items and not focusing on descriptions and details. This is an oversight and should be avoided. Not every item speaks for itself and not every customer comes to find a specific product. Instead, a well written description can convince a potential customer to make the decision to buy.

Use Marketing Tools

Rakuten.com attempts to support its merchants through tools and techniques to help grow sales. This helps both the merchant and the company. There are some excellent tools available for use that can help a merchant attain success.

Use Promotions

Rakuten.com offers its merchants useful promotional tools such as daily deals. This can help merchants attract attention and move more items out of the store.

Work With an e-commerce Consultant

Rakuten.com offers merchants the services of an ECC or an ecommerce consultant. The ECC’s aim is to help maximize sales and grow the business. These consultants can help by reviewing listings, offer marketplace best practices and help participate in the right promotional activities.

 

ADVANTAGES AND DISADVANTAGES OF SELLING ON RAKUTEN.COM

There are many advantages to selling your product through a marketplace such as Rakuten.com. There are also some disadvantages. A few of both are listed below:

Advantages

  • 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.

Disadvantages

  • The Need to market Your Store: Though Rakuten.com provides an efficient platform to list items on, the merchants have the responsibility to differentiate themselves from others by creating an interesting and attractive storefront and communicating with buyers.
  • Handling Shipping and Logistics: This is a big challenge for smaller sellers both in managing costs and ensuring reliability.

TAKING PRECAUTIONS ON RAKUTEN.COM 

In 2013, online shoppers reported wrong charges on their credit cards after the may purchases through Rakuten.com. According to news reports at the time, close to $10,000 dollars were charged on items such as gas valves, newspaper subscriptions in Cleveland, plane tickets in Germany and warehouse time clocks in Colombia. Users on SlickDeals.net also complained on fraudulent credit card charges after using these on Rakuten. Some users also had new accounts opened with their personal information such as birthdates and social security numbers.

Rakuten took the reports very seriously and pledged to work with authorities to investigate. The company remained unaware of any breach to their systems. The Rakuten staff communicated with people making complaints via Facebook and forums to ask them to get in touch to help straighten things out.

A customer run website called Rakutenfraud.com was created to highlight issues with the website’s security.

RAKUTEN.COM SUCCESS STORIES

DealFisher

DealFisher is a daily deals provider that sells primarily refurbished electronics and computer related items. DealFisher achieved significant success while selling on Rakuten in 2013. It was nominated for “Best New Product” and “Best New Merchant – Electronics” in the annual Rakuten Shop of the Year award.

The company managed to achieve this success because of its extensive support program for customers. The service is provided through electronics experts who are able to answer any technical questions or solve technical problems. The company has managed to counter the negative image of refurbished products through warranties, customer service and customer education using the Rakuten platform.

The company has also made use of the ability to offer deals and promotions at any time through the website as well as the ability to control all items to be sold. Rakuten attributes the company’s success to not only great products but also the work put in to maintain and customize the Rakuten shop. All these factors help build loyalty and increase sales.

Image credit: Wikimedia commons | Rakuten, Inc. under Public Domain.

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