This is the case study conducted on Japan largest online retail chain store Rakuten Ichiba, and also its latest expansion to Rakuten Taiwan Joint Venture with President Chain Store, the largest chain store owner in Taiwan that own 7-Eleven.
Case Analysis - Rakuten
Rakuten corporate summaryRakuten in early stage (pre-IPO) Rakuten in growth stage Rakuten in global expansion stage Rakuten Ichiba summaryRakuten Ichiba business model Rakuten Ichiba success secret Rakuten Ichiba Taiwan summary Rakuten Ichiba future Comparison with Easy Pha-max Business model Operation Things to learn from Rakuten Ichiba Conclusion
Mr. Hiroshi Mikitani,Chairman & CEO Rakuten Inc. A former banker at age of 35, founded Rakutenin 1997 during Internet boom and brought thecompany to IPO in 2000.
40million members 3rd Jul 08 Ranked No. 5 in Japan top website Alexa No. 1 retail brand in Japan & 14th Consumer Brand Exceed 24,000 merchants Q2 08 Net sales of US$1.76bil & US$304mil net income 2007 financial report Hired aprox. 3400 employees IPO in Jasdaq 2000
1993 1995: Mikitani earned his MBA in Harvard, and join Bank of Japan when he returned 1995: Mikitani left his job with Bank of Japan to start an online business with his own money 1997 2/7 : founded MDM, Inc. with 5 employees 1997 5/1 : Rakuten Inchiba (cybermall) launched, with 13 merchants & first month revenue of US$3200Initial business model: charging virtual real-estate fee of US$475 per year
1999: Mall expanded to 1600 shops & 600,000 registered members 1999 June: rename to Rakuten Inc. 1999 Sept: start Rakuten Auction serviceRakuten make $5.7mil sales in 1999, earned $2.4mil profits. 2000 : start Rakuten University teaching e-business Rakuten went public in Jasdaq in Apr 2000 with market capital of $3.1 billion (45% own by Mikitani & his wife)
2000: founded Rakuten USA Inc.Rakuten Books founded as JV with Nippon Shuppan Hanbai Inc. Infoseek Japan acquired by Rakuten Inc as portal services 2001: Showtime Inc for TV shopping 2002: Rakuten travel Inc founded Lycos Japan acquired by Rakuten & merged with Infoseek2003: MyTrip.net acquired by RakutenStart Rakuten Securities Inc by acquire DLJDirect SFG Securities2004: Acquired Minnano Shushoku for career business service Acquire Cyber Brains Consultancy to form Rakuten Research Acquire Aozora Card to form Rakuten Credit Founded Rakuten Baseball Rakuten Eagle Baseball team
2005: Acquire Linkshare Corp (online marketing company) under Rakuten USA Rakuten Auction Inc founded as JV with NTT Docomo Consolidate Kokunai Shinpan to structure Rakuten KC 2006: Rakuten sign ops tie up with Shinsei Bank for online mortgage & Tokyo Bank for online banking business 2007: Rakuten Inc celebrate 10th Anniversary Rakuten Travel open Guam branchFusion communication acquired by Rakuten to start IP Telephony Rakuten Bank@TTB was founded in alliance with Tokyo Tomin Bank Rakuten move in to new HQ Rakuten Tower Rakuten enter restructuring stage to further improve business efficiency
2007: Rakuten and Taiwan President Chain Store sign JV to start Rakuten Ichiba Taiwan 2008: Rakuten Europe open in Luxemburg as European Hub Rakuten start operation in Bangkok Thailand for travel business
The most successful e-business portal in Japan
240,000 orders a day
Merchants Rakuten Merchants Server (RMS) 40million of Rakuten members Rakutens ECC (E-commerce Consultants) Rakuten University Members 20million items for selection User-friendly interface Rakuten super point program (loyalty card) Safe shopping service
May 7th 08 : Pre-openingMay 27th 08: Grand opening Aug 6th 08: 440 shops & 160k members Hot sales item: Ladies fashion & Japanese products Target 1000 shops by end 2008
Training courses for Rakuten University RMS Training (must attend) : NT$ 3,000
Listed ItemsMonthly RentalTransaction FeesPackage 12,000 itemsNT$ 5,0005%Package 25,000 itemsNT$ 7,0004%Package 3100,000 items NT$ 10,0003%
Become the No.1 Internet Service company in the world Future e-commerce will move from US & EU lead to Asia leads, main reason is due to raising star from China and India consumers. Rakutens strategy to enter China market will determine if the company World No. 1 goal is achievable.
Rakutens competitive advantages Trusted Brand in Japan Large subscriptions of members in Japan Complete e-business eco-system in Japan Large base of merchants in Japan Challenges for Rakuten ahead Japan No.1 World No. 1 Competition with Amazon (currently 80mil active members & 2million stores associated with Amazon) Global economy downturn may slowdown its global expansion (but may be a golden opportunity for its M&A strategy if the company is loaded with healthy cash-in-hand)