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Review: Japan’s Web giant Rakuten


Rakuten is one of the biggest fish in the Japanese Web market. In fact the service is a giant even by global standards: Rakuten is the country’s largest E-Commerce site (oh, that old word) and Japan is the world’s second biggest economy. This alone says a lot.

The company is well known over here for offering the country’s largest shopping mall site (Rakuten Ichiba).

I will review Rakuten in the following order:
I) General Info
II) Starting Page
III) Functions and Features

IV) Business Model

V) Opinion

I) General Info
Rakuten was founded by Hiroshi Mikitani in 1997 and went IPO three years later. Mikitani is still CEO. The Tokyo-based company employs almost 4,000 people.

Market capitalization stands at around six billion USD (!) and was even much higher some years ago. Rakuten yields an annual revenue of about two billion dollars.

Last month, the company announced it plans to enter as many as 27 international markets until 2012 (China, Taiwan, Brazil etc.). Rakuten USA is headquartered in Boston.

Here is their company info site in English.

II) Starting Page
As to be expected, the starting page is huge. There are dozens and dozens of sub pages/services which actually come close to being comprehensive sites/companies in themselves!

Please click on the picture for an enlarged and translated version of Rakuten’s starting page:

The container on the top left I labeled “Main contents/Links” comprises the following tabs:
Auctions, Group purchases*, Mobile Rakuten, Present Finder, Market*, Rankings, Financial Services, Shopping Cart, Rakuten Travel, Portal*.

“Group purchases” means that prices will fall if more people buy a certain product. Under “Market”, users can browse Rakuten through categories to find and buy products. “Portal” links to Rakuten’s own search and information portal Infoseek (acquired in 2000).

III) Functions and Features
The company is highly diversified, both horizontally and vertically. Thus their site integrates a wide range of services.

Apart from the services described above on the starting page (financial services, a successful travel site (English version is here) etc.), Rakuten offers
– a flea market
– an online bookstore
– a download service for digital contents
– a ticket sales service and much more.

Rakuten is even involved in the Golf business!

Rakuten’s online shopping concept is very user-friendly because of its unified shopping cart approach. This means users can put i.e. a BluRay disc, diet pills and shoes into one basket from different shops and pay in one sum.

All services are being offered under the “Rakuten” brand. So no wonder that some people even speak of an online shopping monopoly when talking about the company.

IV) Business Model
Rakuten’s business model is quite simple: Make money through lots and lots of services covering lots and lots of industry sectors.

For example, approximately 60,000 shops are currently registered on the site (Rakuten Ichiba, Travel and business section combined) offering over 20 million different items. The company is earning revenue by charging fees from online mall operators, travel agencies, securities companies etc. (fixed fees/commission model).

Rakuten also offers a magazine, a special credit card, a comprehensive mobile site, and much more. Also, in the past years the company bought a professional baseball team, several financial/consulting/Web companies and a stake in a major Japanese TV network! In 2005 for example, Rakuten acquired LinkShare, an American Web marketing company, for 425 million USD. These guys are not throwing around peanuts.

V) Opinion
Rakuten is ridiculously huge, that’s for sure. I can’t think of an E-Commerce site with a similar scope in the US or Europe at least. But somehow the company manges to keep everything under one umbrella even though Rakuten and its CEO were regularly in the papers in the past due to a number of scandals.

From a customer’s point of view, I personally like the unified shopping cart approach in Rakuten Ichiba even though I never bought anything there. But from I hear, shopping at Rakuten works without any problems. Given the highly critical and strict mentality of Japanese consumers, this is a must anyway.

Judging design, usability and structure, the site itself is OK given its enormous range of contents.

It will be very interesting to see how Rakuten will change and grow (or maybe collapse which is always possible) in the future. Especially their plans to internationalize rapidly sound really, really ambitious….

Serkan Toto About Serkan Toto
I am the CEO & Founder of Kantan Games, Inc., a Tokyo-based game industry consultancy focused on the Japanese market. Please subscribe to updates on this site via RSS or Email.