Rakuten: On Course To Become A Genuine Global Player?Release date: July 15th, 2014 (116 pages) PDF/Powerpoint format. Price: GBP990.00 |
Abstract
Japan is the only major ecommerce market where a home grown incumbent, Rakuten, achieves higher gross merchandise sales (GMS) than Amazon, on both Amazon Retail and its marketplace combined. (The other market is China, but Amazon’s laggard position in the country is not due to Alibaba’s inherent competitiveness and business model, but an unlevel playing field and CP intervention skewing the market home grown players.)
How has Rakuten made domestic leadership and holding off Amazon possible? We believe that there are learnings that can be copied into other markets and that in time new local champions could emerge to knock Amazon off its perch in the France, Germany or the UK.
Irrespective of the industry, leading loyalty players could learn from Rakuten’s disruptions of global e-commerce. The key competitive edge in its unique business model with a diverse portfolio of businesses is the Rakuten Super Points loyalty scheme which generates loyalty and stickiness for both consumers and merchants and drives significant cross shopping effects. The super points look likely to develop into the first truly global scheme on a vertical basis including consumer finance, retail, travel, streaming content, sport etc and also horizontally across markets (Japan, USA, Germany, France, UK etc).
Rakuten Ichiba’s focus upon quality ensures that only reputable businesses are allowed to trade carrying extremely little risk of poor products and elevating Rakuten as the premium marketplace. Clearly conveying these qualities throughout its global expansion is essential if it is to have an impact in the global e-commerce space. Therefore, Rakuten offers something different to its rivals but these strengths can also be viewed as weaknesses.
The principle of quality merchants and products prevents Rakuten having the scale of Amazon and eBay as it is far more picky about who can sell on the site. This is a major drawback in Rakuten’s quest to become a global leader as it arguably needs a vast network of merchants to drive network effects and rival the big two.
This report probes into these matters and much more in great detail to provide a fascinating insight into this impressive yet relatively unknown e-commerce company whose innovative ideas, energetic expansion and strong adherence to its principles is to be admired. The great question is whether Rakuten will build as much brand awareness as Amazon and eBay have with consumers.
Table of contents
Executive summary: Rakuten 2014 | p13 |
The core of the business model: the marketplace | p21 |
Strengths of marketplaces: The model | p22 |
Strengths of marketplaces: the data benefits, monetisation | p23 |
Strengths of marketplaces: the data benefits, pricing power | p24 |
Strengths of marketplaces: pricing power, beneficial cash flow | p25 |
Strengths of marketplaces: beneficial cash flow, unlimited range | p26 |
Strengths of marketplaces: unlimited range, perfect OSA | p27 |
Strengths of marketplaces: network effects | p28 |
Context – Japan | p29 |
Japan: Demographics - How to tackle an ageing and shrinking population | p30 |
Japan: Demographics - What social reforms are needed? | p31 |
Japan: Economy – from the lost decades to Abenomics, Real GDP growth | p32 |
Japan: Corporate - Role of small firms, financial discipline, clean image | p33 |
Japan: Corporate - Issues facing Japanese companies, Rakuten bucking the trend p 34 Japan: Corporate - How tensions with China are affecting Japanese performance | p35 |
Online Retailing in Japan | p36 |
Online retailing: Internet penetration, e-commerce, m-commerce, konbini | p37 |
Online retailing: Konbini, payment methods, understanding Japanese consumers | p38 |
Online retailing: Competitive landscape, demographics dictating shopping habits | p39 |
Online retailing: How will a tax rise affect spending habits? | p40 |
Introduction: Rakuten’s business model | p41 |
Rakuten: Philosophy and historical milestones | p42 |
Rakuten: Rakuten Ecosystem, membership | p43 |
Rakuten: Rakuten Ichiba – the shop centric marketplace | p44 |
Rakuten: The mechanics behind Ichiba | p45 |
Rakuten: Super Points, Rakuten Card and Rakuten Edy | p46 |
Rakuten: Rakuten Ichiba towards a global vision | p47 |
Recent Key Developments | p48 |
April - May 2013: MasterPass and Daily Grommet | p49 |
June 2013: Logistics and Energy | p50 |
August - Nov 2013: Further acquisitions, Fulfilment centre, Spanish expansion | p51 |
November 2013: Sporting success | p52 |
February 2014: Viber, vi-vi-vi.com, European R&D centre | p53 |
April - May 2014: Mastercard tie-up | p54 |
May 2014: Addition of Alipay, Q1 results, Taiwanese credit card, wuaki.tv smart TVs | p55 |
May 2014: Rakuten CAFÉ opens in Tokyo | p56 |
May 2014: Rakuten Box locker scheme launched and SessionM | p57 |
May - June 2014: DC Storm and attribution | p58 |
Financials, KPI and Benchmarks | p59 |
Gross Merchandise Sales: total & e-commerce sales in Yen, 2007 - 13, declining influence of e-comm? | p60 |
Gross Merchandise Sales: total & e-commerce sales in €, 2007 - 13, Abenomics distorting results | p61 |
Rakuten: Net income, margins in Yen, € 2007 - 13, a healthier outlook than competitors? | p62 |
Rakuten Ichiba: Revenue, Ichiba sales revenue in Yen, 2007 - 2013, making its mark in Japan | p63 |
Rakuten Ichiba: Revenue, Ichiba sales revenue in €, 2007 - 2013 | p64 |
Rakuten Ichiba: Transactions and unique buyers 2008 - 13, the power of the loyalty scheme | p65 |
Rakuten: Ichiba GMS per user, annual members 2008 - 2013, what drives the high GMS figures? | p66 |
Rakuten: GMS per merchant, Ichiba as % of domestic e-commerce GMS | p67 |
Rakuten: number of 3P merchants 2012 - Q1 14 | p68 |
Rakuten: Fee structure, commissions UK, US | p69 |
Rakuten: Range issues and getting global network effects going | p70 |
Comparison Amazon & Rakuten, who leads the market? | p71 |
Amazon: Int’l sales in €m 2008 - 13, total, Japan, in Yen 2011-13, who leads the market? | p72 |
Amazon and Rakuten: Japanese sales revenue in Yen 2011-2013, GMS comparisons | p73 |
Amazon: Active Customer accounts 2009 - 2013, Analysis | p74 |
Amazon: Average quarterly spend 11 - 13, Japan in Yen, Rakuten GMS | p75 |
Amazon: 1P Sales by geography in $m, average price, total units, customers, frequency | p76 |
Comparison: Amazon vs Rakuten, who is number one in Japan? | p77 |
Comparison: Amazon vs Rakuten, a defense of Amazon’s business model | p78 |
Rakuten’s strategy | p79 |
Strategy: Global operations and exporting the marketplace model | p80 |
Strategy: International acquisitions – Kobo | p81 |
Strategy: International acquisitions - Wuaki, Viki and Viber | p82 |
Strategy: Marketplace model as a USP, global unification | p83 |
Strategy: getting the domestic logistics network right to succeed globally, global logistics | p84 |
Strategy: Rakuten bank, expansion into the States | p85 |
Strategy: Viber, the vehicle for expansion | p86 |
Loyalty strategy: the power of points, cross-use ratio | p87 |
Loyalty strategy: the power of the points, Amazon Prime threat, click and collect | p88 |
Rakuten’s overseas operations – the EU | p89 |
France: the priceminister acquisition, bolstered by ADS | p90 |
France: High competition, logistics strategy for the EU | p91 |
France: Differentiating from Amazon, moving away from c2c | p92 |
Germany: the tradoria acquisition, tough competition | p93 |
Germany: slow 3P recruitment | p94 |
Germany: aggressive growth plans | p95 |
Spain: ambitious targets, Wuaki link up | p96 |
Spain: a very different expansion strategy | p97 |
UK: the acquisition of play.com, repositioning and closing 1P | p98 |
UK: social media innovations and targeting a leadership position in UK e-retail | p99 |
Overseas operations – emerging markets | p100 |
Thailand: all about m-commerce | p101 |
China, India: payment partnership after baidu failure, India plans | p102 |
Brazil: a market showing much promise | p103 |
USA & Japan – the biggest opportunities? | p104 |
Japan: Synergy, supporting local communities | p105 |
USA: attempting to crack the hardest nut | p106 |
Outlook | p107 |
Outlook: What stands in Rakuten’s way to become number one? | p108 |
Outlook: focusing on quality over quantity, overcoming contradictions | p109 |
Outlook: overcoming contradictions, challenges from within | p110 |
Outlook: What areas is Rakuten getting right? | p111 |
Outlook: How to challenge Amazon and eBay globally, domestic difficulties | p112 |
Outlook: Tax rises, regulations, future of e-commerce | p113 |
Outlook: Promising future but doubts on becoming number one remain | p114 |
Sources | p115 |
Table 1: Gross Merchandise Sales: total sales and e-commerce sales in Yen, 2007 - 13 | p60 |
Table 2: Gross Merchandise Sales: total sales and e-commerce sales in €, 2007 - 13 | p61 |
Table 3: Rakuten: Net income, margins in Yen, € 2007 - 13 | p62 |
Table 4: Rakuten Ichiba: Revenue and Ichiba sales revenue in Yen, 2007 - 2013 | p63 |
Table 5: Rakuten Ichiba: Revenue and Ichiba sales revenue in €, 2007 - 2013 | p64 |
Table 6: Rakuten Ichiba: Transactions, quarterly frequency, number of buyers 2008 - 13 | p65 |
Table 7: Rakuten: GMS per user, per quarter, in Yen, € annual members 2008 - 13 | p66 |
Table 8: Rakuten: number of merchants, per quarter 2012 – Q1 14 | p68 |
Table 9 & 10: Amazon: Int’l sales in €m 2008 - 13, total, Japan, in Yen 2011 - 13 | p72 |
Table 11: Amazon: Active Customer accounts 2009 - 13, total, Japan | p74 |
Table 12: Amazon: Average quarterly spend 11 - 13, in Yen, Rakuten GMS in Yen, € | p75 |
Table 13: Amazon: 1P Sales by geography in $m, average price, total units, customers, frequency | p76 |
Chart 1: Strengths of marketplaces: The model | p22 |
Chart 2: Japan Real GDP growth | p32 |
Chart 3: Rakuten Ecosystem and services | p43 |
Chart 4: Rakuten Ichiba – the shop centric marketplace | p44 |
Chart 5: Super Points, Rakuten Card and Rakuten Edy | p46 |
Chart 6: Sales revenue in Japan (¥), Amazon vs Rakuten 2011 - 13 | p73 |