Case Analysis Rakuten Ichiba
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18-Oct-2014 -
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Transcript of Case Analysis Rakuten Ichiba
• Rakuten corporate summary– Rakuten in early stage (pre-IPO) – Rakuten in growth stage – Rakuten in global expansion stage
• Rakuten Ichiba summary– Rakuten 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$3200
• Initial 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 service• Rakuten 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 Infoseek• 2003: MyTrip.net acquired by Rakuten
Start Rakuten Securities Inc by acquire DLJDirect SFG Securities• 2004: 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 • Rakuten’s 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-opening• May 27th 08: Grand opening • Aug 6th 08: 440 shops & 160k members • Hot sales item: Ladies fashion & Japanese
products • Target 1000 shops by end 2008
Listed Items Monthly Rental Transaction Fees
Package 1 2,000 items NT$ 5,000 5%
Package 2 5,000 items NT$ 7,000 4%
Package 3 100,000 items NT$ 10,000 3%
Others Misc:
Training courses for Rakuten University -RMS Training (must attend) : NT$ 3,000
• 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. Rakuten’s strategy to enter China market will determine if the company’ World No. 1 goal is achievable.
• Rakuten’s 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)