Amazon, Google, and American consumers, take note: If you haven’t yet heard of Rakuten, you will soon.
The Japanese electronic commerce and Internet company is the world’s third-largest online marketplace behind Amazon and eBay. In its homeland, Rakuten Ichiba is the largest e-commerce site in the country, earning $4.9 billion in revenue last year to make it the Amazon and Alibaba of Japan.
Founded in 1997 by CEO Hiroshi Mikitani, the Tokyo-based Rakuten now has more than 10,000 employees worldwide and is ready to take on the big dog of e-commerce—Amazon—with the launch of its first website in the U.S. this week: Rakuten Fashion, which delivers the same level of tech savvy and device acumen that has helped the company grow exponentially over the years. [more]
“We’ve intentionally been avoiding the radar screen of our big competitors—avoiding meeting Amazon and Google guys,” said Mikitani. “But now [that] our annual group revenues are $4 billion, we can become aggressive. This year is year one for global branding.”
The new site is a mash-up of men’s and women’s brands including Volcom, Lucky Brand, Ralph Lauren, Ray-Ban, Steve Madden, Hurley, Bulova, Label+Thread and !iTEM. Aiming to bring a narrative to the shopping experience, the site features a blog and video clips featuring style influencers like Hannah Bronfman, singer Judith Hill and Marie Claire editor Kyle Anderson.
George Chang, Rakuten’s SVP of sales, merchandising and marketplace, tells Fashionista that the vertical is looking to target two groups: Current Rakuten shoppers who know the brand globally and wish to shop in the U.S., and women ages 18 to 35. The latter group is being educated on a new term: “kimawashi,” which translates as “wear around” and means mix and match pieces that go from day to night.
As Fashionista notes, Rakuten’s U.S. fashion site features “product prices [that] hit just above Macy’s and at the bottom range of Nordstrom. So how can Rakuten compete with Amazon and eBay on the fashion front? Amazon is all about efficiency and reliability, Chang says, and it has translated its straightforward, information-heavy product pages over to Amazon Fashion. The fun and fantasy of shopping for clothes is lost.”
Committed to “humanizing” e-commerce, Mikitani told Wired that his marketplace model represents “the true face of social commerce.”
“Internet shopping isn’t just about efficiency and convenience,” he said. “It should be a rich communication between merchant and customer that benefits both sides. On the Amazon marketplace, merchants cannot reach the customer… Amazon controls and dominates the touchpoint.”
Over the past two years, Mikitani’s strategic shopping list includes a $100 million investment in Pinterest, paying $250 million to acquire America’s Buy.com, $38 million on Britain’s Play.com and $315 million on Canadian e-reader Kobo. The investment in Pinterest is key for the company, and Mikitani sees users eventually “pinning” images with a Rakuten ID, similar to an iTunes account number, a tool that is already used by 80 million people in Japan.
In another key recent strategic acquisition, Rakuten purchased Slice, a U.S. based e-commerce app that tracks online purchases, in August.
As the Wall Street Journal noted, Slice mines users’ e-mail in-boxes for receipts from Amazon, Nordstrom and other e-commerce sites to consolidate their purchase history, sends alerts about package shipments and monitors price changes to help users obtain subsequent rebates. Slice also charges a fee to websites to use its software and access some customer data.
Combine that data-mining with Rakuten’s personalized online shopping hub—and ability to let brands and merchants customize storefronts and deal directly with customers—and it’s a powerful platform that should put Amazon and eBay on notice on their home turf.
“Mikitani wants users to browse his sites because they enjoy it and let buying be an afterthought,” Forbes reported. “He calls it ‘discovery shopping.’ Unlike Amazon’s focus on making customers happy, Rakuten wants to make merchants happy. Its 40,000 sellers hawk everything from chocolate to concert tickets and pay Rakuten $630 per month in average rent and a 3% commission on sales.”
Rakuten, like Walmart and Virgin, has its tentacles in many businesses. While brands are experimenting in e-commerce, such as French bank Groupe BPCE and Twitter introducing a money via tweet service, Rakuten Bank of Japan has partnered with Facebook to let users transfer money within the social network.
But its sweet spot is e-tailing, and Mikitani believes his company is raising the bar on personalized shopping and a relatable e-commerce experience.
“I believe that human beings need communication and connection, and that shopping should be a rich experience,” he commented in Harvard Business Review. “I feel this way in part because of my heritage. If you go to a supermarket or a McDonald’s in Japan, you’ll find an extremely high level of hospitality and customer service—in contrast to the atmosphere in most Western markets, where customers are much more focused on speed and convenience. The personalized approach is really in my blood.”
As the next wave of Internet commerce unfolds, it turns out the influence cast by the founders like Jeff Bezos, Larry Page, Sergey Brin, Pierre Omidyar and Mark Zuckerberg, may make the difference at the end of the day.
Rakuten translates as “optimism”—and Mikatani is now prepared to exploit that fundamental ethos to the fullest as it prepares to make its name in the US and beyond.
Still, if it’s going to appeal to American fashionistas, it will need to step up its style game. As Fashionista comments, “While we’re looking forward to seeing how Rakuten Fashion takes off in the U.S., it seems unlikely that shoppers will leave their e-commerce standbys in droves for it. With its bright, busy design, the site doesn’t read fashion just yet.”
[Images via Rakuten]