model and Market Strategy日本亚马逊商业模式 (avo.doc

Rakuten: Japans Amazon 11 Rakuten: Japans AmazonPrepared for MSIT 3830 E-Commerce & E-Business Spring 2014Pat Gillogly, InstructorStudent NameDate SubmittedIntroductionE-commerce has already become the most popular business way in the whole world. E-commerce breaks the state boundaries and allows people to make the transactions at any time in anywhere. Since the e-commerce market is so attractive, the e-commerce followers face tough competition. In order to stand out in this competition, each e-commerce proprietor commits themselves to creating a new model of e-commerce. E-commerce has been applied into many aspects, among these fields; online retailer is one of the most active areas.Rakuten, Inc. is a Japanese electronic commerce and Internet company based in Tokyo, Japan. Among its numerous online properties, its flagship B2B2C (business-to-business-to-customer) model of e-commerce site Rakuten Market is the largest e-commerce site in Japan. Different from other marketplaces which may compete directly with sellers, Rakutens model seeks to empower merchants to deliver Omotenashi, a Japanese high service mindset, which means the hospitality, to help sellers create lasting relationships with customers. As we all know, Amazon, an American multinational electronic commerce company, which is the worlds largest online retailer. Amazon is definitely the best example in e-commerce business as an online retailer. It is not surprising that Rakuten and Amazon have so many similarities. Since Rakuten has been expanding rapidly in recent years, especially in overseas markets, there is no doubt that Rakuten constitutes Amazons competitor in online retail field. This paper is focused on the unique e-commerce model of Rakuten. In this paper, I will introduce Rakutens business structure, its services and the relative fields that Rakuten has been involved. Whats more, the competitive situation is the other part that will be discussed in this paper. In this paper, I will compare Rakuten with Amazon to find out the advantages of Rakuten and how it would grow better in the future. Company OverviewRakuten, Inc. is one of the worlds leading Internet service companies, providing a variety of consumer and business-focused services including e-commerce, travel, banking, securities, credit card, e-money, e-book, portal media, online marketing and professional sports. The company was founded in February 1997. According to its financial report, Rakutens 2011 revenues were US$ 4.7 billion with operating profits of approximately US$886M, suggesting an 18.8% operating profit margin. As of December 2011, it has a market capitalization of US$13 billion and some 10,000 employees worldwide. Rakuten is expanding globally and currently has operations throughout Asia, Western Europe and North America. Rakuten ranks amongst the top 10 Internet companies in the world along with Google, Amazon, eBay, etc. Company Development Rakuten has introduced various businesses to pursue empowerment since its foundation in 1997. During the 15 years of its growth, Rakuten have made several milestones in its progress. In 1997-1999, Rakuten built up the first Internet shopping mall named Rakuten Ichiba when many people did not trust online shopping. In 2000, Rakuten raised its awareness by going public through an IPO. In 2001, Rakuten fist raised its e-commerce consumer market to one trillion yen and got start its travel business online. In 2002, Rakuten implemented a new pricing system with a combination of monthly fixed fees and commission sales to create a new win-win business scheme. In 2005, Rakuten expanded into the personal financing which will lead to the growth of grip profitability and usage frequency. In 2006, Rakuten established the Eco-System across the group to connect with global real businesses across the Internet and also introduced a new organization structure called Growth Management Program for its further growth. In 2008, Rakuten expanded its market from Japan to Asia. In 2009, Rakuten took a new step toward transforming its business from being a Japanese startup to a global Internet services company. In 2010, Rakuten became into a true global company. Company Mission StatementRakuten wants to transform society through the Internet and create a more affluent world. In order to complete this goal, Rakuten shares the ideas of “Value”, “Mission”, and “Practice”. These three ideas define the Rakuten employees as a highly motivated winning team, and aim to become the No.1 Internet services company in the world. According its company content, it has the clear explanation about what exactly this three ideas means. Value means grow independently, and creates a better the society through their work. Indeed, Rakuten has the belief in the capabilities of human beings and commitment to the empowerment of their colleagues and customers. Mission is quite simply that Rakuten aims to change our world and create a more well-off society. Practice means the understanding the company culture of Rakuten and acts on the company culture to enhance skill levels. In other words, the “Practice” requires employees act engage in daily activities with a sense of responsibility and ownership of their actions in order to make a contribution to their business.Company CultureAs I mentioned above, Rakuten has a very unique e-commerce mindset in consumer services which called “Omotenashi”. This mindset is focused on the hospitality which brings a good reputation to Rakuten. Actually, this sprite comes from the company culture in Rakuten which called Rakuten Shugi.Rakuten Shugi forms the foundation of the Rakuten and it tells people the way to work regardless of where they work or what they do. The core of the Rakuten Shugi is Rakuten Brand Concepts. Rakuten Brand Concepts represent values that employees aim to realize through the business and other activities of Rakuten. All the employees working in Rakuten must understand and identify with these Rakuten Brand Concepts.Rakuten Brand Concepts includes five perceptions: “On a Mission”, “Behave Ethically”, “Prepare to Succeed”, “Complete Commitment”, and “Solidarity”. According its company handbook, Rakuten gives all its employees a clear description about the core culture of its brand content. “One a Mission” is equal to the empowerment that Rakuten believes that the only way for a business to grow over the long term is to contribute to the world so significantly that people cant imagine life without it. Rakuten has a belief that the more people they can empower, the more completely they will fulfill their mission.“Behave Ethically” means that they believes that the means of pursuing a mission are as important as the ends. Rakuten is committed to conducting business with honesty, sincerity and dignity; therefore it is critical that all Rakuten employees always behave with integrity and honor. “Prepare to Succeed” means that in order to help each of employee succeed, Rakuten has established the Principles for Success. By taking the initiative to prepare thoroughly and execute effectively, and by practicing the Principles for Success, Rakuten ensure the success. “Complete Commitment” means that Rakuten realizes that they face intense competition. The importance of their mission requires them never to give up. When circumstances change, they need to adjust their plans so that they can still accomplish their goals. “Solidarity” requires all Rakuten employees to work as a team. Only when they work together can this action become an important source of strength.Business ModelBusiness Strategy Speaking of the successful business strategy of Rakuten, we need to mention about its original business system that called Eco-system. This business system is the core function of Rakuten and because of this system, Rakuten has grown rapidly and will continue growing. The Rakuten Eco-system will enrich the lives of all members who use our services. Rakuten provides one-stop access to a wide range of services via the Internet. Our member database serves as the foundation for an enhanced marketing strategy based on the organic linkage of all Rakuten Group services, including e-commerce, travel, portals and finance, under the Rakuten brand. We call this the Rakuten Eco-system. With our common loyalty program called Rakuten Super Points, members are incentivized to use our many services in all aspects of everyday life. With the recent addition of Eco, our Eco-system has extended beyond the bounds of the Internet world and into the real world. The Rakuten Eco-system will continue to enrich the lives of all members who use our services. The Eco-System of Rakuten Picture 1-Source: /careers/business/strategy/Global ExpansionTo become the No.1 Internet service company in the world is always the company goal of Rakuten. Under the globalization, Rakuten has caught the chance to start its global plan to move its business step out of Japan. In order to complete this long-term business strategy, Rakuten has populated its Eco-system, which is already gaining ground in Japan, create a mechanism to integrate various services on a global scale, and empower society through the Internet. Based on its Global Expansion plan, Rakuten will establish the Eco-systems all over the world, and those eco-systems will fuse, unbound by borders between countries. Rakutens goal is to become the worlds biggest Internet service company. In order to realize this, it is necessary for the company to develop its business on a global scale. Currently with the rapidly declining birthrate and aging population, Japan faces a difficult future in which it is predicted the market will continue shrinking in the long term. Considering matters on a global scale, however, rapid economic growth can still be expected in many countries including those of BRICs (Brazil, Russia, India, and China). The Rakuten has decided 2010 will be the year to transform itself into a truly global corporation, and they are currently making steady progress in our expansion overseas. In 2010, they have been making rapid inroads into overseas markets, with entry into the U.S. market through the acquisition of one of Americas biggest e-commerce companies, B, and entry into the European market through the acquisition of PriceMinister, which has the highest number of users in France. At the same time, the company decided in 2010 to make English the common in-house language by 2012, in order to promote global level in-house communication. Rakuten Global ViewPicture 2- Source: /careers/business/global/strategy.htmlThe main services driving Rakutens Global Expansion starting with the e-commerce and travel businesses, they plan to adjust and refine their business models to local markets as they expand overseas. The Picture 2 is the world map of Rakutens business. From this map, we can find out that Rakuten has built its business boots across the world and it is trying to grow its business start by its famous e-commerce services.The e-commerce services are include Internet shopping mall operations, e-commerce consulting, performance marketing, services, etc.Table 1- Rakuten Global E-commerce ServicesAsiaEuropeRakuten IchibaPriceMinisterRakuten International Shipping ServicesPriceMinister United KingdomRakuten Ichiba TaiwanPriceMinister SpainTARAD Premium MallB FranceB GermanyNorth AmericaB ItalyBB SpainB CanadaB United KingdomLink ShareA Vendre A LouerAnother Rakutens famous service is its travel services which provide accommodation reservations, general travel site, vacation comparison site operation, consulting etc.Table 2- Rakuten Global Travel BusinessAsiaEuropeRakuten Travel/ TabimadoVoyager Moins CherTechnology at RakutenIn order to empower society and become the No.1 Internet Service Company in the world, Rakuten is aggressively pursuing global expansion. Programming is the key to realizing that goal. At Rakuten, people do all things from service planning to programming management. Because of this, it is possible to quickly develop new services. As they approach a new phase in our global expansion, the role that programming plays will become increasingly more important. With this establishment, their programming research has entered a new phase, enabling them to provide an environment where they develop everything from new technologies to new service models. Global Expansion - Rakuten Institute of Technology (R.I.T)Rakuten Institute of Technology (R.I.T.) is the dedicated organization within Rakuten, Inc. R.I.T. encourages curiosity, interest & challenge of members and promotes research & development in order to create opportunities combining emerging technologies with innovative services. The concept of R.I.T is called “More Than Web” which means people can get great reality through emerging technologies. Rakuten has spent a decade evolving its business model centered on e-commerce, to create a market completely new to Japan, named Rakuten Ichiba. Now they provide many services such as travel agency (Rakuten Travel), securities (Rakuten Sho-ken) and so on to bridge between real world and net usability. They think their many services are synergized one after another and new reality of our world will be born. They call this Third Reality. They predict the future of the internet, and promote about new emerging technology and service. The main mission of R.I.T is to turn emerging and growing new technology seeds into new business and service opportunities to enrich the Internet life all over the world. In order to reach this goal, R.I.T focus on several technology topics such as natural language processing, multimedia processing, data mining and massive and distributed computing. Competitor AnalysisEven through Rakuten is the biggest Internet company in Japan, it also has multiple competitors inside and outside. Since the final goal of Rakuten is to become the successful Global Internet Company, during its global expansion, it faces the most powerful competitor in the world-Amazon.A, Inc. is an American multinational electronic commerce company in the United States. It is the worlds largest online retailer. The company also produces consumer electronics and is a major provider of cloud computing services. Amazon has separate retail websites all over the world. Since the global e-commerce market grows so fast and has a lot of potential profits, Amazon decided to expand its business into Japan based on the last report from Japanese government said that Japanese online B2C sector grew by 21.7% on a year-on-year basis. However, at the same time, Rakuten also wants to take its global plan to the next level which threats the Amazon expansion in Japan. There are several factors that contribute to this competition that Rakuten will have the chance to win against Amazon in Japan and make its global goal.1. Rakuten V.S Amazon in JapanRakuten has over 47 million members in Japan, which means that 1 of 3 Japanese is registered in Rakuten. The biggest difference to Amazon is that Rakuten was founded as a B2B2C company without a warehousing function. Its a platform for individual merchants to sell their products to individual customers online. In addition, Rakuten aims to create a long-term relationship between sellers and buyers, the B2B2C business model is suited to this idea and will provide a huge brand experience for its customers.2. Rakutens success factors- aggressive pricing and wide diversificationThe main success factor for Rakuten is helping Japanese brick and mortar businesses that want to set up customized online storefronts by themselves. At the end of the 1999s, Rakuten began systematically undercutting prices of existing hosting services by up to 75-85% and combined this with an aggressive sales and consulting model. As a trade-off for cutting out middlemen, merchants had to pay upfront, which made it possible for Rakuten to maintain a positive cash flow. In return, Rakuten pockets fixed “virtual real estate” fees from the over 28000 merchants currently registered on the site, in addition to commission payments, which means 2.6% of each retailers sales revenue. In other words, Rakuten finds out a good balance between sellers and buyers. Beside its considerable customer service, Rakuten also take care of its sellers that provide good business solutions for them to improve their business. Whats more, Rakuten transformed more radically than Amazon did in the United States. Rakuten acquired popular online portal to drive traffic to the main site, established an auction service, provides online securities brokerage, provides an online travel service and offers a blogging platform.Moreover, there is a Rakuten credit card, a personal consumer credit service, an e-bank, a ticket sales service and a popular golf court reservations service that provided by Rakuten.3. Rakuten Marketplace: 35 million items from $1 to $100000Rakuten is well known as an online shopping site for Japanese. In contrast to Amazon, consumers can get anything on Rakuten, from trucks, luxury products, and digital content to fruits that directly offered by regional farmers. The price level is relatively low for many items and the shipping is generally free on all books and media products.And the most important thing is that Rakuten claims that its business is all based on the honesty and the trust from both the sellers and buyers, which require all the description posted on the Rakuten should be the truth. And once any sellers has been reported acted a fake business transaction