Interview with Hiroshi Mikitani, CEO of Rakuten Ichiba, Japan

The original German interview is courtesy of Matthias Hell and shopanbieter.de, a big „thank you“ to Matthias!, translation by ceo-interviews.com.

Guillaume Paumier / Wikimedia Commons, CC-by-3.0

„The biggest E-Commerce Site you never heard of“, that´s the famous Techcrunch bonmot about the Japanese internet group Rakuten and indeed, there is not only some truth in that: the marketplace Rakuten Ichiba had revenues of  346 billion Yen (about 5-6 billion US-Dollars, depending on the exchange rates) in 2010, the company has more than 10.000 employees and is with a market capitalization of 13 Billion US-Dollars* one of the biggest internet companies worldwide. In the last two years Rakuten increased its speed of expansion and acquired among other companies buy.com (USA, Priceminister (France), Play.com (UK) as well as the Canadian ebook company Kobo. In Germany Rakuten took over the marketplace Tradoria.de in the middle of 2011, which has now been renamed into rakuten.de. CEO Hiroshi Mikitani took the name change as an opportunity to come to Germany. Please read our Interview with the CEO of Rakuten:

Where do you see the difference between Rakuten and the US platforms Amazon and eBay?

Rakuten Ichiba is a shop-based online marketplace. Basically you can find here everything you can buy. And if you do not find something at Rakuten Ichiba, probably it is because it is not available in Japan. With its shop-centered approach Rakuten Ichiba is fundamentally different from Amazon. The platform features more than 40.000 indivualized online shops. eBay has adapted a strategy within the last years, that mimicks Rakuten. But also in comparison with eBay there are big differences: the eBay-Stores look very much alike, which is not the case with Rakuten. We focus on certain minimal common standards, beyond that the individual shops can change everything.

With this high degree of independence, don´t you encourage successful sellers to start their own, totally independent online shops?

Indeed, some do actually start their own shops, but most of them come back to Rakuten Ichiba very fast. In comparison the traffic acquisition costs for an independent shop are astronomical. In contrast to that the costs shop owners have to bear at at Rakuten are very small and include a good customer support. Selling at Rakuten Ichiba is much more economically preferable to running an own shop.

As everybody knows, Rakuten is expanding. What is the current status quo of your expansion strategy?

We plan to expand to 27 OECD countries as well as to the BRIC countries. Germany is very important for us, as it represents a very big market. E-commerce grows very well and the offered logistics services are very good.

After the takeover in the middle of 2011, Tradodria has now been completely renamed into  Rakuten.de. What are you next goals for the German market?

We want to become the No. 1 internet marketplace. This will not happen overnight but we can achieve that within 5 years. As our business model is based on cooperation, this depends of course on which sellers we get on our platform. For being able to reach our goals there must be a number of big sellers. If we succeed in this, Rakuten can become an alternative in Germany. Rakuten has a strong commitment towards the German market. We believe that also the local economy can benefit from Rakuten and aim for strengthen the local retail.

What are your plans for local retail?

Online/Offline integration is a strategic objective and because of that very tricky. Recently Amazon encouraged its customers to make photos of barcode in retail shops and offered them then a discount, when buying online. We would never do something like that. When somebody scans a barcode at a local shop in Japan and buys then at Rakuten online, the local shop gets a commission from us. We want to be fair, we do not want to ruin the retailers. This is why we focus on a business model, which offers both sides a fair share. It is just the way today, that customer like to inform themselves offline and buy online. We have developed a solution, that identifies via GPS in which shop the customer got the information and which makes the local retailers some kind of affiliate partners. We don’t want local retailers to consider e-commerce as an enemy, the shops should rather encourage customers to scan barcodes.

How can existing partners of Tradoria benefit from the acquisition by Rakuten?

It is our goal to expand international trade and German sellers can benefit from that. We plan to support the sellers with own logistics services and want to build up own capacities also in Germany. Rakuten is a big group and our partner can benefit a lot from each other.

In Japan Rakuten focuses very much on mobile commerce. What potential do you see for buying via smartphone or tablet in Germany?

Mobile Shopping is very common in Japan, more than 20% of e-commerce is done via mobile devices. But this will happen everywhere and market share of 50% and more will be common for mobile commerce. But our goal is not to distinguish between the devices, but to offer a seamless shopping environment, so to speak a cloud environment for e-commerce.

In Japan you are via “Edy” also an active player in the mobile payment market. Could you briefly describe your approach in this area?

Edy, together with partners, makes a NFC-based payment solution available to local retailers. The biggest challenge for every provider is the question, if they are able to install thousands of payment terminals in thousands of stationary stores. We rely on Sony´s terminal business. Furthermore, in most smartphones NFC chips are already installed these days. But let´s see how successful we will be; currently everybody wants to get into the NFC business.

Rakuten is only one of many big e-commerce players from Asia. Will soon other competitors like Taobao, Alibaba or Tencent also expand to Europe?

I cannot tell, what plans the others have in regard to expansion. But many of our competitors still have a lot do in their home markets. Especially in China counterfeits are a big problem.

And what about Alibaba?

Alibaba is mainly a B2B marketplace and that is not our focus. We are focused on B2C commerce, so we don’t regard Alibaba as a competitor.

 

(Click here for the interview in German on shopanbieter.de)

 

*The German interview states 15 Mio. Dollars market capitalization, ceo-interviews took the values and exchange rates of February 3rd 2012. Source: businessweek.com

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