Rakuten is a Japanese company that has revolutionized the way people shop online. The company provides a unique shopping experience by incorporating various services that cater to the needs of its customers.
This article aims to educate readers about the Rakuten business model and give a brief overview of its history.
The Rakuten Business Model
Rakuten generates revenue through various channels such as commission, cashback, and purchases made through their website or app. The company partners with retailers and earns a commission on every purchase made through their platform.
Rakuten also offers cashback to its customers for every purchase they make. The cashback percentage varies depending on the retailer and product.
To avail of the cashback offer, customers must first verify their purchase through Rakuten’s website or app. The verification process confirms that the purchase was made through Rakuten and ensures that the cashback offer is credited to the customer’s account.
Rakuten’s services extend beyond e-commerce. The company offers a range of internet services such as cashless and e-money payments, fintech services, securities, banking, and a single ID for multiple services.
Rakuten’s ecosystem includes a variety of businesses that cater to the varying needs of customers. Rakuten’s Diverse Services and Ecosystem
Rakuten’s e-commerce business is the most well-known of its services.
The company operates an online marketplace, Rakuten Ichiba, which offers a wide range of products including electronics, fashion, and household items. The company also operates Rakuten Books, a subsidiary that specializes in online book sales.
Rakuten Travel is another service that offers an extensive range of travel options, including flights, hotels, and car rentals. The company has expanded its e-commerce reach into other countries through joint ventures and acquisitions.
Rakuten’s Super Points program is another notable aspect of its ecosystem. The program encourages customers to make purchases by offering points for every purchase made on their platform.
Customers can redeem these points to avail of discounts or special offers.
A Brief History of Rakuten
Rakuten was founded in 1997 as MDM, an online retail business. The company was renamed Rakuten in 1999, and its e-commerce platform, Rakuten Ichiba, was launched the same year.
The company’s founder, Hiroshi Mikitani, had a vision to create a platform that would bring together a variety of businesses under one roof. To achieve this goal, Mikitani established Rakuten University in 2005, which helps employees develop business skills.
The university’s curriculum emphasizes the importance of customer service, innovation, and entrepreneurship. Rakuten continued to grow and expand its services.
In 2010, Rakuten acquired Buy.com, a US-based online retailer, and Play.com, a UK-based retailer. In 2012, the company acquired Kobo, a Canadian company that specializes in e-books.
Rakuten’s global reach continued to expand with joint ventures in China, India, and Indonesia. In 2016, the company made a significant acquisition of the messaging app, Viber, which added to its already diverse ecosystem of services.
Conclusion
In conclusion, Rakuten has created a unique shopping experience that offers customers a variety of services that cater to their needs. The company’s ecosystem includes e-commerce, internet services, fintech services, and securities.
Through its Super Points program, the company encourages customers to make purchases and rewards them for their loyalty. Rakuten’s founder, Hiroshi Mikitani, had a vision to create a platform that would revolutionize the way people shopped online.
This vision has materialized into a company that has expanded its reach internationally and incorporated a diverse range of services under one roof. Rakuten’s history is marked by milestones and expansion that have solidified its position as a global leader in e-commerce.
Ownership and Mission
Rakuten is a privately-owned company founded by Hiroshi Mikitani and his wife, Haruko Mikitani. Hiroshi Mikitani serves as the company’s CEO, while Haruko Mikitani serves as the Chairman.
The couple owns a significant stake in the company, making them the primary shareholders. In addition to the Mikitanis, Rakuten has various minority shareholders, including Tencent and Japan Post Holdings.
Rakuten’s mission statement emphasizes three core values: Empowerment, Innovation, and Entrepreneurship. According to the company’s website, these values are the foundation of Rakuten’s culture and guide their strategic decisions.
The mission statement states that Rakuten is “committed to creating value that empowers individuals, communities, and society as a whole to pursue their dreams.”
The first value, Empowerment, focuses on providing people with the tools they need to succeed. Rakuten does this by offering a range of services such as internet services, fintech services, and e-commerce.
By providing these services, Rakuten aims to empower its customers and enable them to reach their full potential. The second value, Innovation, is what drives Rakuten’s growth and expansion.
The company is constantly looking for new ways to improve and innovate. This focus on innovation is evident in the company’s diverse range of businesses, from e-commerce to messaging apps.
The third value, Entrepreneurship, is a reflection of Rakuten’s origins. The company was founded by Hiroshi Mikitani, who is known for his entrepreneurial spirit.
Rakuten encourages its employees to be creative and take risks. This approach has led to the development of new services and businesses within the company.
How Rakuten Works
Earning Cashback through Rakuten
Rakuten is well-known for offering cashback to its customers. To earn cashback, customers must first sign up for Rakuten.com.
Once they have an account, they can shop at any of Rakuten’s partner stores. These partner stores include a wide range of retailers, from Target to Macy’s.
When a customer makes a purchase through Rakuten’s website, a tracking cookie is placed on their device. This cookie allows Rakuten to verify the purchase and award cashback to the customer’s account.
The cashback percentage varies depending on the retailer and product. Some retailers offer up to 10% cashback, while others offer a flat cashback rate.
It’s important to note that not all purchases qualify for cashback. Some items, such as gift cards, may not be eligible for cashback.
Additionally, customers must make their purchases through Rakuten’s website to earn cashback. If they make their purchase directly through the retailer’s website, they will not be eligible for cashback.
Rakuten as an Affiliate and Revenue Sharing
Rakuten operates as an affiliate of its partner stores. This means that when a customer makes a purchase through Rakuten’s website, Rakuten earns a commission from the retailer.
The commission percentage varies depending on the retailer and product. Rakuten’s revenue sharing model is beneficial to both the company and its partner stores.
Rakuten earns a commission on every purchase made through its website, while the partner store gains exposure to new customers. Through this model, Rakuten is able to offer cashback to its customers and generate revenue for the company.
One of Rakuten’s main partner stores is Target. When a customer makes a purchase at Target through Rakuten’s website, Rakuten earns a commission from Target.
Rakuten then shares a portion of this commission with the customer in the form of cashback. The cashback percentage varies, but it typically ranges from 1% to 10%.
Conclusion
Rakuten’s unique business model has transformed the way people shop online. The company’s services extend beyond e-commerce to include internet services, fintech services, and securities.
Rakuten’s mission statement emphasizes the values of Empowerment, Innovation, and Entrepreneurship. This focus has led to the development of a diverse range of services and businesses within the company.
Rakuten offers cashback to its customers, which is made possible by its revenue sharing model. The company operates as an affiliate of its partner stores, earning a commission on every purchase made through its website.
Through this model, Rakuten is able to offer cashback to its customers and generate revenue for the company.
How Rakuten Makes Money
Rakuten is a diversified company that generates revenue from a variety of sources. The company’s main revenue streams come from internet services, fintech, and mobile services.
In this section, we will explore how Rakuten makes money through these sources.
Income from Internet Services
Rakuten’s e-commerce platform, Rakuten Ichiba, is the company’s primary source of revenue. The platform generates income through commissions, listing fees, affiliate fees, and advertising fees.
Rakuten Ichiba charges merchants a commission on every sale made through the platform. The commission percentage varies depending on the product and the merchant.
In addition to earning revenue from commissions, Rakuten Ichiba also charges listing fees. Merchants must pay a fee to list their products on the platform.
The fee structure varies depending on the product and the volume of sales. Rakuten Ichiba earns affiliate fees by partnering with other websites, allowing them to link to products on Rakuten Ichiba.
When a customer makes a purchase through one of these links, Rakuten Ichiba earns a commission. The company also generates revenue through advertising fees.
Rakuten’s travel offering is another source of income. The company offers a wide range of travel options, including flights, hotels, and car rentals.
Rakuten earns revenue through partnerships with travel providers and by charging a fee for every booking made through its platform.
Income from Fintech and Mobile Services
Rakuten’s fintech and mobile services are another important source of revenue. The company’s fintech offerings include Rakuten Bank, Rakuten Card, and Rakuten Insurance.
These services generate revenue through interest and fees charged to customers. Rakuten Pay and Rakuten Wallet are mobile payment services that allow customers to make purchases using their smartphones.
These services generate revenue through transaction fees and commissions. Rakuten Mobile is a subsidiary that provides mobile phone services.
The company generates revenue through monthly service fees and by selling mobile phones. Rakuten’s Business Model Canvas
Rakuten’s business model can be broken down into ten components:
Customer Segments,
Value Propositions,
Channels,
Customer Relationships,
Revenue Streams,
Key Resources,
Key Activities,
Key Partners,
Cost Structure, and
Competitors.
Customer Segments
Rakuten’s customer segments include merchants and consumers. The company provides a platform for merchants to sell their products and services, while offering consumers a range of products to choose from.
Value Propositions
Rakuten’s value propositions include creativity, originality, payment security, and consumer protection. The company is known for its innovative approach to e-commerce and for providing a secure and protected shopping experience for its customers.
Channels
Rakuten’s channels include its business and sales development team, website, social media platforms, and participation in expos and events.
Customer Relationships
Rakuten’s customer relationships are built through the company’s e-commerce consultants, support team, and self-service options. The company offers a range of services to help customers with their shopping experience, including customer service, support, and self-service options.
Revenue Streams
Rakuten’s revenue streams come from a variety of sources, including internet services, fintech, and mobile services.
Key Resources
Rakuten’s key resources include its software platform, staff, training programs, and customer service infrastructure.
Key Activities
Rakuten’s key activities include digital communication, fintech services, and e-commerce.
Key Partners
Rakuten’s key partners include shipping and logistics providers, financial institutions, and travel associations.
Cost Structure
Rakuten’s cost structure includes expenses related to administration, operations, promotions, and fixed expenses.
Competitors
Rakuten’s main competitors include Walmart, Amazon, and Alibaba Group. These companies offer a range of e-commerce and other services that compete with Rakuten’s offerings.
Conclusion
Rakuten’s business model is built around providing a unique shopping experience for customers that emphasizes creativity, originality, and payment security. The company generates revenue through a range of internet services, fintech services, and mobile services.
Through partnerships with key partners and a focus on delivering value to customers, Rakuten has become a global leader in e-commerce and other services.
SWOT Analysis of Rakuten
Rakuten is a global leader in e-commerce and provides a range of services to its customers. Conducting a SWOT (
Strengths,
Weaknesses,
Opportunities,
Threats) analysis can help us gain a better understanding of Rakuten’s position in the market and identify areas for potential growth and improvement.
Strengths
Rakuten has several strengths that contribute to its success. Firstly, the company has a strong market entry strategy, allowing it to establish a presence in multiple countries around the world.
This has helped Rakuten expand its customer base and increase its brand visibility. Another strength of Rakuten is its emphasis on empowerment.
The company aims to empower individuals, communities, and society as a whole through its services. By providing innovative e-commerce solutions, Rakuten enables customers to pursue their dreams and live a better life.
This customer-focused approach has earned Rakuten a loyal customer base. Rakuten also leverages the power of artificial intelligence (AI) and big data to enhance its services.
The company utilizes AI algorithms to personalize the shopping experience for customers, making product recommendations based on their preferences and past purchases. By analyzing big data, Rakuten gains valuable insights into consumer behavior, allowing them to tailor their offerings and improve customer satisfaction.
Additionally, Rakuten boasts a diverse corporate culture. The company values diversity and inclusion, fostering an environment where employees from different backgrounds can contribute their unique perspectives.
This diverse corporate culture translates into creativity and innovation, enabling Rakuten to stay ahead of its competitors.
Weaknesses
While Rakuten has many strengths, it also faces some weaknesses. One such weakness is waste management.
As an e-commerce platform, Rakuten handles a large volume of orders and deliveries. Ensuring efficient waste management, especially with packaging materials, is a challenge that the company needs to address to minimize its environmental impact.
Inventory management is another weakness for Rakuten. Managing inventory levels and accurately predicting customer demands can be a complex task, particularly with the growing number of products and variations offered on the platform.
Rakuten should invest in technology and systems that can improve inventory management and streamline its operations. Furthermore, understanding customer demands in different markets can be a weakness for Rakuten.
As the company expands globally, it must adapt to local preferences and cultural nuances. This requires a deep understanding of each market’s unique characteristics, which can be a challenge to achieve.
Organizational culture is another area of weakness for Rakuten. While the company embraces diversity, it may struggle to cultivate a cohesive organizational culture due to its international presence.
Building a shared culture across different regions and ensuring alignment with the core values of the company can be a challenge.
Opportunities
Rakuten has several opportunities to capitalize on for future growth and improvement. Firstly, the global e-commerce market is continuously expanding.
The increasing number of internet users and the growing preference for online shopping present a vast market size for Rakuten to tap into. By leveraging its expertise and expanding its presence in key markets, Rakuten can capture a significant share of this growing market.
Technological advancements present another opportunity. Rakuten can continue to innovate and integrate advanced technology into its services, such as virtual reality (VR) and augmented reality (AR) to enhance the online shopping experience further.
By staying at the forefront of technological advancements, Rakuten can maintain its competitive edge and attract tech-savvy customers. Standardization is an opportunity for Rakuten.
With its international presence, the company can work towards creating standardized processes and customer experiences across different markets. This would streamline its operations and improve the overall efficiency of its services.
Rakuten’s global reach also presents an opportunity to expand into new international markets. By identifying markets with potential, Rakuten can establish a presence and offer its services to customers who may not have access to similar offerings locally.
Threats
Rakuten faces several threats that could impact its growth and profitability. Firstly, the process of globalization exposes the company to intense competition from global giants like Amazon and Alibaba Group.
These companies have a strong presence in multiple markets and pose a threat to Rakuten’s market share. Rakuten must continuously innovate and differentiate its services to stay competitive.
Economic factors such as inflation and changes in the global economy can also pose threats to Rakuten. Inflationary pressures can affect consumer purchasing power, potentially reducing demand for Rakuten’s products and services.
Moreover, economic downturns or recessions can impact consumer spending habits and reduce overall market demand. Labor is another threat for Rakuten.
As the company expands globally, it must navigate different labor laws and regulations, which can impact its operations and increase costs. Attracting and retaining a skilled workforce is also essential to ensure the delivery of quality services.
Costs are a significant cost component for Rakuten. Operating an e-commerce platform requires infrastructure, technology, and marketing efforts.
As the company expands and competes with global players, managing costs effectively becomes critical for maintaining profitability.
Conclusion
Rakuten has a strong foundation and possesses several strengths that have contributed to its success. By leveraging its market entry strategy, empowerment approach, AI and big data capabilities, and diverse corporate culture, Rakuten has established itself as a global leader in e-commerce.
However, there are areas for improvement. Addressing weaknesses related to waste management, inventory management, customer demand understanding, and organizational culture can help position Rakuten for further growth and success.
Rakuten has several opportunities to capitalize on, such as the growing e-commerce market, technological advancements, standardization, and international market expansion. To mitigate threats from global competitors, economic factors, labor considerations, and cost management, Rakuten must continue to innovate, invest in training its staff, enhance its marketing efforts, and provide excellent customer support.
By doing so, Rakuten can further solidify its position as a leading e-commerce and technology company. In conclusion, Rakuten’s business model focuses on generating revenue through commissions, cashback, and purchases made through their website or app.
The company’s diverse services and ecosystem encompass e-commerce, internet services, cashless payments, fintech services, securities, and banking. Rakuten’s success lies in its ability to empower individuals, foster innovation, and promote entrepreneurship.
Additionally, a SWOT analysis highlights Rakuten’s strengths, weaknesses, opportunities, and threats, emphasizing the importance of adapting to market demands, embracing technology, and differentiating from global competitors. As Rakuten continues to expand its global reach, it must remain customer-centric, invest in staff training, enhance marketing efforts, and provide top-notch customer support to drive growth and stay ahead in the competitive e-commerce landscape.