April 1, 2020
How Amazon Is Fighting Rakuten For E-Commerce In Japan

How Amazon Is Fighting Rakuten For E-Commerce In Japan


Here in the U.S. we’re used to
Amazon’s unquestionable dominance. Nearly 50 percent of e-commerce transactions
in the United States take place on the platform, while the runner
up eBay only holds about 6 percent of the market. But in Japan, it’s a different story. Though the country is Amazon’s
second largest international market, here the e-commerce giant is locked in
a tight competition for market share with homegrown Japanese
company Rakuten. 2016 was the tipping point when
actually Amazon started to finally take over market share. Last figures I saw was Amazon has
about 25 percent market share and Rakuten is closer to 20 percent. A third player, Yahoo Japan, also holds
about 9 percent of the market. Yahoo Japan launched in 1996, Rakuten
launched in 1997, and Amazon entered the market in 2000. For years, Rakuten’s knowledge of the
local economy and wide suite of products helped it maintain
its market lead. But recently, Amazon’s focus on
price and convenience, superior logistics capabilities, and fast shipping has
propelled it into first. Amazon Prime, I believe, in Japan is
one of the cheapest in the whole world. And for that you get access to
Amazon Prime Now, which can give you free delivery in two hours in
certain areas of Japan, particularly in larger cities. Rakuten doesn’t have a
shipping service like Prime. And while it’s working to build
out its own shipping and fulfillment centers, right now these logistics are
handled by third party companies. So some consumers are turning to
Amazon for quicker and cheaper delivery, not to mention access to the vast
amount of online content that a Prime subscription provides. The layouts of the two
sites are also very different. While Rakuten presents a busy front
page with many links and featured products, Amazon’s site is
simpler and more targeted. Amazon is really built around search. So you go in there and you
search for a specific product and those products will come up, whereas the
Rakuten website allows you to browse through a variety of products, similar
to the experience that you would have in a department store. The user interface on Amazon is quite
good for very specific daily use products. Higher value items tend to be
seen to be bought through Rakuten. Analysts believe the platform’s differences
mean it’s unlikely that either will dominate the
market anytime soon. With its shopping mall model, Rakuten
appeals to consumers used to traditional brick and mortar retail. Each seller has their own
highly customizable landing page. Product descriptions are extensive, appealing to
consumers who want to dig in and do their research. So if you’re a Rakuten merchant, you can
have your product page as long as you want. And some of these pages are
more than 10 meters long. So Rakuten has for a long time said,
we are the champion of freedom for the merchant, for them to communicate
to consumers how they want. Whereas Amazon seems to stick to
a very regimented way of displaying product information. Hart says Japanese consumers also appreciate
the superior look of Rakuten’s packaging. Japanese customers value receiving a nicely
wrapped present for example, or something that’s been handled
with extreme care. And so for items such as
birthday gifts, anniversary gifts, they may actually prefer to buy
that through Rakuten. In addition to e-commerce and fancy
packaging, Rakuten offers a whole ecosystem of products and services referred
to in Japan as the Rakuten World. And once a customer is
absorbed into this world, the company’s robust loyalty points program means
they’re highly incentivized to stick around. So we have about 100 million
membership, of 130 million population in Japan. And we have a very very
strong, the most popular point program in Japan. So that’s our approach. Our membership and
our reward program. Rakuten offers more discount points
the more services you use. So they are the number
one credit card in Japan. So if you use their credit card
when you shop, you get additional discounts. If you use their mobile
phone service, then you will get additional discounts on
your shopping. And if you were to use their
online security service, you would get additional discounts on
their service. So they’ve created a bundling strategy
to give value to consumers. Rakuten operates the country’s largest
online bank, offers a streaming service that competes with Netflix,
home-sharing that competes with Airbnb and owns messaging app Viber. The company is launching its own wireless
network, and in a push for global recognition sponsors the Golden
State Warriors and Barcelona Football Club. It expanded into the U.S. e-commerce market as well and acquired
cashback site Ebates in 2014. You talk to a typical Japanese consumer in
Japan, they may have six or so Rakuten apps on their phone. The strength of Rakuten is not what
we’re kind of a single service company, but we are providing various
different values through our memberships. So I think that is
going to be our strength. As for Yahoo Japan, it stays
competitive as Japan’s clear leader in consumer auctions, and its e-commerce
wing has a partnership with Softbank, so mobile phone subscribers
get discounts for using Yahoo Shopping. Alls to say, though Amazon leads the
market for now, it can’t take its position for granted. To keep up, the company has rolled
out its own points based loyalty program. It also recently introduced
Amazon Pay, a cashless payment service similar to what Rakuten
and Yahoo already offer. Both Rakuten and Yahoo have moved
very aggressively into both credit cards and now cashless payments . Financial services would be the obvious
thing that Amazon is not really doing at scale. As for Rakuten’s future strategy, Matthew
says he envisions the company continuing to build out its
logistics capabilities, creating its own shipping and fulfillment centers
to compete with Amazon. But ultimately, Hart doesn’t believe that
Rakuten should be too worried about Amazon’s increasing presence
in the country. I don’t see within the foreseeable future
that Rakuten is going to be massively disrupted by Amazon. They have a very deep
understanding of the local consumer. I see more Amazon having to change
to accommodate Rakuten’s way of doing business in Japan than vice versa.

100 thoughts on “How Amazon Is Fighting Rakuten For E-Commerce In Japan

  1. Amazon should grad this is Japan. In China, you don't stand a chance fighting with Taobao. They have strong connection to the authority

  2. Rakuten should be really concerned about Amazon. Sad to see Mikitani et el are as deluded as they've always been.

  3. Us Americans are starting to see Rakuten advertising. Bringing the battle to Amazon's home terf.

  4. Italy has its own share of interesting ecommerces: ePrice, IBS to mention a few are nice alternatives to Amazon.

  5. So in nut shell, competition is good for customers and when markets are monopolised by one company it's bad for the consumer?

  6. Only reason all this is possible is that they are losing money on the shopping business and are propping up with their AWS business. Wake up and realize that Amazon is creatimg a monopoly. They are killing all their competitors by undercutting their prices because they can't afford to because of lack of profitability. Once Amazon kills off all of it major competition it's going to raise prices. Just go and look at a graph comparing Amazons revenues to profits over the past 15 years. They have massive amounts of Revenue but have had close to zero profit. They are playing the long game and the regulators are completely missing the threat.

  7. Same in India, flipkart and Amazon are locked in a tight battle for the top share and the story is almost exactly the same as its in Japan

  8. Think about this!! What happens if there was a war? Chinese government will order HAUWEI to shut down or limit their networks…….white peoples stopped being stupid….I’m asian I’m telling you…BAD stuff is coming to you…

  9. I couldn’t find nice sunglasses and sneakers at Amazon JP whilst Rakuten had dozens of premium brands available so I gave it a try. 10/10 service.
    But it took forever to get home like he said lol.
    Amazon is twice as fast even using the same delivery companies.

  10. Asia, the only place that have tech company that’s pushing back American high tech firms. Europe is the occupation zone.

  11. まさか海外で楽天に関するニュースがなされるとは…自分はどちらかと言うと楽天派ですね!でも、アマゾンもよく使います。

  12. Pinstripe suit guy couldn't be bothered to shave or wipe the spittle off his lips? Cmon dude i know it's only CNBC but try a little maybe

  13. I love amazon, but I hope Rakuten wins. We need diversity and it would be incredibly sad to see a great long standing company like Rakuten die for amazon globalization.

  14. have used both. rakuten has a far better range, and competing retailers offering the same goods within the website so you get better competition for price so it's a lot cheaper for single products. what they don't have is integration, serving purely as a middleman, so if the retailer rakuten connects you through messes up or does something dodgy then that's for you and them to sort out because rakuten won't keep them in line, which i've had happen 3 times vs once on amazon.

  15. They freaking bought the biggest e-commerce website in UAE and deleted it . Don't underestimate Amazon

  16. As someone who used to live in Japan for 4 years I feel that Rakuten is or was at least far more superior in Japan. I used to do all my online shopping there and rarely used Amazon.

    I even had a Rakuten debit card that was very convenient and at the time Rakuten was one of the only places that offered a debit card especially a hassle free one as Japan is still largely a cash society.

  17. Yet another proof that you don't need one corporation dominating the world in one area or more. Each country can have their own companies and more than one competing in the same field. The results are a better cheaper service and that is the real free market, not capitalism.

  18. Rakuten always sells the same products for cheaper. They've since expanded into the US market. They fulfill a different niche from Amazon. While Amazon is speedy, Rakuten is cheaper. For very expensive products like computer components, Rakuten is without question the superior platform, better than even Newegg and B&H.

    They've also maintained a good brand presence. They sponsor the GS Warriors, some football teams in Europe (I believe FC Barcelona), e-sports teams, professional racing teams worldwide in multiple leagues. They're definitely an up and coming competitor.

  19. I only knew that there is amazon in JP because of the number of anime that they sponsored. I guess they are trying to appeal to younger generations.

  20. You gotta love the Japanese I mean they have the best E-commerce compared to the American Jeff Bezos Amazon, and also the best team in Spain currently DOMINATING the UCL Champions League Football… they should be booming. P.S Hello Kitty? Are you kidding me that’s the best.

  21. Rakuten.com thanks for showing me a competitor to amazon and ebay, but it looks like they are using existing retail store companies in the US and provide an online shopping and price comparing service to them given how walmart and many others are listed there.

  22. You search in Amazon, so rakuten cannot use the search function? That's a funny and unfair comparison..

  23. Amazon believes that its employees will not be replaced by robots before "at least 10 years"
    http://www.network-usa.com/2019/05/amazon-believes-that-its-employees-will-not-be-replaced-by-robots-before-at-least-10-years.html

  24. Great video! I saw a brilliant article about Amazon in Japan on fbamonthly.com! highly recommended!

  25. Amazon’s mobile app is embarrassingly outdated compared to the Chinese counterparts: Taobao and JD

  26. Rakutan and Alibaba are just messy websites…Both are more geared to Asian market due to the culture and language settings, while Amazon is more organized and structured and very targeted on previous searches and recommendations of similar products which entice shoppers much better to keep shopping with them in my opinion

  27. I am surprised you spent so much time talking about Rakuten and their entrance into western markets without mentioning their acquisition (and later abandonment) of Buy.com.

  28. Rakotan would able to build super detailed profiles of their customers with an insane reach. They can potentially they can see every online interaction and location data, spending habits of 75% of the population

  29. People should stop Amazon of expending further. Any alternative shoul be embraced. Amazon's ultimate goal is to fully control our lives! The evil.

  30. NICE I ALONG WITH MANY OTHERS THAT I KNOW HAVE NEVER ORDERED ANYTHING ON LINE INCLUDING AMAZON.. BUT NOW I'M GOING TO HAVE MY FIRST PURCHASE WITH RAKUTEN!!!

  31. After use Rakuten and Amazon in Japan for many years, I ‘m really sure that Rakuten never win Amazon. Rakuten has really bad customer services and lack of a long term vision.

  32. no reason to order from amazon in most European countries.
    they treat their employees like garbage, they hire rock troll NBA players to handle your packages, are expensive af in comparison with local alternatives and worthless service. no reason to buy from amazon. i only visit amazon to get more pics of products, thanks to their extensive photo and product database. to then order from someone else.

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