Rakuten – Can E-commerce be personalized?

Rakuten is the world's third largest e-commerce marketplace and has often been called "Amazon.com of Japan". But if you ask its CEO, Mr. Hiroshi Mikitani, he would emphasize that Rakuten is very different from Amazon. Rakuten has a clear focus on the shopping experience – providing the customers high quality personal service. By adding an extra dimension beyond the product and customer, Rakuten has successfully created a personalized, bazaar like experience for the customer.

Rakuten essentially has a B2B2C business model where merchants from across the globe can come together and form an internet shopping mall. Each seller can customize his page layout and promotions and communicate directly with the customer through e-mail or SNS (Social networking services). Rakuten receives revenue through fixed fees from merchants and fees per transaction/service. 

Rakuten also offers consultancy services to merchants so that they can increase their users and sales through the website.

This business has expanded to Taiwan, Thailand, Malaysia  Indonesia, Germany, UK, and Brazil, US and France by 2012. As of June 2013, they had 41,000+ merchants for 13.53 million buyers. Rakuten overtakes Amazon in sales of all categories except books and electronics.  Rakuten merchants sell 10% of the wine sold in Japan! This goes to show that for certain product categories, personalized selling is effective in e-commerce.

An interesting story is that of a merchant who wanted to sell fresh eggs through Rakuten. He believed that eggs at a supermarket are generally weeks old and that people would prefer organic, fresh eggs delivered overnight, even at a price premium. Once he opened a store in Rakuten, he would maintain a 'chick diary' to let customers know how his chickens were doing. He would post photos of quality checks and write stories about his experiences. This made people more interested in buying from the egg merchant, although the eggs were priced on the higher side.

So we see the power of the merchant as an influencer of customer decisions in this business model. Rakuten is however not stopping there. It incorporates new technology going beyond data analytics. It is currently testing new software that lets customers search for clothes using photos. So one may upload a dress worn by a celebrity and immediately see its related items on sale. It is quite easy to see why Rakuten is considered a front runner in e-commerce in terms of innovation and customer centricity. 

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Regards,

Soumya Sreekumar

IMT Ghaziabad, Batch of 2012-14

+91 7503139797