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Have you heard of Rakuten?

What began in 1997 as a small online shopping hub has subsequently grown into a global brand and has quickly become one of the most popular e-commerce and fintech businesses in the world. Brands eager to sell on Rakuten recognize it as the leading e-commerce network in Japan and, as a result, a great vehicle to move products. With over 95 million registered users, it is among the world’s most popular e-commerce platforms, serving over one billion customers globally.

Known colloquially in the West as the “Amazon of Japan”, Rakuten offers a variety of products and services online, including the country’s most popular credit card, the largest online Internet bank, a wireless network, a travel agency, a golf reservation system, matchmaking, wedding planning, insurance, and a streaming service. The growth hasn’t stopped there, however. The company has a history of making acquisitions and investments in other companies, which has led to offshoots such as Rakuten Travel and Rakuten Marketing. Additionally, they hold significant stakes in global tech companies, including Pinterest, Lyft and AirBnB.

As Rakuten competes in Japan with Amazon.jp, brands who want to sell to Japanese consumers need to first understand the fundamental difference is between those two potential channels before they begin shipping products.

First, Rakuten operates its e-commerce business in a partnership approach. They provide a platform where business owners manage their own inventory, logistics and customer service. Companies that sell on Rakuten have more control and personalization over their brand, which is quite different from the services offered by Amazon in Japan.

Rakuten also prides itself on providing users with a more personal shopping experience than their e-commerce competitors. To accomplish this, they operate a loyalty-based membership program. This program offers members various benefits like cashback offers and Rakuten Super Points, which result in each user having their own experience with the platform. The loyalty program performs strongly and has become a trusted brand in and of itself.

By comparison, Amazon.jp operates a “closed system.” That means that the company handles every aspect of the business for brands, which includes warehouse management, logistics, and customer service (similar to how Amazon operates in North America). To some extent, Amazon is perceived as an impersonal shopping supplier in Japan. 

Furthermore, Amazon.jp sells private label products on its platform alongside third-party items, which creates an even more competitive environment for sellers. Rakuten, on the other hand, chooses not to do this; companies that sell on Rakuten benefit from this lack of competition. This is another one of many ways Rakuten has gone out of their way to incentivize sellers and differentiate themselves from Amazon.jp. 

What other things should brands take into account if they want to sell on Rakuten or Amazon.jp?

Other examples of this intentional differentiation include the following:

Looking ahead, Amazon is rumoured to have its eyes on offline retail- by acquiring brick-and-mortar grocery and convenience stores, the US-based behemoth is seeking to further strengthen its distribution network in Japan. Skeptics, however, believe that cultural hurdles may be too challenging for the American company, leaving Rakuten with the upper hand in Japan.