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Rakuten reports strong growth, reaffirms Malaysian commitment

Gabey GohJun 21, 2013
  • Reports 400% increase in the number of orders
  • Plans to grow local offerings, empower local retailers

RAKUTEN Online Shopping has reaffirmed its commitment to the Malaysian market, citing positive growth and inroads made with local industries.
 
During a business update briefing with members of the media, Masaya Ueno (pic, right), chief executive office and president of Rakuten Malaysia, claimed that since the website’s launch last November, it has enjoyed rapid expansion.
 
The Malaysian operations is Rakuten’s first greenfield investment in the region, and the online mall now boasts 130 merchants, 40,000 products and a monthly average of 30% in total product growth.
 
Ueno also said that Rakuten has seen steady growth with a 25% increase in member sign-up month-on-month, and a 400% increase in the number of orders.
 
He was unable to share what the total membership figure is or what percentage were active, regular shoppers. However as an indicator of market health, Ueno pointed to the fact that its Health & Beauty category is one of the top three for the country.
 
“This is unique to Malaysia and typically indicates that there is growing purchasing power and interest in the market,” he said.
 
Asia Pacific roadmap
 
Globally, Rakuten Inc reported US$1.1billion in revenue for the first three months of 2013, marking a 26% growth, and recorded an operating profit of US$225 million, a 23.1% jump.
 
According to Toru Shimada (pic above, left), senior executive officer and director of Rakuten Inc, the company’s business expansion strategy in the Asia Pacific is structured into four phases.
 
The first phase saw the company establish a foothold in four markets – Taiwan, Thailand, Indonesia and Malaysia. The second involved the setting up the company’s regional headquarters in Singapore.
 
When asked why the company has an office in Singapore but no presence in the market, Shimada acknowledged there was potential in the market and said that the company is considering its entry.
 
Rakuten is currently in the third phase of its Asia Pacific strategy, which focuses on increasing its investment in financial and human resources, along with acquisition of new payment partners such as MasterCard MasterPass in Malaysia.
 
In addition, Shimada shared that upcoming plans included further investment in the critical logistics infrastructure and more fashion partnerships.
 
When asked for an update on the US$10million Rakuten Asia startup fund which the company launched in April, he said the company is still in the process of identifying potential investees.
 
The fund is intended to incorporate startups into Rakuten’s strong e-commerce networks and establish “synergy,” rather than for purely financial purposes, he claimed.
 
“We see some opportunities in Singapore but the priority will be in startups in markets where we are already present in,” he said.
 
When asked about how Rakuten intends to counter rising competition in the online shopping space, Shimada said that the key differentiator lies in its approach.
 
“The difference between us and other competitors is the way we are investing in the space. While others have been investing heavily in logistics and infrastructure, we have been focused and investing into merchants instead and educating them on how best to sell to users online,” he said.
 
Ueno said that Rakuten’s strengths also lie in its portfolio of well-known brands and an easy-to-use platform that allows merchants to easily set up their digital storefront.
 
“In a survey we conducted recently, the key inhibitor for online shopping was revealed to be fear over the reliability of merchants. So we have put a lot of work into creating a trusted network and environment for our customers,” he said.
 
He also pointed to another unique offering from Rakuten, which is its in-house team of e-commerce consultants that works directly with merchants to guide them on their transition online.
 
“We do a lot of knowledge-sharing especially between our experts in Japan and the local team in Malaysia,” he added.
 
Rakuten maintains its ultimate vision of expanding its role to that of a full-line services company in markets that it is active in, in line with its business in Japan, but Shimada and Ueno were unable to share a definite timeline for this expansion.
 
“We are exploring possibilities and looking into local infrastructure and market demands. While we do see many synergies with what we can offer the market, we have to look at online behaviour trends first and gauge a market’s readiness,” Ueno said.
 
Malaysian mission
 
Plans to increase Rakuten’s footprint in the Malaysian market are manifold, said Ueno, via more strategic partnerships and an increase in its marketing efforts.
 
To illustrate, he pointed to the recent partnership with mobile messaging service platform LINE to establish a corporate official account in Malaysia.
 
Following the success of campaigns conducted via the mobile platform in Japan and Taiwan, the company hopes to replicate that in Malaysia and has already garnered over 13,000 followers on its account.
 
The company is also embarking on joint marketing campaigns and promotions with partners such as Celcom and Era.fm.
 
“We have also identified Facebook as another key channel. We may not have a large advertising presence like our competitors because we prefer to market directly to our target audiences in a more intimate fashion,” he claimed.
 
Ueno was also especially proud of another partnership, this time with local merchant Caring Pharmacy, which holds claim to being the first local healthcare/pharmacy brand to venture into the e-commerce space.
 
“We were surprised at the popularity and uptake since Caring’s online storefront was launched. So were they, as this level of success in the online space was new to them as well,” he added.
 
After making headway into the untapped market of healthcare and pharmaceuticals, Ueno said that the company intends to continue its commitment to bring more non-traditional industries online.
 
“We will also be focusing on extending our strategic partnerships in the months to come, in line with our business-to-business-to-consumer (B2B2C) model that brings the best of both worlds to merchants and customers,” he said, adding that developing relationships with small and medium-sized enterprises (SMEs) will also be a priority.
 
Rakuten expects to maintain its current growth trajectory till the end of the year and is targeting a 50% increase in merchants during that same timeframe as well.
 
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