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What do we know about Rakuten?
Rakuten is an electronic commerce company that was founded a little over twenty years ago (1997). It is often referred to as a Japanese Amazon, but that is a bit misleading, because there is also Amazon Japan (and I have a friend who worked there). Rakuten’s headquarters are located right here in Setagaya ward (I didn’t know that). In addition to running a large e-commerce site (Rakuten Ichiba (Market)) (apparently the largest e-commerce site in Japan), Rakuten also handles credit card companies, digital communication services, professional sports endeavors, sports reservations (notably, reservations for tee times for golf), media services, and many other business ventures. After its founding, Rakuten expanded its operations to other countries including the United States, England, France, Taiwan, China, and Brazil. Rakuten has over 70 subsidiaries and other related companies. Since its founding, Rakuten has made a very concerted and deliberate effort to expand its operations to other countries, and I remember several years ago, Rakuten made news when it announced English would be its official, in-house language (see the below explanation concerning this “Englishization” policy). This means that all communication at Rakuten, even between Japanese people (and even including the company cafeteria menus) is in English. According to WIKI, some 40 percent of engineers at Rakuten are foreigners. In my field of patent translations, a quick search reveals that Rakuten has a formidable intellectual property portfolio, with thousands of registered patents, mostly in Japan, but also in the United States, Europe, China, and other countries. Also worth noting is that Rakuten has been successful in securing patents for business methods, which are difficult to get in Japan. Intellectual property is a pretty dry field, but the number of patents is a good indication of how innovative a company is, and from this number patent applications and granted patents, I think it is safe to say that Rakuten is a very innovative company. My impression is that Rakuten is a household name here in Japan, based on the anecdotal evidence that everyone I know here uses it (also based on its ubiquity in the field of sports and e-commerce).
The internet services section
This part of Rakuten operates a variety of e-commerce sites, such as Rakuten Books, Rakuten Travel, Rakuten GORA, Rakuten Mobile, and Ebates. Rakuten Books is an online book store, but in addition to books, this site also handles e-books, magazines, western books, DVDs, Blue Rays, CDs, music distribution services, video games, PC software, and other computer devices. A quick search of Rakuten Books reveals that it is on par with Amazon as far as I can tell concerning selection. Also, it seems to have a pretty decent selection of English books from a perfunctory search of the website. A google search in English and in Japanese reveals that this is a very well-travelled site. I’ve never used Rakuten Travel until writing this article, but a brief search of the website shows it is quite similar to other travel websites, such as Google Flights. For research (and for personal reasons) purposes, I actually bought a plane ticket to go home to America from Rakuten Travel after making comparisons with Google Flights, and I actually was able to buy a cheaper ticket off Rakuten Travel. Rakuten GORA is a site for making golf reservations. Every prefecture in Japan is listed, broken down and categorized into the various regions of Japan. There is also an option for golfing abroad. I’ve never actually played golf, but this site seems like a very useful way to make reservations for tee time (the number of people, the starting time, the date and various other factors are input to find, along with the prefecture, the ideal golf course). I’m old enough that I have several O-san (middle-age guys) friends who play golf, and when I asked them, of my friends who play golf, ALL OF THEM are at least aware of this service and several use it regularly. Rakuten Mobile is a service for prepaid SIM cards that can be used anywhere in Japan. The great thing about this service is that it does not require signing up with Rakuten or entering into any formal contracts: it’s a pay-as-you-go-type system. Ebates is a coupon, cashback service that was originally started in America, but was obtained by Rakuten in 2014. Apparently, with this service, you can get money back for money you have already spent on other sites. Huh, didn’t know that. I probably should start using this. According to its website: “Stores pay us a commission for sending our members to their websites, and we share it with you. It’s that simple!”
The Fin Tech Segment
This section of Rakuten provides a variety of financial services, including Rakuten Card, Rakuten Bank, Rakuten Securities, Rakuten EDY (electronic money), Rakuten Life Insurance, Rakuten Insurance, and R Points (Rakuten Point Card). Concerning Rakuten Card, you can get cash back of 6%, 10%, 5%, 8%, 10% 5%, 10%, 6% 8%, 10%, 9%, and 5%, respectively, for Groupon, Cheaptickets, Alamo, Elemis, Naiman Marcus, Naturalizer, Marriott, Groupon Coupons, Sunglass Hut, Orbitz, Moosejaw, and Expedia. Concerning Rakuten Bank, its main website lists interest rates corresponding to each type of card it issues. These services are apparently used in over 30 countries with over 1.2 billion users. Concerning Rakuten Bank, some of its merits, according to its website, include 24/7, 365 day access to ATM services, zero handling feeds for ATM services, zero handling fees for wiring money to other banks, the accumulation and use of Rakuten points, the ability to access services with one’s smart phone without having to actually visit a brick and mortar store, and good interest rates only available at Rakuten Bank (by the way, interest rates in Japanese banks are essentially zero, meaning saving money doesn’t accrue interest (though Japanese money doesn’t seem to inflate as much); also, being able to utilize ATM services at any time is a huge benefit, as my bank, Mizuho, regularly closes all ATM services for days at a time for service maintenance). Rakuten Securities offers a variety of services, such as buying and selling stocks domestically (in Japan) and abroad, buying domestic (Japan) and foreign government bonds, currency trading, and precious metals (and a lot of other services). Rakuten EDY, as mentioned above, is electronic money. The name EDY represents the Euro, the Dollar, and Yen. This service can be used on Osaifu-keitai (portable wallet), which is the main means for using electronic money in Japan (this in turn can be accessed on all major cellphones and from all major cellphone providers in Japan (AU, Softbank, and Docomo)). Concerning Rakuten Life Insurance and Rakuten Insurance, a brief google search reveals that both are widely used in Japan and that many expatriates in Japan make use of both. Finally, concerning R points, according to WIKI, these are actually called Rakuten Super Points. These can be used on Rakuten Ichiba, Rakuten Books, Rakuten Travel, etc.
Rakuten Sports
As one subsidiary or section of the behemoth that is Rakuten, in recent years, Rakuten has gotten heavily involved in sports. To begin with, domestically, Rakuten owns the baseball team Rakuten Eagles. This is a relatively new professional baseball team in Japan, based in Sendai, Miyagi Prefecture. This team actually won the Japan series in 2013. Rakuten also owns Vissel Kobe, a professional soccer team based in Kobe, Hyogo Prefecture. In addition, Rakuten hosts an annual tennis tournament, called the Rakuten Open, and according to its website, this is the largest tennis tournament in Japan. In the men’s singles, Kei Nishikori won in 2012 and 2014, and other notable victors include Pete Sampras in 1993, 1994, and 1996 and John McEnroe in 1988 (I don’t play or follow tennis, so I’m only listing the athletes even I know by name recognition). Also, in 2017, Rakuten became the main sponsor for the Golden State Warriors, a professional basketball team in the NBA in the United States. Finally, Rakuten has also established a partnership with the soccer team FC Barcelona. Both teams have Rakuten emblazoned on their jerseys.
Hiroshi Mikitani
Allow me to say a few words about the CEO of Rakuten. I have a friend here in Japan who, several years ago, asked me what I thought about this man. At the time, I didn’t know who he was, and I told him so. My friend, having been told this, was disappointed. He said to me, more or less, “this guy is the Japanese Steve Jobs, but no one outside of Japan knows who he is.” Any article about Rakuten would be remiss in not discussing this man at least a little. Born in 1965 in Kobe, Hyougo Prefecture, Mikitani, at the age of 53, has quite an impressive resume. He is the CEO of Rakuten, in addition to being the head of the Crimson Group, the head of Vissel Kobe (the soccer team previously mentioned), and the chairman of the Tokyo Philharmonic Orchestra (on a personal note, I often run right past this place, Tokyo Opera City in Hatsudai, on my way to my company in Shinjuku). His personal wealth is estimated to be 7.1 billion USD!! He graduated in 1988, but then took a few years off to get a master’s degree from the Harvard Business School. In 1995, there was a massive earthquake in the Kansai region of Japan, with his hometown of Kobe especially bearing the brunt. This was a major turning point for Mikitani: he decided that Japan’s economy had to be revitalized, having seen the destruction in his home town and the country’s impotence in dealing with it. In 1997, along with several co-founders, he launched Rakuten Ichiba at the cost of 250,000 USD. He intended this to be a mix of e-BAY and Amazon. From 2010, Mikitani started actively expanding Rakuten overseas, and from this time, his company also became heavily involved in the sports endeavors detailed above. Also in 2010, he started what is called “Englishization,” implementing the in-house reforms detailed above wherein English is the official in-house language at Rakuten. This policy was something of a controversy at the time, and the president of Honda Motor Company called it “stupid.” Mikitani disagreed, and opinioned that speaking English is no longer an advantage, but rather it is an absolute necessity. I have to admit that at the time, I shared the same opinion as the president of Honda Motor Company, but it seems Mikitani has proven us both wrong, as Rakuten has been quite successful with its expansion activities abroad. Mikitani and many of his people have lived and studiesd abroad, and I think these experiences have shown them the benefits of being proficient in the English language. On a personal note, his sister is a doctor, his brother is a biology professor at Tokyo University (the most prestigious university in Japan), and his grandfather cofounded the camera company Minolta.
Rakuten as an Innovator
As mentioned in my previous article concerning a cashless society, Japan is notoriously slow to change. This is a conservative country, and generally, people here are hesitant to change things. Having said that, Rakuten really stood on the spearhead of innovation in this country, introducing e-commerce, e-money, many financial services, and truly innovative business methods, as evidenced not only by their number of patents, but also by their increasing expansion into foreign markets. In addition, Rakuten has not limited itself to such fields, and has expanded into the field of sponsoring sports teams, such as baseball teams in Japan, soccer teams in Europe, and basketball teams in America.
What do you think about Rakuten?
Rakuten is a force to be reckoned with. There is no question about this. This company, as detailed in this article, is massive, it has dozens of subsidiaries and related companies and operates in as many countries. The size and influence of this company cannot be slept on, and I think, with the progression of AI, cashless payments, and the like, I think this company’s influence will only become stronger.
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