Creative Idea Powerhouse

China e-Commerce market place been a very challenging market ever. There are currently more than 56Million online merchants in China, according to a recent report published by AliResearch-the leading C2C e-Commerce platform in China. The total market size for Online Retailing in China for Y2009 also topping RMB200Billion (Aprox US$30Billion), growth from RMB128Billion in Y2008; a huge growth of market since Year 2002 when C2C market start to get into mainstream.

Base on the research published in Mandarin from AliResearch, what interested to me more is the data showed that there is total 13.2% of the online retailers are fresh graduates from universities. It shows that more and more graduates students are directly enter into online entrepreneurship since their graduation. Just have this data in your brain, there are 7million students graduates from universities directly enter into setup their own webstore and sell online in China! With 87million online consumer buying and consuming basically everything sell online, this is a market that cant be neglect.

There is no reason why we get to know today from the Techcrunch that Baidu and Rakuten is forming a new alliance to tap into the China Online retailing industry. Both of the company will invest a total of US$50mil into this new JV and Rakuten will control majority stake in this new formation JV. This is not the first time for Rakuten to handle the new JV for oversea expansion. In early Y2008, Rakuten has setup their first e-Commerce expansion in Taiwan, follow by Europe. In Y2009, Rakuten form  a new JV in Thailand with a local e-Commerce partner. The company continue to expand their foot print in oversea expansion into Malaysia in late Y2009 – according to some source, they worked with local Internet Tycoon – Malaysia Online (MOL.COM) in Malaysia e-Commerce development roadmap. In early Y2010, they have new plan, and they are now put their focus on the Asia soon to be largest e-Commerce marketplace. 100Million of online consumers, over US$50bil of market in Y2012; and what else, a fast growing of income level in all level of workforces in China that making them consume basically all the ‘import branded products’ from ‘Out of China’.

The strategic move, from my point of view, is pretty interesting as we can see in Y2010, another new high for e-Commerce development in Asia, particulary for China e-Marketplace. For instance, majority of these mid-income level netizens would like to consume and purchase ‘oversea’ branded products that rather than cheap and ‘look-alike’ products that are ‘made in China, brand by oversea’. Rakuten will employ the same strategies as they did for Taiwan market, to continue to ‘export’ Japanese products into neighbouring countries.

As I always believe, the Year 2010 will be a very exciting year for E-Commerce. The development of Internet has enter a new era where everything is going to be so realistic about turning CPM or your adveritising dollar into sales profit. Forget about a million of click through, or billion of impression if nothing convert into placement of orders. Show me the money, will be the most concern for business during this recovering period. More and more traditional retailers are seeking for ‘reasonable’ expansion to oversea. Rakuten model of exporting Jap products through B2C model into countries like Taiwan or China, are the model we are having the cross-selling model you can find in SMilDS.COM. As I said, the Y2010 is a rising year for e-Commerce! Fun and excitement!~

Today when we having the discussion with one of the editor from local business magazine, something came up at my mind, the yet another buzz word ‘glocalization’ – the combination of the globalization and localization.

I first notice the real big MNC been practicing these, by seperating the operation and management of individual countries into regional, and let the local management team to handle the day to day works base on local culture and organization structure. HSBC, one of the pioneer in introducing glocalization concept, global expertise, local presence sort of stuffs.

When I try to look back into e-Commerce, how many of the big players in Asia really successfully crossing their own countries borders and expand to oversea market? Rakuten is one of the millions who does that up to now. It has been in Japan for a very long time – 10 years, and really step strongly before it make the bold decision to expand its Rakuten Ichiba out to oversea – particulary Taiwan. Who else in this region has ever ‘try’ before? Is that the local market is ‘big’ enough for them, or it is very difficult for these players to take the bold decision to move out? Lelong has passed its 10th year presence and look back, it is still Malaysia boleh only company in Malaysia. That really make us think again, is that being the largest in Malaysia good enough for us? My answer is NO for sure.

Our vision, in Platform2u.com, is to realize the e-Commerce dream in Asia, to be the largest e-Commerce Platform provider that from Malaysia, and cross over to the entire Asia countries. It never be easy. After landing our foot print in Hong Kong, follow by next in Philippines during this coming July, it is the time we take a bold and aggresive move again to reinforce our marketplace in Malaysia and Hong Kong.

Glocalization, will be the spirit, the value, the core of our entire e-Commerce attempt. Be the global e-Commerce provider to help all the SME and SMIs to find the new global marketplace, and continue to help those SME and SMIs to localize their presence each and every countries we establish our foot print. It sounds imposible to help all our SMEs and SMIs to be glocalization companies in past, but during today interview, I have the new insight, yes, we going for glocalization model, to help all our partners merchant to transform them into glocalization companies – IN ZERO ADDITIONAL COST to them. It is a new thing where even Rakuten won’t able to achieve easily, but we will try. When Rakuten bring over few hundreds merchants from Japan to enter Taiwan market, they work very closely and hard to help those Japanese firms to have a local presence in Taiwan through their glocalization attempt, but I believe our model will make a different from Rakuten, easier, faster, and more dynamic.

Glocalization – it will be our brand new focus…. We wish to be to first in China to introduce Glocalization e-Commerce, are we able to buy enough time on this? Is our speed fast enough then the speed of Internet? Let’s the result reveal end of this year 2009…

I have finally complete the base case study on Rakuten Inc, and also its largest retail mall Rakuten Ichiba.
The company currently claim that they have exceed 40million registered members, and more than 25,000 merchants stores using their platform to sell online. Its e-commerce business unit achieve sales of 14.2bil Yen in Q1 08, and 15.4bil Yen in Q2,08 respectively, which turn to be approximately US$100mil per quarter. The group financial reports US$1.7bil net sales in 2007, with US$304mil in Net income during the same period (17.2%) which is an interesting figure for a e-Commerce company in Asia. In early 2008, Rakuten Ichiba joint ventured with Taiwan’s President Chain Store to found Rakuten Ichiba Taiwan as its first attempt to bring its cybermall business oversea. The JV formed a NT$174million giant and successfully captured 440 shops signed up and 160k members registered. The formation also help Japanese merchants to ‘export’ their products to Taiwan members, which claims to be a strategic move for Rakuten Ichiba global expansion.
However, when we compare these figures with Amazon.com, it is really interesting to know that Amazon is currently having 78mil active members, and gross sales of US$14.8bil. during the same Y2007 financial report. Amazon also has seller group (merchants) of 1.3million worldwide.

Due to recent project, I need to do a research on the Japanese giant e-Commerce Rakuten Inc. Its 2007 reporting net sales reached US$1.76 billion and Net Profit of US$304million (17.2% of Net Sales). It has total of 43.9million members under Rakuten Group (which 35.9million are from Malls business); and 22,396 merchants (stores). Under the leadership of its founder and CEO, Mr. Hiroshi Mikitani, the company has involves itself into multiple businesses such as Credit Card & Payment, Portal and Media, Telco, Securities and Travel industries.

I have gathered a short summary about this company to share with the entreprenuers in Malaysia:

5 secrets of Mr. Hiroshi’s Rakuten Success
1. Get things done (Kaizan concept)- continue learning and improvement from day to day – also the secret of Toyota Motors
2. Complete Professionalism- be the professional, the best in what you do in your industry – Jack Welch GE’s spirit
3. Hypothesize, Execute, Verify & Incorporate – visualize, and focus, then execute and corrective action
4. Customer satisfaction maximization - easy to say by many companies, even large corporations but when come to implementation, I still see many local companies take customers as secondary priority, where I have many bad experience on this.
5. Speed!, speed!! & speed!!! – this personally give me a big motivation to get onto action rather than plan plan plan….

Of course, the company itself also equip with most of the attributes to be a successful tech & web company, good working environment, free foods, continue learning & improvement culture,  and I have to admit that the most important thing over this is that they are putting customer as the first and most important priority all the time. They even have their Rakuten University to help customer to improve their e-commerce store, and a team of e-marketing experts to provide instant support and help when needed. Ask back our local website builder company, how many really putting the efforts on this? Time to change..

I will soon put up my whole paper about this company to share with you, meanwhile email me if you need to find out additional information about this company, or you have some insightful information to share with me drop me msg at eddie at ciph dot biz.

Rakuten.co.jp users come from these countries:
Japan95.1%
China2.6%
United States0.5%
South Korea0.3%
Taiwan0.2%