Rakuten-World’s 3rd Largest eCommerce Site You Might Not Have Heard Of!
Formerly known as Buy.com, and now a part of the Rakuten Inc – Rakuten.com is the third largest eCommerce site in the world (behind Amazon & eBay) that connects buyers and sellers using a marketplace model.
With an offering of more than 90 million products from 38,500 merchants around the globe, they cater to over 18 million customers. Their product listings are divided in 24 categories, some of which include: Computers & Office, Electronics, Fashion & Beauty, Video Games, Books / Movies / Music, Home & Household, Health & Fitness, Toys & Baby and Deals & More, etc… There is something available for everyone here!
Their core business model is a B2B2C (Business to Business to Customer) marketplace model. What differentiates them from the others is that – they attract customers by selling products at below cost, and also have developed their own in-house technology, that is used every night to figure out the lowest prices from all sources and then accordingly setting their prices.
The site also offers discovery shopping, Video Content and Video Reviews about the products as well. Apart from free shipping and 45 Day return policy, customers are also get to earn Super Points with every purchase which can be used to buy products.
They try their best to create and offer a personal shopping experience to its users. They do so, by permitting all the sellers to customize their pages with their own unique layouts, pictures and promotions, giving the feel of an attractive and interactive web store.
Rakuten.com offers a true shopping market and personalized experience, which is less like robotic and more like human. They believe that consumers should be able to buy from people and not from the internet.
Their underlined approach is to aid the merchants to succeed, rather than competing with them!
For Merchants: -
To be able to sell on the portal, all you need to do is ––– Create an account, which takes about 10 minutes to complete, post which, you need to list the products you wish sell, and done!
The company offers a three part fee structure for the merchants, which includes: The Membership Fee is $99/Quarter or $33/Month, the Commission Fee is between 8% – 15% depending on different categories, and the Fee Per Item is 0.99 cents (charged when the item is sold). Listing on the website is completely free.
Here, you get to avail some features like: Account Manager, R-Mail (CRM Email), Rakuten Super Points, Customizable Merchant Storefront, Personalized URL, Custom Product Pages, Robust Shipping Engine, Sales Reporting and Insights, Merchandising Placement, Redesigned Seller Portal, etc…
Other than that, they also offer several high level packages with much more advanced features to sellers as well, such as: professional level and professional plus. This is one of the key factors that differentiate Rakuten from other platforms like Amazon.com or eBay.
About Rakuten Inc
Rakuten.com is a part of Rakuten Inc, which is a Tokyo-based eCommerce and Internet Company that was founded by Hiroshi Mikitani (CEO) in February 1997 as MDM Inc. Rakuten is a Japanese word which means Optimism.
The Rakuten Group is a compilation of a total of around 40 Businesses & Services in sectors including: Online retail; Banking, Credit and Payments; Portal and Media; Travel; Securities; Professional Sports; and Entertainment.
The company has managed to reach to this position on the global front in such a short life-span mainly by a series of acquisitions and joint ventures, which include: Buy.com (USA), Priceminister (France), Ikeda (Brasil), Tradoria (Deutschland), Play.com (UK), Wuaki.tv (Spain), Kobo Inc (Canada), etc.
Other than that, some of their investments also include: Pinterest, Ozon.ru, AHA Life, Daily Grommet, etc…
As of 2015 – with an employee base of roughly 12000, the company accounts for revenues worth ¥713.5 Billion and a net income of ¥44.28 Billion.
Who Founded The Brand?
To begin with Rakuten.com (formerly known as Buy.com) is presently owned by Rakuten Inc, which is owned by Hiroshi Mikitani, who also happens to be the CEO of the company.
A Harvard Business School Alumni – Hiroshi had worked with the Industrial Bank of Japan (now part of Mizuho Corporate Bank), and had also started his own consulting firm called Crimson Group, before starting Rakuten!
At 151st position amongst the world leaders, he was valued at $8.7 Billion by Forbes in March 2015.
Scott Blum is the original founder of Buy.com which got renamed as Rakuten.com after its acquisition!
Born in San Jose in California in 1964, Scott had tasted success at a very early age 14, by having won four gold medals, two silver and one bronze, in the many school activities that he was a part of.
He graduated from Cherry Creek High School, and then began his career at an early age of 19, with Ritz-Carlton Hotel as a Car Parking Attendant. Next, he then took up a job to sell women’s shoes at a Nordstrom department store in 1985.
While at it, he also started his first company called – Microbanks! His company was one of the first ones to sell add-on memory modules for Macintosh computers. After making a net profit of $1.2 million on revenues of $1.8 million in the first year itself, he sold the company to Sentron Technology in San Diego for $2.5 million in cash, in the second year.
Post that, he co-founded Pinnacle Micro, along with his father. They were resellers of Sony optical disk drives. In a very short span, they had managed to reach position where they were making $81 Million annually.
Unfortunately, the company got into a tangle with Securities and Exchange Commission (SEC) and was forced to resign from the company.
After that stint, he then decided to start Buy.com, and the rest, as they say is history!
Some of his favourite past times include: surfing, golfing, snowboarding, and eating Subway for lunch.
How Has Their Growth Been So Far?
Formerly known as Buy.com, Rakuten.com was founded in 1997 by Scott Blum!
It began by selling computers, and then eventually also expanded into numerous other categories, including software, books, videos and games as well. Their business model was to sell products to consumers at below cost, and earn their revenues through other mediums such as advertising, selling add-on services, etc…
In their first year itself, they beat Compaq’s record for the most first-year sales, by selling goods and services worth $125 Million. Post that, they also managed to raise a whooping $120 Million from SoftBank in their first round of funding itself. In 1999, in attempts to raise more funds, Scott had to sell remaining parts of his stake to SoftBank as well.
Interestingly, in just about 2 years since their launch, Buy.com managed to launch an IPO worth $195 Million in early February 2000.
The stock value sky-rocketed to the roof in the initial days, but soon began dipping down at the same speed as well. Eventually, they were forced to delist themselves from the NASDAQ Stock Market because they were not able to adhere to the norms of maintaining a stock price above $1 per share.
This was followed by the sale of the UK wing of buy.com to a UK department store called John Lewis in 2001, and their technology was used to create a new portal for the John Lewis chain.
Things took a different turn by the end of 2001, when Scott went ahead and reacquired his company back from John Lewis for $23.6 million and took it private from public.
Soon after the acquisition, Scott decided to changes things around, and instead of just selling electronics, movies and music, etc., he went ahead and decided to add more products to their current listings such as sports equipment, apparel, shoes, health and beauty products.
Additionally, since Amazon (with 25 million customers i.e. approximately five times their userbase) was the only direct competition they had, they even went ahead and announced a 10% below Amazon.com cost on all books sold on the site along with free shipping site-wide.
Their aggression to fix things was so much that, they even went ahead and placed a full-page ad in the Wall Street Journal promising a better buying option.
In March 2002, Buy.com launched their first ever issue of Buy.com Magazine, that gave information about the latest electronic devices and computers, and released four issues per year. Over the period of time, this magazine grew to attain a circulation of five million, and a circulation of five million. It was later converted into an all-digital publication.
In the next few years, buy.com partnered with eBay by striking a deal to sell millions of items on eBay and also became their largest seller. Their amount of products for sale also grew from 2.3 Million to 5 Million, making them the second largest eCommerce portal in the US, just behind Amazon.com.
During this phase, Buy.com even filed for an IPO again, but eventually opted to drop the idea in 2007.
And finally, this journey of theirs came to an end in May 2010, when Buy.com got acquired by Rakuten Inc (largest eCommerce portal in Japan) for $250 Million in cash. During the time of acquisition, Rakuten had 64 million members, while Buy.com only had 14 Million customers.
Three years later in 2013, Rakuten officially announced that they had changed the name of Buy.com to Rakuten.com, effective immediately.
Over the period of time, Rakuten even expanded and launched in many parts of the world including: Russia, China, Brazil, Germany, Canada Thailand, Malaysia, Austria, France, Taiwan, South Korea, Indonesia, and the United Kingdom, as well.
Later, in 2014, they also purchased online rebate site called Ebates.com for a whooping $1 Billion in cash, simply because, it would allow customers to earn cash back when shopping online.
Last year, with the help of a partnership with Bitnet, the company also started accepting Bitcoin as payments as well.
Since then, they have made various developments, changes and additions, to reach to a point where today, they are known to be the third largest eCommerce portal in the world.