Taking hints from its Chinese contemporary Alibaba, Rakuten, the Japanese e-commerce company behind chat application Viber, is eyeing an entry into the small yet aggressively growing Indian online marketplace segment. And it seems like the company may just be looking at a direct entry, as opposed to Alibaba’s investment based approach.
Apparently, the company has been quietly laying the groundwork for its entry into the country (via ET). Building upon its development centre in Bengaluru, Rakuten has also established a business office in the city and the last we heard, was doing its best to entice talent away from other companies.
Speaking on the topic to Economic Times, a spokesperson of the company said,
India is a vibrant growth market and a great source of talent and ideas for us at Rakuten. We are always interested in new global opportunities for growth but we don’t have any comments on developments in India at this time.
The company has both — the reasons as well as the resources to enter the country. The almost 20 year old company currently has over 12,000 employees with over $5 Billion in sales. And while it’s the top retailer in Japan and facilitates more than a quarter of that country’s online retail, it also has significant interests abroad.
The company runs Buy.com, online cashback company Ebates Inc. in the US and also has interests in ride-hailing app Lyft and Pinterest. Rakuten also connects over 10,000 online specialty stores from all over Japan to 170+ countries in the world.
Apart from Japan and the US, the company also has interests in UK, Brazil, Spain, Malaysia and Indonesia. In fact, about 60 percent of its revenue comes from its business abroad. In 2012, the company’s revenues totaled US$4.6 billion with operating profits of about US$244 million. In June 2013, Rakuten, Inc. reported it had a total of 10,351 employees worldwide.
In 2005, Rakuten started expanding outside Japan, mainly through acquisitions and joint ventures. Its acquisitions include Buy.com (now Rakuten.com Shopping in the US), Priceminister (France), Ikeda (now Rakuten Brasil), Tradoria (now Rakuten Deutschland), Play.com (UK), Wuaki.tv (Spain), and Kobo Inc. (Canada). The company has investments in Pinterest, Ozon.ru, AHA Life, and Daily Grommet.
The sudden interest in India may have been prompted by the surging e-commerce niche in the country along with an increasing facilitation of outside entry. Indian Government’s recent decision to allow upto 100% foreign direct investment in online marketplaces is obviously the cherry on the cake.
It becomes interesting now, as we will await to see whether three of world’s biggest ecommerce firms from the most developed economies globally — Amazon from US, Alibaba from China, and now Rakuten From Japan take the lead in the Indian market, or our Indian poster boys — Flipkart, Snapdeal and Paytm take away the glory.
Another interesting aspect which will be watched for in this space, will be whether these three foreign giants look for investments into Indian ones or simply run their own businesses and let the Indian firms wither away. Indian consumers are a cost conscious lot, and considering the monetary capacity of Amazon, Alibaba and Rakuten, they might probably find it easier to establish a business and take it away from the Indian giants — by offering lucrative deals and
Well, with a 100 percent plus growth rate and projected online sales of $55 Billion, India is definitely the destination of choice for businesses looking for another huge market to grow into. What will be more enthralling than the earlier Flipkart v/s Snapdeal v/s Paytm battle will be the one between Amazon, Alibaba and Rakuten.