In 1997, Rakuten, Inc. (hereinafter referred to as the “Rakuten Group”) set up Rakuten Ichiba, which became Japan’s largest e-commerce platform. Today, the Rakuten Group provides over 70 types of online and physical services - including e-commerce, e-books, travel, banking, credit card services, professional sports, etc. - to nearly 1.4 billion members throughout the world, and has established the Rakuten Ecosystem in 30 different countries and regions.Link of interview video
The Rakuten Ecosystem has now spread all over the world. In the course of developing its global operations, the Rakuten Group made Taiwan its first overseas business location, showing Taiwan has a special meaning for Rakuten. So why did the Rakuten Group decide to expand into Taiwan? Let us explore what made Taiwan so attractive for Rakuten together.
In 2008, the Rakuten Group established Taiwan Rakuten Ichiba, Inc. in Taiwan. This represented Rakuten’s first step in its expansion into overseas markets. The Rakuten Group believed that, not only was Taiwan geographically close to Japan, but there were also many cultural similarities between the two countries, and a particularly important factor was that people in Taiwan were generally highly receptive to Japanese culture, which would help the Rakuten Ichiba e-commerce platform to develop in Taiwan.
Another point that made Taiwan very attractive to the Rakuten Group was Taiwan's impressive technology capabilities, as well as its high penetration rate of mobile devices, extensive Wi-Fi coverage and receptivity to new technology. At the same time, the Rakuten Group concerned that investing in an overseas country with a larger market size would require a higher investment, which means shouldering a higher level of investment risk. By contrast, Taiwan’s market was just the right size, making it ideally suited for collaboration on the development of Rakuten’s first overseas business location. Currently, Taiwan Rakuten has around 300 employees, serving over 6.8 million members and more than 10,000 merchants, with the range of services covers every aspect of people’s daily lives. Taiwan Rakuten has also succeeded in building a comprehensive Rakuten Ecosystem in Taiwan, second only to Japan.
Grace Lo, CEO of Taiwan Rakuten Ichiba, Inc., points out that: “Taiwan is a very interesting market. Although the market size is relatively small, it is ideally suited for use as a test market.” The Rakuten Group currently provides over 70 types of services around the world, and Taiwan was the first overseas market outside Japan in which many of Rakuten’s innovative services were launched. After field-testing in Taiwan and the making of any necessary adjustments, the business model was then expanded to other countries. During this process, the Rakuten Group also shared experience, providing feedback to overseas teams. Taiwan Rakuten CEO Grace Lo compares this testing model to working in a kitchen, where new recipes are developed by combining different ingredients in different ways, and then making adjustments based on people's responses in tasting sessions, so as to be able to more precisely appeal to consumers’ culinary preferences.
Having accumulated experience of operating in overseas markets in Taiwan, the Rakuten Group was then able to adopt a nimble and flexible strategy for entering the European and North American markets, and gradually developed into a multinational corporation, able to operate successfully across a diverse range of consumer cultures. For example, having observed that consumers in the U.S. are used to getting cash-back rewards, the Rakuten Group used the “Ebates” cash-back website to enter the U.S. market. In another example, Rakuten used the “Rakuten Viki” streaming platform to enter the Brazilian market. To their surprise, they discovered that Taiwanese TV dramas and soap operas, with their emotion-inducing story-lines, became very popular in this passionate Latin American society.
This year, as the COVID-19 coronavirus epidemic spreading throughout the world, it has had a serious negative impact across all industries, and many physical, bricks-and-mortar stores have been forced to expand into e-commerce, with the aim of developing new business channels that can help them to escape from their current difficulties. Within a few months after COVID-19 epidemic outbreak, more than 200 businesses had contacted Taiwan Rakuten. However, Grace Lo frankly admits that: “Many businesses were under the impression that it is easy to set up an online store on a platform like this. In reality, once they have been operating online for a while, they discover that it is actually quite challenging.” To help businesses make the digital transition, Taiwan Rakuten’s E-commerce Advisory Team provide them with one-to-one assistance, and also implement online training. One particular issue is that the managers of the businesses that have been contacting Taiwan Rakuten are often relatively elder, and have difficulty using new technology. Consequently, Taiwan Rakuten needs to spend a lot of time helping them to learn how to operate the online systems. The Taiwan Rakuten team have also divided tens of thousands of case studies from the past into specific categories, so that they can identify cases from the past that are similar to new merchants’ projects, and then use these to work together with the merchant to decide the best way to run their online store.
Taiwan Rakuten CEO Grace Lo goes on to share with us the two key factors that are most important for a business’s digital transformation. The first one is mindset, or in other words: how one manages one’s expectations. A lot of business-owners tend to think that, once you have got the products available for sale, customers and orders will just appear out of nowhere. However, just like other distribution channels, the e-commerce channel requires in-depth management in order to drive sales. The second key factor is that, not only does digitalized operation involve staring at information on a computer screen all day, but an even more challenging problem is working out how your brand can transmit a sense of warmth and how your products can embody their own narrative, given that the customer cannot actually touch them.
Today, competition between e-commerce platforms is growing ever more intense, and platform operators need to be able to rapidly and precisely retain existing members and develop potential new customers. Data is the Rakuten Group's DNA; by accumulating huge amounts of data and integrating it with technology, Rakuten is able to create new services and new experiences. For example, the Rakuten Group had been planning that, prior to the commencement of the Tokyo Olympics, it would launch a bi-directional, Taiwan-Japan, trans-national points conversion function. Members who had accumulated points in Taiwan Rakuten Ichiba would be able to convert and use these points directly at physical outlets in Japan. This kind of regionalization of the “points economy” represents innovation in terms of combining data with new forms of information and communications technology (ICT).
Responding to the trend towards integrating new technology in the retail sector, the Rakuten Group has proactively adopted artificial intelligence (AI) technology, with the aim of being able to rapidly and precisely provide members with service solutions that match their needs, based on analysis of personal preferences. It can be anticipated that, in the future, marketing will become more personalized, and it may involve more future projections, for example, using data analysis to proactively recommend consumers to try out different styles of outfits or accessories, thereby creating a whole new kind of consumption model.
The Rakuten Group is also collaborating with baseball teams, and will be using 5G mobile communications technology to give baseball fans a new game-viewing experience, for example, by promoting the development of cash-free “smart” ball-parks, or using drones to take video footage of the game that can then be transmitted over 5G networks, making it possible to focus on specific individuals within the ball-park, and making fans outside the ball-park feel as though they really are watching the game live. In the future, the Rakuten Group plans to apply 5G technology to an even wider range of scenarios, and will be using more new technologies to make life more convenient for Rakuten members, creating even more and more exciting online shopping scenarios and life experiences for members.
As the Rakuten Group's first overseas business location, Taiwan Rakuten has never ceased to expand the scope of the Rakuten Ecosystem within Taiwan. In 2019, Taiwan Rakuten take over Taiwanese professional baseball team, the Lamigo Monkeys. The company has been gradually working to build up the industry value chain in the travel/sports/tourism sector, and has added new experiences to sporting events in Taiwan, such as providing a “contactless economy” experience, letting sports fans to order food online in advance, and then pick up directly at the ball-park. The Rakuten Group hopes that, with every new business Rakuten moves into, it will be enhancing the Rakuten Ecosystem in Taiwan, as well as increasing the level of value that Rakuten services provide to the 6.8 million Rakuten members in Taiwan.
Looking ahead to the post-COVID era, with new trends in retailing, besides working to further increase the number of members in Taiwan, the Rakuten Group will also be focusing on guiding consumers towards more in-depth interaction with the Rakuten platform. In addition, Rakuten will be promoting innovation in the area of cross-service, cross-region integration, continuing to play the role of pathfinder in the era of the data economy.
Source： Department of Investment Promotion, MOEA
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