What is Rakuten? Making The Most of Japan’s Market of Choice

To some, Rakuten is their go-to shopping platform. For others, Rakuten is their cashback rewards app of choice. Yet despite their different use cases, both features fall under the umbrella of Rakuten Group, Inc. In fact, today, Rakuten spans over 70 businesses, including internet services like e-commerce and digital content, fintech services like credit cards and banking, as well as mobile services.

With over 1.7 billion members worldwide, Rakuten represents a great opportunity for marketers to get their brands seen. This guide will specifically focus on Rakuten’s e-commerce platform, examining user preferences and offering insights into successful marketing strategies on this digital marketplace. What is Rakuten? Read on to learn more.

What is Rakuten?

Rakuten Group, Inc., is a Japanese technology conglomerate based in Tokyo. The company first launched in 1997 as Rakuten Ichiba, a B2B2C online marketplace that became its most recognized venture. This platform laid the foundation for the “Rakuten Ecosystem,” designed to encourage users to engage with multiple services provided by the Rakuten Group. Rakuten began its overseas expansion around 2005, and, as of today, the Rakuten brand has a presence in 30 countries worldwide.

Alongside Amazon Japan and Yahoo! Shopping, Rakuten Ichiba is one of Japan’s major online shopping platforms. As of 2023, Rakuten has attracted over 100 million registered members and recorded over 6 trillion yen (approximately $40 billion USD) in domestic e-commerce gross merchandise sales (GMS).

Unlike those who visit Amazon with specific items in mind, customers at Rakuten enjoy a “virtual shopping mall experience,” where they navigate through their favorite brands as if in a physical store. This exploratory shopping experience allows customers to venture beyond the initial search to discover a broader selection of products, continuously drawing Japanese shoppers to its site.

Who Uses Rakuten?

As of the third quarter of 2023, Rakuten Group in Japan reported a 7.2% increase YoY in monthly active users, reaching 40.9 million. The Rakuten ecosystem continues to expand, with 76.5% of users utilizing two or more Rakuten services in the past year, including services other than Rakuten Ichiba.

According to a local survey, Rakuten Ichiba is particularly popular among Generation X and Y, with a usage rate of 48.6% and 46.3% respectively. Rakuten Ichiba is favored by women. In fact, the top 30 products listed in Rakuten’s “Ranking of The Year 2023” are mostly female-targeted products, such as facial masks (as a form of fashion) and colored contact lenses.

What Do People Use Rakuten for?

According to a survey by Manebu Research (まねーぶ調べ) involving 300 Rakuten Points users, Rakuten Ichiba is the most used Rakuten service, followed by Rakuten Bank and Rakuten Travel. Additionally, Rakuten Ichiba is the most preferred place for earning and spending Rakuten Points, surpassing other options such as street shopping, investments, or shopping on other online platforms.

Unlike typical e-commerce platforms functioning as catalogs of products, Rakuten Ichiba is like an online shopping mall, offering a shop-centric, consumer-focused experience. It is a comprehensive platform where shoppers can find almost anything. The most popular categories among Japanese consumers are fashion, beauty, supplements, sports & outdoors, electronics, and baby & maternity products.

Japanese consumers are open to various categories, as long as they align with their interests and preferences.

Rakuten Points

Rakuten Points is Rakuten’s Rakuten’s flagship loyalty program. It allows members to earn and redeem points on Rakuten’s services and at partner stores across Japan. By 2022, the program had distributed over 3 trillion points, equivalent to 3 trillion Japanese yen or approximately US $20 billion.

Unlike other loyalty programs with spending restrictions, Rakuten users enjoy the freedom to use their points across the entire Rakuten Ecosystem. They can use their points for a variety of activities, from everyday essentials like groceries and dining to investing in stocks, trading cryptocurrencies like Bitcoin and Ethereum, or paying bills.

What Do Users Like About Rakuten?

When exploring why users favor Rakuten, Japanese users typically highlight the Rakuten Ichiba e-commerce platform, whereas international users often refer to the cashback platform. LINE research indicates that users primarily favor Rakuten due to the ease of accumulating points, followed by access to numerous special promotions and services, and the app’s straightforward product search function.

Rakuten Ichiba places great importance on store presentations, urging merchants to create visually appealing shops to reflect their brand’s story, philosophy, and culture. As a result, stores often employ various promotional strategies and feature personalized brand pages to engage customers.

Furthermore, Rakuten values genuine user feedback, leading to higher entry standards for merchants compared to other e-commerce platforms. Its strict “zero-tolerance” policy against fake reviews ensures the authenticity of user feedback, building trust among its extensive user base.

One Rakuten user, Tsunekawa, says that he likes Rakuten Ichiba because “I can accumulate a lot of points and the e-commerce site is very well designed.” Rakuten Points is one of the world’s most unique and beneficial loyalty programs. Unlike other loyalty programs that offer basic returns within a single service, Rakuten allows users to earn points across any of its services in Japan without any limitations on where the points will be spent. This flexibility enables users to use their points across the Rakuten ecosystem, whether for grocery shopping with Rakuten Pay, booking a salon appointment through Rakuten Beauty, or even investing extra points in the stock market.

How Does Rakuten Generate Revenue?

The Rakuten Group operates across three segments: Internet Services, FinTech, and Mobile. According to the 2023 Rakuten Consolidated Financial Reports (IFRS), Internet Services led with revenues of 1,212,314 million yen (8,112 million USD), followed by FinTech at 725,165 million yen (4,852 million USD), and Mobile at 364,556 million yen (2,439 million USD). The Internet Services and FinTech segment saw growth in both revenue and profit, with increases of 9.8% and 11.2% YoY in revenue, respectively. Meanwhile, the Mobile segment also achieved a 3.9% YoY increase in revenue.

Internet Services

Rakuten’s Internet Services include its renowned e-commerce mall Rakuten Ichiba, online cashback website, travel booking platforms, sales of advertising, and more. In 2023, this segment achieved a 9.8% YoY increase in revenue and totaled 1.21 trillion yen (8 billion USD). Its domestic e-commerce gross merchandise sales, including Rakuten Ichiba, Rakuten Travel, and Rakuten Books, grew by 6.9%.

Its overseas businesses, especially digital content services such as Rakuten TV and Viki, continue to expand, with a 42.8% and 23.4% YoY increase in registered users. Rakuten’s advertising business also experienced 12.9% YoY growth and exceeded the annual revenue goal of 200 billion yen.

FinTech

Rakuten’s fintech services include payment solutions, investing, banking and securities over the Internet, and insurance. The fintech segment demonstrated strong revenue growth last year, with an 11.2% YoY increase to 725.2 billion yen (4.8 billion USD).

In 2023, Rakuten Payments, including Rakuten Pay and Rakuten Card, saw a 35.7% YoY revenue increase to 75 billion yen ($500 million USD). The number of locations accepting Rakuten Payments has grown to over six million and is continually expanding.

Additionally, Rakuten Securities is especially popular among younger investors, and has recorded more than 10 million customer accounts.

Mobile

Rakuten’s mobile service includes communication services, technologies, and operation of electricity supply services. This segment experienced a 3.9% YoY revenue increase to 364.6 billion yen in 2023, with Rakuten Mobile alone achieving a 17.7% growth in revenue. The subscriber count of its mobile carrier service exceeded 6 million.

The growth of Rakuten Mobile is attributed to its commitment to offering affordable service plans and expanding its network coverage. Its Rakuten SAIKYO Plan, in particular, is becoming increasingly popular. Additionally, initiatives like a 5% rate on Rakuten Ichiba purchases for plan users and the referral program have attracted over 150,000 participants.

How Can You Market on Rakuten?

Display Ads

As of June 2023, Rakuten has over 100 million members, providing brands with access to extensive user data, such as registration information and actual behaviors like browsing, purchasing, and service usage, enabling brands to target with precision.

Unlike general targeting that rely on search keywords and analogous data, Rakuten’s targeting is based on factual data, such as purchase history. For example, a pet food company aiming to target dog owners can use Rakuten’s data to specifically target individuals who browse or purchase pet food and pet wears, rather than general targeting that only uses pet-related keywords.

Additionally, Rakuten supports various ad formats, including SNS ads (social media ads), video ads, native ads, and banner ads, catering to different marketing needs.

Omni Commerce

This is an offline marketing solution based on Rakuten ID and offline purchase data. It collects users’ offline purchase data and location data through Rakuten’s services “Rakuten Pasha” and “Super Point Screen”. Rakuten Pasha allows users to earn Rakuten Points by uploading their receipt snapshots, while Super Point Screen lets users earn points simply by viewing ad pages.

Businesses can leverage the Rakuten ID platform and this offline purchase data to implement various offline sales promotions, gain insights into user purchasing behaviors, and create tailored campaigns, and address every stage of consumer behavior by tapping into user interactions across Rakuten’s services.

Sales Expansion, Brand Gateway, and Showroom

Rakuten connects user behavior data with their Rakuten ID to offer a one-stop marketing solution, ensuring accurate PDCA (Plan-Do-Check-Act) cycles and an in-depth understanding of users, addressing the challenge of fragmented marketing activities and data.

Its marketing support includes the Brand Gateway and Showroom, where both focus on enhancing product awareness and building goodwill, ultimately converting potential customers into buyers. In addition, Rakuten’s data platform enables brands to monitor user behavior and refine their strategies for greater impact.

For sales promotion, Rakuten’s Sales Expansion leverages the brand’s onsite advertising, effective sales tactics, content design, and CPC ads on search results pages to reach the target audience and drive repeat purchases.

Rakuten Points

Rakuten allows users to earn and spend their Rakuten Points both online and offline. By offering points to the user experience across the Rakuten ecosystem instead of just associating them with specific products, advertisers offer incentives without compromising their services or brand reputation. This approach allows advertisers to drive store visits through location-based ads, incentivize purchases by offering points, and encourage in-store purchases at physical stores by giving away coupons.

Rakuten Merchant Server (RMS)

RMS integrates R-Storefront, R-Backoffice, R-Mail, and R-Karte, for smooth store operation and contact with users. It supports merchants in sales promotions and other marketing activities.

• R-Storefront: This feature helps brands build their virtual storefront, customizing the layout, product placement, and pricing. Brands can select from a variety of templates to design their page and access numerous functions for store management.

• R-Backoffice: This order management tool allows orders to be categorized and filtered by task, facilitating batch processing by status. It enables merchants to send the same e-mail to multiple orders and supports report creation and coordination with logistics and payment services, greatly improving work efficiency.

• R-Mail: To help brands communicate with their customers, R-Mail enables brands to draft and send emails in bulk, as well as manage recipient lists based on specific criteria. Given the high level of trust and relevance placed on emails in Japanese business culture and lifestyle, R-Mail is an effective tool for marketers to enhance brand awareness and engage potential clients.

• R-Karte: This is a data analysis tool that helps brands evaluate their store performance by providing insights into metrics such as number of visitors, search keywords, and conversion rates. It also features “Rakuten Search Inflow Improvement” for product-specific keyword search analysis, and a store chart for comparing the brand’s current data against its past performance as well as the industry benchmark.

Market on Rakuten with Nativex

Advertising on Rakuten in Japan can be complex, but it’s much easier with the right help. That’s where Nativex comes in, offering full support to brands and advertisers looking to grow their presence on Rakuten.

Contact us today to maximize your brand’s potential on Japan’s top online platform.

Interested in exploring different social media app marketing in China? Take your pick from our “what is” series on WeChat, Xiaohongshu, Weibo, Naver, and Kwai. You can also keep your eyes on the blog for more updates as they happen.