Japan's Rakuten has become a "hot commodity", with many big sellers entering the market

Anker Innovations, a leading super seller in the cross-border circle , pointed out in its 2022 financial report that in 2022, when the average exchange rate of the yen against the RMB fell by 12.61%, its revenue in Japan was still as high as 1.796 billion yuan, a year-on-year increase of 3.67%.

The outstanding performance of the top sellers is enough to glimpse the broad prospects of the Japanese market, and Rakuten is undoubtedly at the top of this market. As one of the leading platforms in the Japanese e-commerce market, it has not only gone through 26 years of history, but also occupies 28% of the local e-commerce market share , and is the "hot commodity" that many cross-border e-commerce sellers are eyeing.

In the cross-border circle, it is not uncommon for e-commerce platforms to be short-lived. Many of them start out with a bang but quickly disappear. How did Rakuten Ichiba survive to where it is today? The secret is two words: "quality".

Select high-quality sellers and strive to attract "one in a hundred"

Rakuten Ichiba was founded in 1997, six years earlier than China's Taobao (launched in 2003). Looking at the history of the global e-commerce market, it is a "pioneer" platform. At that time, it started its e-commerce journey with 13 online stores.

Today, after 26 years of development, the number of stores has expanded to 57,000 ( as of December 2022). However, Rakuten Market has extremely high requirements for merchants.

Zhou Yang, head of Japan's Rakuten Group's China business and general manager of Rakuten Shenzhen, made it clear that compared with other platforms, the entry threshold of Rakuten Market is relatively high. "We adopt the strategy of selecting high-quality sellers for merchants, because only in this way can we guarantee the quality of sellers entering the platform ."

In 2021, the cross-border circle has been swept by the trend of "multi-platform layout". The number of sellers on many platforms has increased rapidly, and the scale has expanded rapidly in a very short period of time. In this process, as one of the leading e-commerce platforms in Japan, Rakuten Market is naturally favored by sellers .

While other platforms have opened their doors to attract new sellers, the number of Chinese sellers on Rakuten Market has not fluctuated much. "Lowering the review standards and taking the opportunity to make a profit is not Rakuten's style, nor is it the culture of Japanese companies," said Zhou Yang. He said that when all sellers enter the platform, unfair competition will easily occur, and a good business environment will be difficult to guarantee. "We don't want to ruin the brand."

As online shopping has developed to this day, many platforms have been included on the "death" list, but Rakuten Ichiba has survived steadily to this day, which is obviously inseparable from its strict control over the merchants that join.

Prefer boutique sellers

At present, there are two main types of cross-border e-commerce sellers: boutique sellers and mass-market sellers. The former focus on R&D, and are relatively slow in launching new products. They prefer quality over quantity, while the latter are just the opposite. They win by launching new products quickly and in large quantities, but lack R&D capabilities.

There is no doubt that boutique sellers are the "dish" of Rakuten Market. Zhou Yang said that they prefer to recruit sellers who operate vertical categories and brands in a refined manner. "Although merchants do not necessarily have to have their own factories, the definition of products and function development must be completed in-house."

As we all know, Rakuten Ichiba adopts the boutique store model. From its perspective, general-purpose sellers are haphazardly doing things here and there and cannot accumulate anything. Boutique sellers, on the other hand, choose to delve deeply into a certain category and are more likely to form a brand. This way, sellers can also stay on the platform longer and have more room to develop.

ANLAN , a beauty instrument brand that has gone global, is a typical representative of boutique sellers. Four years ago, when Rakuten Market opened up to Chinese entities, ANLAN entered the platform as one of the first "early adopters". After entering the platform, it has achieved both good performance and brand power. Not only did it achieve a 376% sales growth in 2021, but its brand image has also been further consolidated and enhanced.

Not only ANLAN, but also Tineco, which makes floor scrubbers, Xgimi Technology, which makes projectors, and EcoFlow, which makes outdoor mobile power supplies... These Chinese companies with strong product or brand power have quickly opened up the market in Japan, and now their annual sales in the Rakuten market have reached a considerable scale.

These companies are product-oriented /boutique sellers. For this type of seller, product/quality is everything. They know that products need iteration and innovation, and they also know that product research and development requires a lot of money, and they never hesitate to spend money in this regard. Zhou Yang agrees with this: "I once visited a seller of home fitness equipment in Hangzhou. Their company has 400 to 500 people, of which product research and development personnel account for 50%."

During the interview, he mentioned more than once that Rakuten Market attaches great importance to the "product development capabilities" of sellers. It is precisely because of this that in recent years they have increased their efforts to explore the Chinese supply chain, while deepening cooperation with factory-type sellers to further improve the quality of platform sellers.

"Although they have no experience in cross-border e-commerce, they have factory strength and product research and development capabilities, and the quality of the products themselves is also evident," said Zhou Yang.

Go deep into the industrial belt and tap the potential of the supply chain

The e-commerce market survey released by the Ministry of Economy, Trade and Industry of Japan in August 2022 showed that the e-commerce rates of China's three major advantage categories in Japan are as high as over 20%, including household appliances at 38%, household goods at 28%, and clothing accessories at 21%.

However, in Zhou Yang's view, these categories still have huge potential markets worth exploring. "We have been open to Chinese sellers for four years, but Chinese sellers still account for a very small proportion of the number of sellers on Rakuten Market, and China's strong supply chain advantages have yet to be tapped."

In order to deeply explore the potential of China's supply chain, the Lotte China team has been working hard and trying in recent years, and has held many large-scale investment promotion activities in Guangzhou, Ningbo and Hangzhou. According to SourcingArts data, there are more than 100 industrial clusters in China , most of which are distributed in Zhejiang, Jiangsu, Guangdong and Shandong provinces . Among them, the industrial clusters represented by the Pearl River Delta region of Guangdong Province and Hangzhou and Ningbo in Zhejiang Province are large in scale and influence.

From the perspective of Guangdong Province, Shenzhen is a world-renowned Chinese electronics capital and the most developed city for electronic product exports. 90% of China's electronic product factories are located in Shenzhen, Guangzhou and Dongguan . Panyu District and Huadu District of Guangzhou are the main production areas of leather bags. Shiling Town in Huadu District is the world-famous "Chinese Leather Goods Capital".

In addition, Guangzhou's clothing industry is also very strong, with Panyu District alone gathering more than 7,000 clothing manufacturing companies . Zhongshan is known as China's lighting capital, with more than 80% of China's lighting produced here. In addition, Foshan and Huizhou's commercial lighting and small appliances are also competitive.

From the perspective of Zhejiang Province, Hangzhou 's auto parts industry and security monitoring industry are very developed . In addition, Jiubao in Hangzhou gathers countless clothing brands and large and small processing factories. To the west of Jiubao is one of the largest clothing wholesale market clusters in China: Sijiqing. A popular saying in the clothing circle: "Look at Guangdong in spring and summer, and look at Zhejiang in autumn and winter."

These are the confidence for Chinese companies to go overseas, and are also the "treasures" that Rakuten Market wants to tap.

Over the years, Rakuten Ichiba has become synonymous with "high quality" and "high quality" in Japan by virtue of its unremitting pursuit of the quality of merchants, and has attracted a large number of "fans". Coupled with its unique points system, "Rakuten fans" are firmly encircled on the platform. This has further contributed to its current leading position.

The market share ranks among the top, and the leading position is stable

Currently, Rakuten Market accounts for 28 % of Japan's e-commerce market share and is one of Japan's leading e-commerce platforms. The platform has a large advantage in sales share in multiple categories in the Japanese e-commerce market.

Last year, affected by inflation, consumers' purchasing desire declined and the performance of e-commerce platforms declined significantly. However, against this background, Japan's Rakuten still achieved a total e-commerce transaction volume of 5.6 trillion yen in 2022 , a year - on-year increase of 12.3 % .

"If you want to shop online, go to Rakuten Ichiba" has become the shopping habit of many Japanese consumers.

Nowadays, competition in Europe and the United States is becoming increasingly fierce, and emerging markets such as Southeast Asia and Latin America still need to improve in many aspects such as logistics, and it is difficult to see results in the short term. In this context, it is a good choice for Chinese cross-border sellers to enter the Japanese market through Rakuten Market, which has a large e-commerce scale, strong purchasing power of residents, and low transportation costs.

However, Zhou Yang also made three suggestions for Chinese sellers joining the platform: first, they must have high-quality products and be able to develop and improve products based on the characteristics of the Japanese consumer market; second, they must have a solid team and be as localized as possible in operations and services, responding with meticulous and thoughtful Japanese services; third, they must have perfect logistics guarantees, set up overseas warehouses in Japan as much as possible, or use Rakuten's store logistics support service "Rakuten Super Logistics R SL" .

Japanese e-commerce took shape in the late 1990s , so Rakuten, founded in 1997 , can be said to have witnessed the development of the Japanese e-commerce market. According to Global Data's forecast, the Japanese e-commerce market will maintain an annual compound growth rate of about 5.2% in the next four years, and by 2026 , the scale will reach 27.4 trillion yen ( 237.8 billion US dollars), with huge potential. As a platform that has accompanied the Japanese e-commerce market through 26 years of ups and downs, Rakuten will surely continue to write its own outstanding achievements in the future.

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