Taking aim at Amazon, Japan's Rakuten launches brand in US

Rakuten, the dominant Japanese e-commerce firm, converts Buy.com to its new American online shopping mall

By Jay Alabaster, IDG News Service |  IT Management

Visitors to what used to be Buy.com will see a few changes on the front page this week -- including a pronunciation guide for its new name.

The site is now branded "Rakuten," after Japan's largest e-commerce firm, a massive online conglomerate that dominates even giants like Amazon at home. Rakuten (the site suggests it is read "rack" - "ah" - "ten") bought Buy.com in 2010 for US$250 million as part of a global spending spree, and has been gradually rebuilding it since.

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The old Buy.com, which mainly sold directly to customers, has been swallowed whole. It is now one of thousands of stores in a giant online shopping mall, along with those run by firms like Petco and wine.com. The online mall, "Rakuten Shopping," is an attempt to recreate the brand's success in Japan, where it is a household name and about 60 percent of the population are members.

Rakuten, the characters for which mean "optimism," is converting acquisitions to branded online shopping malls all over the world. It has already rebranded online retailers Ikeda in Brazil and Tradoria in Germany, and sites like Play.com in the U.K. are on the way, as it moves toward its ultimate goal of establishing a global mega-mall. Rakuten already offers cross-border purchases on some products through its "Global Market."

The company feels strongly that this strategy, which focuses on luring retailers and fostering relationships between them and customers, is different from the one taken by the online retailer it is chasing in most markets.

"You can't think about e-commerce without thinking Amazon," said Mark Kirschner, global chief marketing officer. "But Amazon is really focused on a vending-machine shopping experience - you search, you find, you buy, you're done."

In Japan, where Rakuten is omnipresent, its businesses include online travel, auction and e-books, plus a bank and securities firm, as well as a baseball team, the Rakuten Eagles. But at the core is its giant online shopping mall, and the difference between shopping there and on Amazon's Japanese site is immediately clear.

While searches on Amazon lead straight to product listings, from either its own offerings or others that sell products through its site, browsing through Rakuten often takes one to the virtual storefronts of its retailers. The company feels strongly that shoppers want to browse and connect with those they are buying from, even online.

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