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A Growing Marketplace

A Growing Marketplace

A Growing Marketplace

A year after its purchase by Japanese marketplace leader Rakuten , has launched Rakuten Marketplace on its site. Emma Herrod speaks to Adam Stewart, Marketing Director, Rakuten’s, about this new sales channel and the firm’s strategy for growth.

Rakuten Marketplace is a true marketplace,” says Adam Stewart , Marketing Director, Rakuten’s . “It’s unique,” he says of the merchant retail offering which the firm launched on its UK ecommerce site in September 2012.

Not only is Marketplace a new sales channel for retailers large and small, it aims to empower merchants by allowing them to create their own branded shopfront within Rakuten’s website. Stewart explains how Marketplace is in essence a shopping centre with individual storefronts. Rather than being confined to a standard template, all merchants have a Merchant Toolbox which gives them the freedom to bring their brand to life on the platform and create their own shopfront using a wysiwyg-style application.

These shopfronts are the main difference between the Rakuten Marketplace model and’s previous model, PlayTrade, through which other brands and individuals could sell direct to shoppers on its platform. In the past, explains Stewart, merchants couldn’t translate brand on but they are now able to do so, enabling them to build greater engagement and deeper relationships with consumers.

To help them boost this engagement, merchant sellers can access another tool through the Merchant Toolbox, Superpoints. They can use this online loyalty scheme, which is used across the platform, to promote themselves and incentivise shoppers who purchase from them. Merchants can also run their own multiplier promotional campaigns, whereby shoppers earn extra loyalty points by buying certain items – or anything – from the merchant. In addition, it can be marketed to specific segments such as the merchants’ own customer base or across the customer base. supports new and existing merchants wanting to operate on Rakuten’s platform. A growing team (currently about 25) of E-commerce Consultants are on the end of a telephone to help them with anything from setting up a storefront to getting the most from the platform and optimising their online sales. “It’s all about partnership,” explains Stewart.

The Marketplace model and Merchant Toolbox are already used to great effect on the Rakuten Ichiba site in Japan as part of its B2B2C model. Tools such as Superpoints and branded shopfronts are in operation or being considered by other Rakuten subsidiary companies around the world.


It’s a collaborative approach that eBay also uses, whereby the relationship between the merchants selling on the platform and consumers is as important as the relationship between the consumers and the platform itself.

Part of this approach is the opening up to merchants of the Rakuten mailing system. Customers who shop with a retailer can choose to receive updates on its latest products and special offers. Using the Rakuten Mail tool merchants can then engage in direct communication with their customer base.

Stewart explains why this collaborative approach is so critical: “Let’s face it, competition online is fierce. Whatever a retailer’s size, it’s crucial that they are armed with the tools to create a shopping experience that offers customers more than just the lowest price tag. Rather than competing with our merchants, at Rakuten’s we want to create lasting partnerships and help them maximise sales through the platform – it’s win, win, win.”

Whereas other marketplaces may compete directly with sellers, Rakuten’s model seeks to empower merchants to deliver omotenashi, the Japanese model of high-quality service, which helps them create lasting relationships with customers.

It’s also a model that has helped’s Japanese parent company Rakuten to become one of the world’s top 10 internet companies by market capitalisation. Rakuten, which bought in September 2011, has numerous sites, including its flagship B2B2C ecommerce site, Rakuten Ichiba, the biggest ecommerce site in Japan and among the world’s largest by sales.

Forbes recently labelled Rakuten the seventh most innovative company. has already incorporated some of these technology innovations, although it still runs on the same platform. “Innovation is key to Rakuten and we’ll try to implement things if they work for the UK market,” says Stewart.


This belief in partnership and co-operation runs across the Rakuten group of companies. It holds regular global leadership meetings across all its subsidiaries, such as in the US and Canada, PriceMinister in France and Spain, Tarad in Thailand, and Rakuten sites in Brazil, Germany, Austria, Taiwan, Malaysia, Indonesia and Taiwan. It uses video conferencing held at different function levels across its subsidiaries such as marketing, IT and leadership, to give everyone a chance to share best practice and ideas. “There’s nothing deemed not to share,” says Stewart. Rakuten also has a Global Creative Web Design team and Global Market Team.

Stewart says Rakuten acquired for its expertise in the UK market;, in turn, has gained leadership through the Rakuten model. The challenge now is to combine both into a localised UK version of Rakuten. He adds: “We’re getting the pieces of best practice that can enhance the experience for the UK customer.”

Part of this channelling of best practice has been’s goal of introducing the omotenashi service model, which steps away from the vending machine retail model and aims to go the extra mile when delivering great customer experience. As part of this push, the company recently brought its customer service contact centre back to the UK from the Philippines, which “saw customer satisfaction levels increase,” says Stewart.

He adds: “We have a 55-strong team to advise customers pre- and post-sale, and this will be increasing to 200 over our peak period. Furthermore, we will soon be increasing customer service via social channels from its current operation of 12 hours to 24/7. This will run alongside other channels to ensure we are as accessible as possible.”

This emphasis on service is already paying off: Verdict Research named the UK’s Best Entertainment Retailer in its 2012 Consumer Satisfaction Index.

Stewart goes on to explain how “there’s always a long list of ideas” to keep the Japanese group at the cutting edge. One of founder and CEO Hiroshi Mikitani’s principles is “speed, speed, speed,” says Stewart, so “we have prioritisation meetings on pushing forward”. He explains how he had 12 months in which to prove the business case and ROI for social. “ is driven by numbers,” he reveals.

In August 2012, reported that Facebook fans could be more valuable to online retailers than those gained through paid-for channels. It revealed:

  • Fan growth: Over the previous 12 months Rakuten’s more than quadrupled its social following. Without any paid-for media promotion, it attracted 370% organic growth, taking its community from 75,000 to more than 350,000;
  • Fan reach: Through friends of fans, the 350,000plus fan base (calculated on the number of friends of fans) has a potential reach of more than 38 million – that’s more than the active number of internet users in the UK;
  • Sales growth: Volume of sales directed through Facebook to Rakuten’s grew rapidly with year-on-year sales through the platform up by 80%. Sales that can be directly attributed to Facebook accounted for more than £2m of gross merchandise sales (GMS) for Rakuten’s;
  • Tweet reach: Rakuten’s has an active community on Twitter with more than 40,000 followers. Top tweets can receive more than one million impressions.

According to its 2011 figures, on average, customers who had engaged with one or more Facebook campaigns from Rakuten’s spent 24% more on its website than those who hadn’t. Furthermore, shoppers who made their first purchase on Rakuten’s referred through Facebook spent 30% more than the average customer in their first year of using the website.

“It’s not just about increasing sales through our Facebook fans; we see social channels as being a huge part of engaging and rewarding our fans,” says Stewart. “We have a vast amount of data on fans.” Using the EngageSciences platform, can create holistic profiles of its fans – looking at how they engage with and share content. This drives personalisation in other channels and helps in the creation of online campaigns “that are more compelling and better reward our biggest social promoters and advocates”. Fans have first sight of promotions, sometimes up to 24 hours before general release, as well as competitions with prizes such as those with tie-ins to film studios.

Stewart says social media will be a core part of the business going forward, and reveals that’s social media success “has been shared back to Japan”, leading them to implement EngageSciences there.


The company has achieved a lot over the past 12 months. It has raised its profile and made the market and consumers more aware of what it can offer, while driving through “productivity and efficiency”, bringing all content, richer content and reviews into one place within the shopping mall to make it easier for consumers to shop across different brands.

The next step is to grow the Marketplace model while developing tools to further empower its merchants. This will enable it to offer a far greater breadth of products and new categories through the merchants that join the platform. now has ten categories including clothing and, says Stewart, “we are looking to take that even further”.

Of course, has targets to grow the Marketplace in terms of merchants and consumers. “One attracts the other,” says Stewart. Initial growth is going to come from transitioning the 2,000 merchants already on PlayTrade into Rakuten Marketplace.

“We’ve got a lot to do at,” he says. “The learning curve is very quick and intense.”

Rakuten is expanding globally and currently has operations throughout Asia, Western Europe and the Americas, including Rakuten’s in the US, Rakuten’s PriceMinister in France, Canadian eReader company Kobo, Spanish streaming and video-on-demand business, and French ecommerce logistics business Alpha Direct Services. It has more than 10,000 employees worldwide.

With such swift growth, there is no doubt that Rakuten is acquiring expertise along the way to localise the Rakuten Marketplace model.

According to its website: “The Rakuten Group will promote a horizontal penetration of our unique business model started from Japan as well as the know-how for success in each country and region. Also, we will develop a highly synergetic global management platform and will enlarge the Rakuten Ecosystem globally, striving to become the world’s No. 1 internet services company.”

As far as the UK is concerned, it may be the third biggest marketplace, but has moved from being a seller of just cds and dvds, to a platform where customers trade their unwanted games and merchants sell their wares, plus it has also expanded into other categories. Its possible future position is as a shopping mall for all who can create a shopfront. Will it remain the UK’s number three marketplace or can it overtake eBay in the number two slot by the time Rakuten’s becomes

As far as the name is concerned, Stewart says, “we’re taking things one step at a time”.

The UK ecommerce landscape is certainly large enough for more marketplace channels and is ahead of other retailers such as Tesco , HMV and Asos , harnessing their own positions and traffic as they move towards a joint retailer/ marketplace model. With changes in business models coming thick and fast in the retail industry right now, it’s certainly an interesting journey for merchants, consumers and marketplaces alike.

Founded in 1998, Rakuten’s is the UK’s third largest ecommerce marketplace, with a customer base of more than 14 million registered users. It has offices in London, Cambridge, Jersey and Bristol, and employs more than 400. In 2012, it was voted the UK’s Best Entertainment Retailer in Verdict’s Consumer Satisfaction Awards. In 2011, was acquired by Rakuten Inc, one of the world’s leading internet service companies.

The Rakuten Marketplace Merchant Toolbox

  • Rakuten Superpoints – This unique online loyalty scheme lets retailers reward and incentivise customers, by running their own multiplier promo campaigns where shoppers can earn extra loyalty points for buying from them.
  • Customer Databases and Rakuten Mail – Customers that shop with a merchant can choose to receive updates on the latest products and special offers from them.Using Rakuten Mail, merchants can then engage in direct communication with their customer base.
  • Branded Shop Front – Rather than being confined to a standard template, merchants can create brand personality online.
  • E-commerce Consultants (ECCS) – Merchants are assigned a personal contact from Rakuten’s’s team of e-commerce consultants to help maximise sales. They provide personalised guidance on everything from customer insight to promoting products.

Why the rise in marketplaces?

Marketplaces are not just an extra channel through which retailers can sell their wares. The UK ecommerce landscape has seen a number of retailers – Asos, Tesco, HMV – launch their own marketplace platform in recent times. So why the sudden rise and what challenges do they bring?

“Setting up their own marketplace gives larger retailers the opportunity to diversify,” says Seamus Whittingham, Managing Director, EMEA, ChannelAdvisor . It also means that they can “spread any risk across another channel while leveraging what they have – site traffic.” He explains how “many brands have reached a glass ceiling of own customers/product range and are looking to take their business to the next level. “You have to have a certain amount of traffic gravity in the first place in order to monetize that traffic,” he says. A retailer such as Tesco can then feed transactional data back into the core business both on- and offline and into its Clubcard programme.

Tesco’s UK General Merchandise Director Neela Mukherjee comments on the main reason that Tesco set up a marketplace and why other retailers are expanding in such a way: “A marketplace is a great way to bring a broad range of products to customers in one place, including from specialist sellers and experts in their fields. As well as appreciating being able to make a purchasing decision from a single website, customers are looking for a name they trust. Tesco is a well-recognised and trusted brand, which is why it works for us.”

This trust of the retailer as it expands through a marketplace model is one of the reasons for merchants joining the platform. As Joel Stevenson , Managing Director of one of Tesco’s merchant partners explains, “Primarily [a marketplace] is a way to reach new customers. Many of our marketplace partners, like Tesco in the UK and Wal-Mart in the US, have loyal and well-established customer bases that they’ve built over a long period of time across hundreds if not thousands of transactions. Having built that sense of trust, the customer may be more willing to buy from a brand like Wayfair via the marketplace partner because of their existing relationship with them.”

Tesco’s objective for the future is to build in more partners across all categories to bring the best products to its customers at the best price but without compromising its high standards. “We only work with partners we invite on board, to ensure our customers get the levels of service and quality they would expect from Tesco,” says Mukherjee.

The marketplace at is in soft launch at the moment but “it’s early days and purposely low key for the time being, while we test the functionality to ensure everything works and the experience is a good one for the customer,” says HMV’s Partnerships Manager James Flett. “Our priority is to focus on delivering a successful Christmas, but we will look to officially launch early next year with a wide range of partners. For the moment we have a number of partner offerings, including with DVD Gaming, who were the first to go live. Ultimately it’s about complementing our existing core offer and filling any gaps so that we can extend an even greater contentrelated choice to our customers.”

Some marketplaces are not so selective of the merchants that come on board, which could be an issue with the reputation of all companies dependent on the workings of the platform and vice versa. “There is a big difference between platform operators like Amazon and eBay and the brick and mortar players,” says Joel Stevenson. “The platforms pretty much let anyone in but then try to police through customer feedback and operations metrics. That leads to some issues like people selling counterfeit goods on eBay but over time the community and platform do a pretty good job of self-policing. It’s a bit trickier for someone like Wal-Mart who is really focused on a great customer experience in all cases. These larger brick and mortar retailers focus on partnering with established leading online retailers, like Wayfair, since they can rely on our customer service and operations expertise to take care of their customers.”

Another issue with marketplaces is where the line is drawn between collaboration and competition between marketplace and merchant. Stevenson comments that it varies greatly by marketplace with some partners being very aggressive in using sales data generated by their marketplace to inform their own selection. “Every partner is different though, for example eBay doesn’t sell anything directly so you don’t have that concern with them,” he says.

Tayyab Akhlaq, Managing Director of Genie and the Geek, comments that they do not encourage retailers to run sales on the marketplace and their own websites at the same time. “Instead, they advise using the marketplace to encourage sellers to visit the retailers’ own sites to see more of what’s on offer, therefore maximising sales.”

EBay and Amazon follow different models explains Seamus Whittingham; eBay is a marketplace and Amazon a retailer with a marketplace. “Amazon can afford the luxury of gamekeeper turned poacher,” since they, as the forefather, can adopt practices and processes that a new marketplace starting out today wouldn’t be able to do, says Whittingham. “Brands are nervous of a marketplace as competitor so clear demarcation is needed between you as retailer and marketplace so you are not competing,” he says.

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