What is Brief History of Rakuten Company?

What is the history of Rakuten?

Rakuten, a global technology conglomerate, has profoundly influenced the e-commerce and internet services landscape. Founded in February 1997 by Hiroshi Mikitani in Tokyo, Japan, the company's initial vision was to empower small businesses with an accessible online marketplace.

From its beginnings with six employees and 13 merchants, Rakuten has grown into a global entity with over 28,000 employees operating in 30 countries. Rakuten Ichiba remains one of Japan's largest online marketplaces, holding a significant 28% market share within the Japanese e-commerce market as of 2023.

Rakuten has diversified into a vast 'ecosystem' encompassing fintech services, digital content, and mobile communications. This expansion aims to connect users with a comprehensive suite of services, showcasing a strategic approach to growth and market penetration, much like the principles outlined in a Rakuten BCG Matrix.

The Rakuten company history began on February 7, 1997, when Hiroshi Mikitani founded MDM, Inc. in Tokyo, Japan. Mikitani, drawing from his finance and consulting background, envisioned an online marketplace to empower small businesses, particularly in the wake of Japan's economic downturn. This vision was also shaped by personal tragedy, as the 1995 earthquake prompted him to seek a new entrepreneurial path.

The Genesis of Rakuten

Rakuten's journey commenced with the launch of its first product, the Rakuten Shopping Mall, on May 1, 1997. Initially, the platform was a modest operation with just six employees and 13 merchants, many of whom were personal connections of the founder.

• The company was founded as MDM, Inc. on February 7, 1997.
• The first online marketplace, Rakuten Shopping Mall, launched on May 1, 1997.
• The founder, Hiroshi Mikitani, invested $250,000 of his own capital.
• The company was renamed 'Rakuten' in June 1999, signifying optimism.

Mikitani's strategic approach to the Rakuten business model centered on a B2B2C framework, setting it apart from contemporaries. This model offered attractive, lower commissions for merchants, reportedly around $500 initially, making it accessible for smaller businesses. This focus on supporting smaller enterprises, rather than exclusively targeting large sellers, was a key differentiator from competitors like Amazon. The Rakuten origins are deeply rooted in a desire to provide a platform for any product and to foster the growth of independent merchants who might otherwise struggle to establish an online presence. This foundational principle has been a driving force throughout the Brief History of Rakuten.

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The early history of the Rakuten company is a story of rapid growth and strategic diversification, beginning with its founding in 1997. The company's initial focus on e-commerce laid the groundwork for its future expansion. This period saw significant milestones that shaped its trajectory.

Public Offering and Early Success

Rakuten went public on April 19, 2000, on the JASDAQ market, a move that provided substantial capital for its ambitious plans. By this time, Rakuten Ichiba had already attracted 2,300 stores and achieved 95 million page views monthly, demonstrating its early popularity.

Empowering Merchants and Service Expansion

To support its growing merchant base, Rakuten University was established in January 2000, offering essential online shop management knowledge. The company also diversified its offerings, launching Rakuten Travel in March 2001 for online hotel bookings.

Innovative Business Models and Loyalty Programs

A key innovation in April 2002 introduced a business model for merchants that combined fixed monthly fees with sales commissions. The introduction of the Rakuten Super Point Program in November 2002 proved instrumental in fostering customer loyalty and retention.

Entry into Financial Services and Global Reach

Rakuten's expansion into financial services began with the acquisition of Aozora Card Co., Ltd. in September 2004, later becoming Rakuten Card Co., Ltd. By November 2016, Rakuten Card had over 13 million holders, contributing significantly to the company's revenue. International expansion started in 2005 with the acquisition of US-based LinkShare, now Rakuten Advertising. The company established its first overseas e-commerce site, Rakuten Ichiba Taiwan, in February 2008.

Ecosystem Development and Market Dominance

This era saw Rakuten actively developing its ecosystem concept, integrating diverse services around its core shopping marketplace. By 2011, Rakuten Ichiba's gross transaction volume surpassed 1 trillion yen, with 38,000 online shops, solidifying its market leadership in Japan and paving the way for further global expansion. Understanding the competitive landscape is crucial, and a look at the Competitors Landscape of Rakuten provides valuable context.

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The Rakuten company history is a narrative of consistent innovation and strategic adaptation. From its origins as a small e-commerce platform, it has grown into a diverse global enterprise. Key milestones include its establishment of the Rakuten Institute of Technology in 2005, signaling a commitment to research and development. The company's expansion strategy involved significant acquisitions, such as Buy.com in the U.S. and Kobo Inc. for e-books, broadening its service offerings. The introduction of Rakuten Pay in 2016 further solidified its presence in fintech. The company's venture into sports with the Tohoku Rakuten Golden Eagles baseball team and Vissel Kobe football club also marked its diversification. A notable technological step was accepting Bitcoin in 2015.

Rakuten has consistently pushed boundaries with its innovations, notably its early adoption of cryptocurrency with Bitcoin acceptance in 2015 and the development of its app-based payment system, Rakuten Pay. The company's commitment to technological advancement is also evident in its investment in AI to enhance its services and maintain a competitive edge.

Rakuten Institute of Technology

Established in 2005, this institute focuses on research and development to drive future technological advancements for the company.

Global Acquisitions

Strategic acquisitions like Buy.com, Kobo Inc., and Viber Media have significantly expanded its global reach and diversified its digital offerings.

Fintech Expansion

The launch of Rakuten Pay in 2016 marked a significant step in strengthening its financial technology portfolio and mobile payment solutions.

Cryptocurrency Adoption

Being an early adopter, the company began accepting Bitcoin across its marketplaces in March 2015, showcasing a forward-thinking approach to digital currencies.

Sports Diversification

The establishment of a baseball team and acquisition of a football club demonstrate a strategic diversification beyond its core e-commerce and digital services.

Englishnization Policy

Implemented in 2010, this policy aimed to foster globalization by mandating English for business communications, despite initial internal resistance.

Rakuten has encountered substantial challenges, including fierce competition from global e-commerce giants and difficulties in expanding into markets like China. The significant financial investment required for its mobile carrier service has also presented a notable hurdle. As of 2024, the company is actively working on cost optimization and aiming for consolidated profitability to navigate these pressures.

Intense Market Competition

The company faces persistent competition from major global players like Amazon and Alibaba, as well as strong local competitors in various markets.

International Market Entry Difficulties

Expansion into certain international markets, such as China, proved challenging, partly due to geopolitical factors impacting joint ventures.

Financial Strain from New Ventures

The substantial financial outlay for launching and expanding its mobile carrier service has been a significant challenge for the company.

Internal Resistance to Change

The 'Englishnization' policy, while ultimately beneficial, initially faced internal resistance and staff turnover, highlighting the complexities of organizational change.

Adapting to Evolving Technologies

Continuously investing in new technologies like AI is crucial to stay ahead of the curve and adapt to the rapidly changing digital landscape.

Profitability Focus

The company is currently focused on cost optimization strategies to achieve full-year consolidated profitability, a key objective for its financial health.

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The Rakuten company history traces its origins back to February 7, 1997, with the founding of MDM, Inc. by Hiroshi Mikitani. The pivotal launch of its online shopping marketplace, Rakuten Ichiba, occurred on May 1, 1997, marking the beginning of its e-commerce journey. The company officially became Rakuten, Inc. in June 1999 and subsequently went public with an IPO on the JASDAQ market on April 19, 2000. This timeline highlights significant milestones in its evolution, from its Rakuten founding and early e-commerce development to its strategic diversification and global expansion.

AI-Driven Transformation and Ecosystem Integration

Rakuten is strategically integrating AI across all operations through its 'AI-nization' initiative. Rakuten AI, launched in July 2025, aims to enhance user experiences and streamline interactions within the Rakuten Ecosystem, with planned integration into Rakuten Ichiba by autumn 2025 for personalized recommendations.

FinTech Growth and Strategic Reorganization

The FinTech segment showed robust growth in Q1 2024, with revenue up 15.1% year-over-year and operating income up 47.4% year-over-year. A strategic reorganization of its FinTech business is set for October 2024 to foster deeper data collaboration.

Global Expansion of B2B Technology Services

Rakuten Symphony, the company's B2B technology arm, is targeting expansion into new global markets including Singapore, Malaysia, Indonesia, Sri Lanka, the Middle East, and Europe. The company envisions 50-60% of its revenue coming from services and 30-40% from product sales within the next three to four years.

Navigating Competition and Future Growth Aims

The company projects steady growth in mid to high single-digits for domestic e-commerce gross merchandise sales (GMS) in FY2025. Rakuten's future strategy involves managing intense competition, addressing financial challenges related to Rakuten Mobile, and capitalizing on opportunities in fintech and e-commerce expansion.

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