Rakuten seeks a sporting chance in a global market

Japanese e-commerce giant Rakuten has teamed up with two of the biggest teams in sports to launch a global rebranding strategy aimed at growing its international business.

Facing stiff competition at home from Amazon, Rakuten has struck multimillion-dollar partnerships with top Spanish football team and global icon Barcelona FC, and NBA basketball champions Golden State Warriors from California. The deals are designed to propel its brand awareness outside Japan.

Alternative to Amazon

Rakuten is hoping it can replicate its new partners’ sporting prowess with its own performance in the e-commerce arena, and lure a growing number of merchants towards its online marketplace to enable it to become a solid alternative to the likes of Amazon and eBay.

Launched by Hiroshi Mikitani in 1997 as an online marketplace, Rakuten quickly emerged as one of Japan’s pioneers of online shopping. Twenty years on, Mr Mikitani, who still serves as CEO, has grown the business into a group with a global membership of 1.1 billion people, a turnover of about $7.1bn per year and some 70 subsidiaries spanning e-commerce, digital content, communications and financial technology (fintech) firms. These include international brands such as ride-hailing apps Lyft and Go-Jek, messaging platform Viber, and e-book and e-reader company Kobo.

However, a formidable rise (and investment push) by Amazon in Japan and other major international markets has eroded Rakuten’s market share at home, and stymied its early efforts to gain a deep footprint outside Japan. The group is now hitting back with this new global rebranding campaign, designed as a springboard for it to gain international recognition and decisively establish its brand outside Japan.

“By unifying our brands across the globe, we aim to create a global ecosystem of services linked by the Rakuten brand, to build the global awareness of Rakuten,” the company said in an e-mail statement. “This will allow members around the world to develop a closer connection with a brand they can trust and more easily recognise the benefits of using multiple Rakuten services.”

A global profile

The partnerships struck with Barcelona and the Golden State Warriors gave Rakuten’s rebranding global visibility almost overnight as its logo appeared on the jerseys of some of the world’s most famous sporting names, such as Lionel Messi and Stephen Curry.

“Through the partnerships with Barcelona and the Golden State Warriors, we will have the opportunity to connect with a large global audience, which will enhance awareness of Rakuten brands in e-commerce, digital content, communications and fintech not only in the teams’ local markets, but around the world,” the company said in its statement.

During the 2017/18 season, Rakuten’s logo will feature on the match jersey of Barcelona, one of the most successful teams and brands in global football. The deal, for which Rakuten has committed €55m a year for four years with the option of a fifth year, is one of the biggest of its kind in football and “is set to power our global brand strategy”, Mr Mikitani said when it was first announced in November 2016. The group’s logo will also appear as a patch on Golden State Warriors’ jerseys in a deal reported to be $60m over three years.

Both deals are part of the global rebranding that have become crucial for Rakuten given the challenging conditions in its domestic market, where Amazon is threatening its long-standing supremacy. According to a survey by market research company DI Marketing, about 70.2% of digital shoppers in Japan use Rakuten, only slightly higher than the 66.7% of those who said they use Amazon’s Japanese site. This competition – not to mention the adverse demographics of the Japanese market, with ageing consumers less likely to become assiduous online shoppers – has pushed Rakuten’s board to look elsewhere for new markets and growth.

Rakuten generated about 20% of its revenues outside Japan in 2016, according to company figures. The management has been keen on growing its overseas business – particularly in Europe and the US – for several years, shaping an aggressive M&A strategy that has intensified in the past years.

M&A flurry

Deals such as the $1bn acquisition of San Francisco-based cashback website Ebates, or the $900m takeover of Israeli’s Voip and messaging app Viber (both wrapped up in 2014) may have stolen the limelight, but Rakuten has been involved in about 30 M&A operations between 2011 and 2016. Yet there is still unexpressed value in the Rakuten universe, and the rebranding push aims directly at uncovering this value in Amazon’s main markets of the US and Europe.

Mr Mikitani has not hesitated making public his aim of competing with Amazon on equal terms. “Only alternative to Amazon. The enemy of your enemy is your friend,” reads a slide he displayed twice during an investor’s presentation in September, to emphasise Rakuten’s commitment to collaborative partnerships with online and offline retailers that already compete with Amazon.

Rakuten has signed the deals. Now it seems its ambitions outside Japan will stand or fall at the mercy of global online shoppers.