Line takes aim at Rakuten and Amazon, to launch five new ecommerce services

Line, the messaging app that has nabbed 490 million registered users in three years, announced its plans for becoming a major player in the ecommerce industry at a news conference in Tokyo today. The strategy marks an interesting inflection point for Line. The service gained popularity for it’s colorful stickers, grew its revenue base with mobile games, and now has its sights set on ecommerce.

Line Mall has been available in Japan since March. Its success is difficult to judge as Line has not disclosed active user or download numbers. Judging from today’s press conference, Line has seen enough positive signs to move forward, full speed ahead.

Though the Japanese ecommerce market represents only 3.1 percent of total retail shopping in the country, Line is entering a space already crowded with challengers. Take a look below at the services Line intends to deploy as it tries to take Japan’s ecommerce away from entrenched challengers like Rakuten and Amazon.

• 1. Line Group Shopping (To be released August 28)
  Shoppers can receive a discount up to 50 percent if they team up and buy a certain product as a group. All shoppers must be Line users and the shopper making the purchase must be connected to all others in the group. Payment and shipping will be conducted separately for each member of the purchasing group so no single person has to pay everything upfront and everyone can receive the goods at their own convenience.
• 2. Line Gift (To be released by end of 2014)
  Similar to other ecommerce services, items can be sent as gifts. Using Line, the group shopping function can also be used so a bunch of friends can split the cost of a gift.
• 3. Line Marche (To be released by end of 2014)
  Typically, fresh food from Japan’s countryside can only be bought on-location. With this app, shoppers will be able to purchase directly from local communities.
• 4. Line Select (To be released by end of 2014)
  A shopping mall that specializes in high-end retail. Shoppers can browse and purchase high-fashion goods on their phone.
• 5. Line Creators Mall (Release date undecided)
  A shopping mall that specializes in goods produced by local makers.

A look at the new Line Mall in action

Line’s commitment to ecommerce is clear but the innovation of their offerings is limited. In Japan, Groupon does group shopping, Amazon has long had a gift function, Rakuten’s whole business model is based on connecting shoppers and sellers from all corners of Japan, and there is no shortage of apps offering access to high-end and self-made goods.

Takeshi Shimamura, the senior executive in charge of commerce and media, told the crowd that the current beta version of Line Mall does not charge businesses for using the platform – but that this system is open to change as the service sheds its beta label.

Bemoaning Line’s lack of creativity misses the point, however. At this stage, Line is more or less a juggernaut printing money. This new emphasis on ecommerce shows that the firm’s top management understands that their time in the sun will not last forever. If they want to retain users and attract new ones, their service must create new incentives to stay.

See: Line is now selling user-created stickers. Check out our favorite seven
Successful ecosystems like Rakuten have figured this out. Though the company is most commonly known for its ecommerce service, its credit card, banking, and travel services are all interlinked so users get increased discounts and rewards for staying within the Rakuten family.

Would-be platform providers like Gree and DeNA have not yet been able to translate their gaming user base into a full-fledged, diversified ecosystem. Line’s built-in audience of 490 million is larger than either Gree or DeNA’s at the height of their popularity. That is 490 million registered users who can potentially slide over to Line’s ecommerce offerings for their shopping needs.

At the global level, if Line succeeds at this strategy, it will be an immense win. But first, it must win on its home turf. There, the company will pit its 52 million users against Rakuten’s 93.87 million and Amazon’s 48 million. Line is confident in its chances. “When we think about Rakuten or Amazon, we don’t think we need to replicate their services. Line’s best quality is [its ability connect people]. Our goal is to change the way people think and buy goods,” Shimamura said.

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