How Rakuten’s Global Expansion Began With Baby Steps in Taiwan

We’ve written a lot about Rakuten’s (JSD:4755) overseas adventures over the past year or so. The Japanese e-commerce giant now has partnerships, investments, and acquisitions peppered across the map. But of course it wasn’t always this way.

The company’s first venture abroad was back in 2008, back when e-commerce was a fledgling industry and the company’s reputation was only really well established at home in Japan. It was then that Rakuten looked to Taiwan to expand its B2B2C business, joining forces with retailer President Group – the operator of Starbucks, 7–11, and others in Taiwan – to establish a joint venture (51 percent Rakuten’s capital, 49 percent PG). Rakuten Ichiba Taiwan was launched in May of that year, with the company hoping its success in Japan would translate well to the Taiwanese market.

So how did that game plan work out? Initially, it didn’t go so well says Rakuten Taiwan’s CEO Yuichi Ejiri. The company struggled with all kinds of problems out of the gate, including brand recognition:

Rakuten Taiwan CEO Yuichi Ejiri

At that time 14 Japanese people came to Taiwan and just tried to copy everything from Japan. As you can imagine, it didn’t work and we changed a lot of things. For example the website design. Rakuten’s webpage now has changed; at that time they preferred more text not graphics or banners.

But in Taiwan they preferred more fashionable banner designs. At that time we did copy the Japanese simple, text-focused pages and the reception from the market was terrible. Many people said it looked like an old-age portal site. So we started changing piece by piece, now our page design is totally different than the Japan page.

Ejiri notes that even though Rakuten had changed its online public face, the basic logic that made the company successful at home still remained – the company’s expertise in improving things like conversion and click-through rates, this was still key to building its business in Taiwan in the early days.

In addition to wooing Taiwanese consumers, Rakuten also had the difficult task of acquiring new merchants to sell on its platform. In Japan the company was already established as an internet giant, and it didn’t have to work so hard to bring merchants on board and could do most of it online. But in Taiwan Rakuten was still a new brand, and so the company required more offline activities in order to acquire merchants, such as send forms or explanations, make calls from sales staff, or visit them in person.

Even today, years after Rakuten first arrived in Taiwan, the company still uses such methods, noting that Taiwanese merchants are more demanding. The result is a local management process very different from Japan. The brand is better recognized now however, and as Rakuten’s online application interface improves it hopes to gradually make merchant acquisition easier.

The company’s efforts with certain types of merchants have indeed paid dividends, particularly gourmet/food merchants. Ejiri tells us that Rakuten paid special attention to these merchants:

Most other platforms don’t want to take these merchants in, because it takes time to implement such internet shop operations. But we thought it was a big opportunity, because there are so many types of local food. So we intentionally tried to focus on these gourmet shops and sent a lot of sales people to go to the islands and the countryside to recruit all those unique food shops. It took a long time to teach them and also we did many tie-ups with gourmet websites and TV programs. But finally we are the largest gourmet e-commerce site in Taiwan.