"The total amount of domestic EC distribution of 10 trillion yen by 2030".
President Mikitani of Rakuten takes a look back at the impact of the Coronavirus in 2021 at the Rakuten EXPO.
With that, it is expected that Rakuten domestic EC distributions are expected to be 10 trillion yen by 2030.
“We are aiming with the goal of achieving a total domestic e-commerce distribution value of 10 trillion yen by around 2030”
Rakuten Group held their Rakuten Expo 202 online on September 2. The chairman and president of Rakuten Group, Hiroshi Mikitani, took the stage to share his company’s business strategy with store owners.
Here is a summary of the first half of 2021 that President Mikitani told the nearly 30,000 store owners who watched online.
The impact of COVID-19 has led “Rakuten Ichiba” to perform well in FY12/20, and the total EC distribution amount exceeded 3 trillion yen. This momentum was maintained in the January-June period of 2021, and the total amount of domestic e-commerce was 28 trillion yen, an increase of 17.0% from the previous year.
The total shopping distribution for Rakuten Ichiba, 1st Party (Fashion, Books, Rakuten 24, Rakuten Nishitomo Net Super), Open EC (Rebates, Rakuten Pay Online Payment), and Rakuma is from 2019 to the second quarter of 2021. CAGR (Compound Annual Growth Rate) increased by 23.6%.
As President Mikitani stated, “Rakuten Ichiba” and other services have established a solid user base.
The number of users of “Rakuten Ichiba” has grown significantly in 2020. The percentage of users who purchased from “Rakuten Ichiba” and “Fashion” in the January-March period of 2021 and bought it again in the April-June period of 2021 was about 76%, indicating that the user retention rate has remained stable.
Rakuten Group has set a target of surpassing the 5 trillion yen mark for total domestic e-commerce distribution in 2021.
In addition to the total distribution value of Rakuten Ichiba, the total domestic EC distribution value includes the total distribution value of Travel (lodging distribution), Books, Golf, Fashion, Dream Business, Beauty, Delivery, Rakuten 24 (Direct), Auto Business, Rakuma, Rebates, Rakuten Seiyu Net Super, etc.
Here are 4 factors behind Rakuten Ichiba's expansion
1) Compatible on Mobile
“The total amount of online shopping distribution via mobile far exceeded that via PC. We believe that mobile will be a source of growth in the future. The number of elderly people who use tablet devices will increase in the future. Rakuten Group will continue to make detailed improvements to further evolve Rakuten Ichiba in cooperation with all of our customers."
Rakuten Group is currently focusing on its mobile business. President Mikitani emphasizes that if the number of users of Rakuten Mobile devices increases, there will be a significant synergistic effect on the total amount of e-commerce distribution, including Rakuten Ichiba. First, let us look at the current status of the mobile business.
The number of Rakuten Mobile contracts (total of MNO and MVNO) has exceeded 5 million. “Sooner or later, this number of users will grow from 20 to 30 million, ” said Mikitani. In August, he announced that Rakuten Mobile’s 4G coverage had reached 90% of the population.
What kind of effect does the increase in the number of contracted lines have on “Rakuten Ichiba”? President Mikitani says: “It greatly contributes to the expansion of the total amount of EC distribution.”
First, new users: 19% of new Rakuten Mobile users who signed contracts in the April-June 2021 period are new users using Rakuten’s services for the first time. One in three users who had no experience using Rakuten Ichiba before signing a contract with Rakuten Mobile purchased products on Rakuten Ichiba within six months to a year after signing a contract.
Also, 62.9% of Rakuten mobile users shop at “Rakuten Ichiba.”
Acquisition of New Users of Rakuten Group
Percentage of Rakuten Mobile Users
He emphasized that “the next slide is shocking” as the rate of increase in the total annual distribution of contractors (contractors who have been using it for over a year in March-July 2020). Before and after the Rakuten Mobile contract, the total annual distribution in “Rakuten Ichiba” increased by 77%.
Increase Rate of the Total Annual Distribution of Contractors (from March 2020 to July 2020)
The company also released data showing the breakdown of these figures. For example, the total monthly distribution of Rakuten and existing Rakuten Ichiba users increased from 13,000 yen before the MNO contract to 21,000 yen after the MNO contract.
Rakuten Mobile charges can be paid with points. Rakuten Mobile and “Rakuten Ichiba” shopping are very compatible with the use of Rakuten points. (President Mikitani)
Regarding customer loyalty, Rakuten Group conducted a study of users who signed up between July and December 2020 and found that the number of Diamond members increased from 26% in the month of sign-up to 36% six months later. “Mobile is a service that deepens loyalty,” said Mikitani.
2) Shipping Included Line
We want to realize a more convenient, more enjoyable, and safer shopping platform by uniting stores, users, and Rakuten Group. They are making various efforts for that purpose.
One of the initiatives that contributed to the expansion of total distribution value at “Rakuten Expo 2021” was the shipping fee. As of July, more than 90% of stores had introduced the “free shipping line,” which sets the shipping cost at 0 yen for purchasers at 3,980 yen or more, exceeding 90%.
Comparing the growth rates of stores with and without the “Shipping Included Line,” the growth rate for stores with the “Shipping Included Line” was approximately 25 points higher than for stores without the “Shipping Included Line” (when the total distribution growth rate in December 2020 is compared to the same period in the previous year).
In addition, user satisfaction with the “shipping line” increased by 13.3 points between the start of the “shipping line” and June 2021.
3) Improved Delivery Efficiency
Rakuten plans to invest over 200 billion yen in its “One Delivery” concept, which aims to build a unique delivery network by expanding its logistics bases and last mile.
Rakuten Group is collaborating with Japan Post to build logistics bases, delivery systems, and receiving services, and to expand the use of Rakuten Fulfillment Center, Yu-pack, and other services. On July 1, Rakuten Group and Japan Post invested in JP Rakuten Logistics G.K., and on the following day, the company changed its name to JP Rakuten Logistics Co.
Japan Post, they have built a next-generation logistics platform and expanded it to various businesses in the most open form possible. Through collaboration, a system will be established to provide higher quality services at lower delivery costs without increasing the burden on store owners as much as possible.
"Logistics bases must also be considered in the future, for example, in Hokkaido and Okinawa. We are also considering supporting a wide range of delivery services, such as bulk delivery (of products from multiple stores), installation of lockers in various locations, and weekly bulk delivery for customers who want it once a week." (President Mikitani)
4) Further Expansion of Point Usage
As of August 2021, Rakuten Group has exceeded 2.5 trillion points in cumulative issuance points. According to a survey by the MMD Institute, 42.4% of smartphone users use “Rakuten Points”. President Mikitani says: “Rakuten Point is the overwhelming number one point service used by smartphone users.”
The Super Point Up Program (SPU), a point program that increases point multipliers when using various services such as Rakuten Ichiba, Rakuten Travel, Rakuten Bank, and Rakuten Card, is supporting the expansion of point usage.
The “SPU” has spread among Rakuten users year by year. This has led to a steady transition in cross-use and an increase in active users. In addition, it is said that about 1.6 times the points issued at “Rakuten Ichiba” are used when purchasing products.