Rakuten – Another foreign site failed in China

Tue 24 April 2012 15:00, Kelly Ge

Rakuten – Another foreign site failed in China

Rakuten, the biggest e-commerce site in Japan, announced on April 20 that its Chinese e-commerce site would be closed on April 27. Followed by AOL, Ebay, Myspace, Groupen, Rakuten is another foreign players announced to quit China. The reason Rakuten gave is the intensive competition and might go back later. To be the biggest in Japan, Rakuten should be used to competition and be fully prepared.

The rumor about the withdaw of Rakuten has been spread for quite a while. Actually, Rakuten is quite positive about the market in China 2 years. The trendy Japanese products are favored by lots of young people, and would like to pay more to get it directly from Japan. The cooperation with Baidu is a free path to branding on all Baidu channels and get traffic directly from Baidu without burn money for search engine advertising. At that time, only Taobao is the biggest, and the later players such as 360buy, Dangdang are not big enough.

With so many advantages, why Rakuten fail?

  1. Not fully localized. All higher level of managers are from Japan, and do not know Chinese market well, and cannot take efficient action on the changing market. On the user interface, no regional focused, no differences strategies for retailers, and no external corporations.
  2. Not enough exposure for brand awareness. The marketing promotion of Rakuten keeps “a low profile” comparing to its competitors. The only exposure is on Baidu, and did not heavily promote on other channels, while its competitors are everywhere, not only on all online channels, but also on many off-line channels. Some joked that it is only when Rakuten quit that we know this brand for the first time.
  3. Totally rely on the traffic from Baidu. Since Baidu is the only source to get traffic in, but now it is proofed that the traffic from search engine only cannot boost online shopping efficiently.
  4. No unique selling point. Though on the home page, browsers can get a clear message that Rakuten is from Japan and some products are from Japan, but the actual product and brands may confuse users. To see all kind of brands, covering almost all sectors of daily life, visitors cannot get impression at all, for that is exactly the same as all its local competitors. If people can get the same products in other e-commerce sites, why buyers choose an unfamiliar Rakuten.
  5. Fail to corporate with Baidu. Different management style causes many internal conflicts and make the corporate impossible to proceed. Since the exposure on Baidu is cruel for Rakuten, the quit of Baidu made Rakuten lost the last source of traffic. It is the last straw that breaks the camel's back.

Though users can still order from Rakuten global site (still has Chinese site), the shoppint experience will not be convenient, for on the global site, no local payment support and shipping support. A few big players have eaten up the entire market share. To go back? It seems a mission impossible for Rakuten.

*Image is from Rakuten


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