Rakuten Inc

Amazon Inc. And Rakuten Inc. There have been a few major reasons identified, including continuing expansion, potential, and heightened competition, which are being experienced by the e-Commerce market as more and more consumers switch from the old form of retail shopping to online shopping. These important aspects don't appear to be decreasing anytime soon, according to market studies. Due to the growing opportunity, e-Retailers must become extremely knowledgeable about the benefits and drawbacks of outsourcing business-related services in order to gain market share and maintain their competitiveness in this booming market. Outsourcing can be considered an extremely effective tool in turning businesses that fall under the e-Commerce category more profitable and productive. Outsourcing can also be used as a tool for accelerating growth as well. Entering into a partnership with a company which removes shipping, returns and order fulfillment can save one a lot of time and also offer a lot of benefits. Due to expectations of fast and free shipping by customers in such an industry, association with a corporation that offers quick and free shipping a reality without deducting from your bottom line can propel your company to success. However, as e-Commerce market places such as Amazon, Rakuten and Ebay are simplifying shopping and selling of products in the online market, it is of vital importance to take into consideration some key factors in order to ensure your business is laid upon the right platform.

Founded in 1995 by Jeff Bezos, a graduate from Princeton University in computer science an electrical engineering, Amazon.com is considered the company that is closely associated with the e-Commerce phenomenon. The company has evolved from selling books to a virtual online market with diverse range of products raking in tremendous revenues raising from 150 million dollars to 3.1 billion dollars from 1997 to 2001 (de Jonge 1999:36). Such a successful beginning has been experienced by very few companies in the recent history which has resulted to wide press coverage majority of which has been cheerful and positive. A new and entire collection of embellished stories and half-truths has accumulated surrounding this phenomenon Amazon.com where the CEO Jeff Bezos and the department of public relations of the company eagerly perpetuate them including popular press and business media. Even though the company has been very successful, operations of the company are overshadowed by these myths in many respects. A virtual company is made more virtual by the mysticism of Amazon.com where de Jonge through a penetrating and lengthy article in the New York Times says that the ultimate form of Amazon.com will forever remain elusive, appearing at the edge of the horizon as a lovely shimmering. Therefore, Amazon.com existing only in the imagination is truly a virtual company (de Jonge 1999:36). As a result, this makes the company’s business strategy much more difficult to assess and how it impacts on retailing.

The decision by Jeff Bezos to locate the company in Settle was as a result of availability of a huge pool of technical talent and the fact that one of the largest book wholesalers located in Roseburg, Oregon was nearby. In addition, one has to charge sales tax in the state through which he or she is incorporated according to the laws of sales tax for online retailers which simply meant that there would be an increase in price because of the rate of sales tax due to all the transactions from that state leading to a competitive disadvantage. Locating the company in a small state and being uncompetitive concentrating on smaller number of transactions was logical as opposed to setting up the company in a big state.

It is customary for Jeff Bezos to proudly repeat the commandment of Amazon.com in every interview he gives, “Our vision is that we want to be the world’s most customer-centric company” (Business Week 1999b:54). The customer service in Amazon.com is better than many large online companies because the company from the beginning has invested a significant amount of both financial and human resources in customer service commitment. Promotion of the communal myth has also been successful where active involvement of shoppers in the company goes beyond simply spending money where they write and post reviews in terms of the Associates program which has been truly successful initiative. In a specialized niche, other websites list books which are linked to Amazon for buying which is a form of micro-franchising. Every book sale generated for Amazon will earn the owner of the Associate a small commission. A huge number of virtual storefront represented by over 260,000 associate sites are scattered all over the internet and they drive business to Amazon.com (Johnson 1999).

In order to conduct or navigate Amazon’s virtual space in Amazon’s website, one either uses keyword searching or browses. Databases of the wide range of products from the stocks of Amazon are where the web pages are generated. The designers completely control the geography of the screen which is a world miniature. (Johnson 1997). There is growing concern in the design and usability of websites due to the growing number of people accessing information and services through the internet. Convenience and speed are the major reasons why most people shop online, however a large number of website do not meet these requirements (Chaplin 1999). Some of the difficulties faced are, pages which load slowly and confusion on how to order and purchase products online. These factors have negative impacts the online shopping experience negatively. Amazon has managed to improve its services making it better than many e-commerce sites and this is evident from the rising number of customers and large volumes of repeat business. In other cases usability is an issue of accessibility in cases where sites are rendered completely unusable for individuals with disabilities (Waddell 1999).

Rakuten was established in 1997, two years later after Amazon. The founders were Mikitani and Shinnosuke Hojo after briefly running Crimson Group which was a consulting firm that Mikitani had founded in 1996.After earning his MBA in 1993; he worked in industrial bank of Japan some years before heading out to start an online mall on the internet platform which was emerging. Unlike Amazon, Rakuten started with a wide range of products to sell. Big electronic companies sold their products on Rakuten to subscribers where revenues were generated by the online selling platform in three major ways: monthly fees which were fixed, advertising and a portion of the fee generated from the sale of online shopping channel. There was stiff competition with other online selling platforms like Amazon and yahoo Japan. The only way Mikitani new would sustain the level of growth at which Rikuten was experiencing was expansion. The first step He took was partnering with local firms in Thailand and Taiwan in the beginning of 2008. Introduction of e-malls locally took place before spreading further in Asia, Europe and the U.S in 2010. His Goal was to position himself in 27 countries and raise the overseas portion in the gross transaction volume amount to 70%. Through acquisitions and joint ventures, Rakuten managed to extend its reach to Korea, Taiwan, Guam, Thailand the U.K and the U.S. (Johnson 1999).

In conclusion, it is evident that both Amazon and Rakuten were both established using different methods but both have managed to emerge at the top as some of the best online shops. They were established to serve locally but with time both companies begun serving clients from different regions around the world. What remains the same their core philosophy, Amazon a global convenient store and Rakuten a global brand store. The two have managed to differentiate themselves this far hence co-existing with the sole purpose of complementing the needs of the customer across varied segments.

Work cited

Business Week, 1998, “Amazon’s Wild World”, Business Week, 21 st December 1998, pages 70-74.

Chaplin, H., 1999, “E-commerce: Don’t believe the hype”, Salon Magazine, 22 nd January 1999.

De Jonge, P., 1999, “Riding the Wild, Perilous Waters of Amazon.com”, The New York Times, 14 th March 1999, section 6, pages 36ff.

Johnson, S., 1999, “The Sim Salesman”, FEED Magazine, 26 th January 1999.

Johnson, S., 1997, Interface Culture: How New Technology Transforms the Way We Create and Communicate, (HarperCollins Publishers).

Waddell, C.D., 1999, “The growing digital divide in access for people with disabilities: overcoming barriers to participation”, paper presented at Understanding the Digital Economy: Data Tools and Research Conference, 25-26 th May 1999, Washington DC.