Rakuten Reveals Their Startegy On Increase Its Business With Fewer Bucks.

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Rakuten Reveals Their Startegy On Increase Its Business With Fewer Bucks.

Groups at the Silicon Valley summer home of Rakuten chief Hiroshi Mikitani, had drawn a crowd of entrepreneurs with hopes that their startup would be the choose as his next acquisitive e-commerce group. An encounter at Mikitani’s California retreat helped connect Rakuten with Viki, a video-sharing website its bought during the previous September.

Acquisitions.

Tokyo-based Rakuten as garnered up at least 10 such deals since the previous year, most recently for Viber Media, the develop of free messaging application. Earlier acquisitions included a Canadian e-reader manufacturer Kobo and Spanish video-streaming service Wuaki.tv

SoftBank, another Japanese technology company that led by a billionaire tycoon, is also on his own personal mission of acquire as many spaces. But Rakuten has decided to take a different approach. M&A watchers says its targets tend to be much smaller and boarderline in the red. For this matter, Rakuten has assembled a team of underdogs for relatively small amounts.

Rakuten has dished out a total of $905 million, or one-fifth of its annual sales, for Viber. During the meantime, Facebook paid over $19 billion for WhatsApp, which boast the messaging application with the most users worldwide. Viber may be third-rate by comparison, but it totaled up a 20th as much. Rakuten appears really confident in their current momentum.

Whenever Rakuten makes an acquisition, Mikitani goes on to talk about expanding its “economic sphere.” At the center is e-commerce the formidable Rakuten Ichiba virtual mall. The groups picks up any operations that is on the grounds of losing money and, at least in Japan, has enjoyed repeated success in making them profitable.

Red Zone.

Take eBank for example, It was losing billions of yen when Rakuten bought it during 2009. The following year, it turned a profit thanks to the injection of customers gained from Rakuten Ichiba. With its name now called Rakuten Bank, It has joined forces with the groups credit card and brokerage units, generating a total of 7 billion yen ($ 68.7 million) in a profit a year.

Rakuten financial services business gained a total of 44.1 billion yen last fiscal year, half of the groups operating profit. And they achieve far much greater margins than the three Japanese giant banks do. Rakuten insists on paying for acquisitions itself.

     “Basically, we make do with cash earnings from e-commerce,” Chief Financial Officer Yoshihisa Yamada says.

“We don’t gamble with big sums of borrowed money,” Yamada adds.

This has made Rakuten become completely different from SoftBank. If Masayoshi Son;s telecommunications group is like a king borrowing as much as he can to move into and even much grander castle, Mikitani;s company perfers to continue expanding further from its keep.

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Kevin C is passionate for tech world wide. He was apart of Qbox media and currently is apart of a UX firm based in Hong Kong.

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