Besides the hype of Facebook´s start at the stock market, another media company hits the headlines: Rakuten Ichiba, one of the world´s biggest online market places acquires an interest in a 100 million dollar investment by investing the biggest part in the social media platform Pinterest, which is also supported by investors like Andreesen Horowitz, Bessemer Venture Partners and FirstMark Capital, as well as a number of private investors. Thus, their value exceeds the billion dollar limit. The company´s value only reached up to 200 million US$ last year. But especially in the last couple of months, the company can refer to a rapid rise of user numbers. According to Wall Street Journal, the reach of Pinterest grew up to 20 million users (+ 6,000%). Different market surveys have pointed out that this bookmarking service puts more customers in contact with online shops than, i.e. Twitter or Google+ together.
The aim of this takeover: Using Pinterest as a commercial platform for brands
The strategy behind this takeover is pretty exciting: The current shooting star of social platforms shall serve as a commercial platform for the eCommerce portal, because everything that has been missing on eCommerce pages, like browsing and window-shopping, is offered by Pinterest. It is not targeted like a price check on Amazon or a Google search and this is how they might win over the general public: A product recommendation network for companies. Rakuten wants to use the potential of promoting branded products.
Expansion-friendly eCommerce player
The international ambitions are huge: Rakuten absorbed the site buy.com in the US for 250 million US$ and Priceminister in France for approximately 200 million US$ in 2010. They added the British eCommerce company Play.com (29 million €) and the German company Tradoria in 2011. The takeover of the Canadian eBook provider Kobo for 315 million US$ at the beginning of last November opened up a whole new business area for Rakuten.
Source: Rakuten Financial Results 2011
Amazon in sight
The flagship site is still the Japanese site Rakuten Ichiba, which was founded in 1997 and produced sales of 4.7 billion US$ in 2011. Rakuten ranks among the ten biggest internet companies worldwide by reaching a market value of approximately 15 billion US$.
The eCommerce platform, which calls itself a shopping center on the internet, adopts a completely different approach than its competitor Amazon. Amazon is rather customer-oriented and product-oriented, whereas Rakuten focuses on the retailer by adopting a shop-centered approach. The B2B2C-platform includes 40,000 very individual shops in Japan; there are 9.4 million products offered in 5,432 shops over here. Besides that, Rakuten also focuses on a bunch of different income streams, which are not retailer-oriented.
Conclusion: The amount of the marketing budget often decides the success or failure of an online shop. This is precisely where the new strategic partnership and its vision of a commercial platform for brands come into play. The connection of rather linear purchase processes in eCommerce and an emotional, wide-coverage and visual strength social media platform can evolve into an innovation in e-commerce. It is going to be exciting to observe to what extent they´ll have the strength to compete with similar global players like Amazon.