Precise SWOT Analysis of Rakuten – One Of The World’s Largest E-commerce & Online Retailing Companies

Quick Stats on Rakuten

Founder	Hiroshi Mikitani
Year Founded	1997
Origin	Setagaya, Tokyo, Japan
No. of Employees	24,000
Company Type	Public
Market Cap	$14.96 Billion (2021)
Annual Revenue	JPY¥ 1.46 Trillion (2019)
Net Income/ Profit	JPY¥ 116 Billion (2019)

 

(Areas Where Rakuten Deals, Source: Rakuten Group)

Services by Rakuten

Some of the services provided by the Rakuten group of companies are as follows. 

• E-commerce services
• Payments app for users and retailers
• Rakuten wallet for online transactions and cryptos
• Comprehensive general, life, and other insurance
• Market research and marketing services
• Mobile communications and telecommunications

Competitors of Rakuten

Rakuten competes with a slew of other companies on a global scale. Rakuten’s top five competitors are:

• Walmart
• Amazon
• Alibaba
• Dillard’s
• eBay

Now that we’ve understood the company’s core businesses. Let’s move on to the SWOT analysis of Rakuten 

SWOT Analysis of Rakuten

A SWOT analysis helps in the identification of a company’s strengths, weaknesses, opportunities, and threats. Rakuten may compare its company and performance to competitors and the industry as a whole using this tried-and-true management model. It’s a great tool for figuring out where the firm shines, where it falters, devising countermeasures, and figuring out how to grow.

To better understand the SWOT analysis of Rakuten, refer to the infographics below:

From the SWOT analysis of Rakuten, let us first begin by understanding the strengths of Rakuten.

Strengths of Rakuten

Rakuten’s strengths are its capabilities and resources, which it can use to gain a long-term competitive edge in the marketplace. 

• A Track Record of Successful Market Entry: Rakuten has a proven track record of not only releasing new services in the home market but also catering to a variety of markets based on user insights. Rakuten has developed one of the world’s most unique and resilient ecosystems by connecting these disparate services under a shared membership and reward program.

• Big data, AI, and Empowerment: Rakuten’s strengths include data, the technological capability to efficiently analyze it, and the desire to empower society with these resources. The next level of empowerment is personalization, which is achieved through the use of data and AI. 

• A diverse, Dynamic, and Open Corporate Culture: The open and dynamic business culture encourages the interchange of various viewpoints. Talented workers from more than 70 nations make up the company’s staff. Systems are fine-tuned to enhance productivity and facilitate the establishment of new enterprises by constantly reviewing and enhancing internal organization and operations.

(Rakuten Sponsor of FC Barcelona Shirt, Source: Financial Times)

• Sports Sponsor: Rakuten is the primary sponsor of one of the famous football teams which is FC Barcelona. This in itself tells how Rakuten is famous globally.   
• First to Market: Rakuten has the advantage of being the first to market in a lot of segments. It has dabbled in a variety of fields, including international business and information technology. Rakuten was able to come up with a new solution to tap un-catered markets thanks to the strategy & execution solutions and strategies.
• Good-quality Products and Services: Rakuten improves its market share due to the quality of its products and services, as its present customers are incredibly loyal.
• Strong Finances: Rakuten’s strong balance sheet and financial statement can let it invest in new and diverse projects, diversifying the revenue stream and increasing Return on Sales (RoS) and other KPIs.

Weaknesses of Rakuten 

Weaknesses are elements of a company or brand that can be strengthened. The following are Rakuten’s key flaws:

• Incapacity to Comprehend the Demands of Customers: An inadequate strategic decision-making process results from a failure to grasp customers’ needs and expectations. As a result of this problem, the company may be unable to identify potential areas for improvement in the product/service mix.
• Inadequate Management and Sustainability of Waste: Environmentalists criticize the organization for its inadequate waste management policies and inability to incorporate sustainability into its operations. Inventory management practices that are ineffective may lead the company to lose efficiency.
• Weak Project Management and Decision Making: Rakuten’s decision-making process is overly slow, resulting in costly delays in the introduction of new products to the market. Poor project management techniques can hinder its capacity to successfully create additional branches or extend its product line. High employee turnover and a lack of organizational commitment can raise recruitment expenses and lower productivity.
• Culture of the Organization: It appears that Rakuten’s organizational culture is still characterized by turf conflicts between divisions, high job stress and, as a result, low employee morale. This could create major roadblocks for future expansion.
• Technology Integration in Processes: Even though Rakuten Native has integrated technology into its backend procedures, it has yet to harness the power of technology in its front-end operations.

Opportunities for Rakuten

Opportunity is a competitive advantage and a driving force for a company. It is the most convenient time or setting in which the organisation can achieve its goals.

• Consumer Preferences and Market Size: Rakuten needs to retain loyal consumers and attract new ones. The exponential growth of the population, particularly in existing or new client segments, presents a significant opportunity for corporate growth. Good market information, the changing client wants, tastes, and preferences might be seen as an opportunity.
• Developments in Technology: Rakuten can employ artificial intelligence advancements to better estimate consumer demand and improve recommendation engines. The company may save money, enhance productivity, and deliver new goods faster by integrating advanced technologies.
• Increasing the Level of Standardisation: Rakuten can take advantage of this trend by reducing the number of products available on the market and concentrating marketing efforts on the most profitable ones.
• International Markets: The international market has become more open as a result of globalisation. Rakuten is well-positioned to take advantage of these prospects and expand its market share. Increasing worldwide interconnection will help the company to target a geographically dispersed consumer base, and boost profits.
• Increased Consumer Disposable Income: Rakuten can make use of rising disposable income to create a new business model in which customers pay gradually for the services they utilize.

Threats to Rakuten  

Threats are the factors that make it difficult for the organization to achieve its defined goals. The following are some of Rakuten’s threats: 

• Increasing Globalisation: Globalisation forces organisations to cross national borders and deal with cultural variety, which can be problematic if the organisation lacks cultural intelligence.
• Environmental Sustainability Trends: The growing environmental sustainability trends act as a major threat when offered products/services that are not environment friendly. It brings unfavourable press and criticism from environmentalists, and it harms the brand’s image in a competitive market.
• Regulations and Bureaucracy in the Government: Rakuten should keep a close check on fast-changing government policies, particularly in the areas of environmental and labour safety, as it faces rising pressure from protest groups and non-governmental organisations.
• Economy and Inflation: When clients’ spending patterns and purchasing power are directly influenced by deteriorating economic conditions, business performance suffers. Inflation raises production costs and has a negative influence on company profits.
• Cost Component and Labor- Governments are seeking to impose greater environmental levies to encourage the use of cleaner alternatives. Rakuten may face greater transportation and packaging costs as a result of this.

This concludes our in-depth SWOT analysis of Rakuten. In the next section, we’ll go through a quick overview.