02.11.17 Overseas Sales Strategy, E-Commerce Company Ken Kayama - PowerPoint PPT Presentation

02.11.17 Overseas Sales Strategy, E-Commerce Company Ken Kayama

Intro to Japanese EC market Preferences and behavior of Japanese consumers Rakuten Group Introduction Rakuten Ichiba (marketplace) Introduction Overview of Rakuten’s Cross Boarder Program How to Onboard (fees and steps) 2

Ken Kayama, Overseas Sales Strategy Group Assistant Manager Joined Rakuten in 2013. Consulted with over 2000 companies to open a shop in Rakuten Ichiba marketplace. My mission is to provide sales channel for overseas sellers to expand their global sales and provide more product variety for Rakuten users for more happiness! 3

Intro to Japanese EC market Preferences and behavior of Japanese consumers Rakuten Group Introduction Rakuten Ichiba (marketplace) Introduction Overview of Rakuten’s Cross Boarder Program How to Onboard (fees and steps) 4

7,877 km & 7 hours difference Population 127 million people Estonia Land 377,915 km2 (almost same as Finland) Japan # of Prefecture 47 prefectures Major Cities Tokyo, Osaka, Nagoya Ethnic Group 95.8% Japanese Literacy < 99% English Literacy 35 th in the world Source: Bloomsburg exchange rate. 30.10,2017 5

GDP (nominal) Exchange Rate € 4.31 trillion € 1 = ¥132.15 Per Capita Unemployment Rate € 34,129 2.8% Automobiles, electronic equipment, machine tools, steel, Major Industry non-ferrous metals, marine products, chemicals, textile products Primary Sector (Agriculture, Forestry and Fisheries) 1.1% Secondary Sector (includes mining and electricity) 25.6% GDP Composition Ratio Third Sector (communication, financial, retail-related services) 73.2% Export Item Automobiles and parts:19.9%, Steel: 5.4%, Semiconductor 5.1% US: 18.5%, China: 18.1%, Korea: 7.9% Major Export Countries Crude oil and petroleum: 20.9%, liquefied natural gas 8.7%, food products 8.0% Import Item Major Import Countries China 21.7%, Americas 8.4%, and Australia 6.1% Source: http://ecodb.net/country/JP/ 6

4 th Market Size Rank Country largest global (Billion € ) e-commerce market 1 China 380 2 US 273 100 3 UK 73 Million Internet users 4 Japan 65 82.8% 5 Germany 57 Internet Penetration 6 France 34 7 South Korea 30 8 Canada 22 9 Russia 16 10 Brazil 15 Source: http://www.statista.com/statistics/377624/leading-countries-retail-e-commerce-sales/ 7 Exchange Rates: $1= € 0.89 (as of May 31 th , 2017)

€ Billion CAGR = 11.7% EC Ratio in % 140.0 6.00% 5.43% 120.0 4.75% 5.00% 4.37% 100.0 3.85% 4.00% 3.40% 3.17% 80.0 2.84% 3.00% 121.7 60.0 110.7 102.9 93.7 2.00% 40.0 76.5 68.0 62.6 1.00% 20.0 0.0 0.00% 2010 2011 2012 2013 2014 2015 2016 EC Market Size EC Ratio Source: Sources: eMarketer, Japan Ministry of Economy, Trade and Industry, B2C Sale 8 Exchange Rates: $1= € 0.89 (as of May 31 th , 2017)

Japan vs US E-Commerce Penetration Rates (%) GAP= Potential 9

Source: Criteo, Inc. Mobile commerce report 10 http://www.criteo.com/media/5333/criteo-mobilecommercereport-h12016-us.pdf

Intro to Japanese EC market Preferences and behavior of Japanese consumers Rakuten Group Introduction Rakuten Ichiba (marketplace) Introduction Overview of Rakuten’s Cross Boarder Program How to Onboard (fees and steps) 11

"Reference: ： PayPal and Ipsos,”PayPal Cross- Border Consumer Research 2015”" 12

➢ Don’t just translate English product descriptions – localize! 99% of population speak ➢ Use high quality images / video. Japanese almost exclusively ➢ Make sure content is optimized for mobile. ➢ Leverage user generated content. ➢ Weights and dimensions in metric Over 60% of orders are units. from mobile devices ➢ Apparel sizing conventions vary by country. 13

Intro to Japanese EC market Preferences and behavior of Japanese consumers Rakuten Group Introduction Rakuten Ichiba (marketplace) Introduction Overview of Rakuten’s Cross Boarder Program How to Onboard (fees and steps) 14

1997: Company was founded by Hiroshi Mikitani and 5 members. Rakuten Ichiba: Began with only 13 shops 16

20 th Year Anniversary  Establishment: Feb, 1997  Office : Crimson House (Tokyo, Japan)  Employees : 14,134 (as of Dec 31, 2016)  Market cap : 2 billion USD (as of Dec 31, 2016)  Businesses : Rakuten Ichiba (e-commerce) and approximately 70 other businesses 17

Partnerships Global Expansion Credit Cards Sports Business Loyalty Program E-commerce 13 platform Merchants POINT 1997 1997 2004 2004 2010 2010 2017 18

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Save 1% off the purchase Digital Currency 1RSP = ¥1 Exchange Exchange to e-money and mileage 22

Available at Thousands of Offline Stores Use! Save! 23

Cross-use Rate that Rakuten members use more than two services 24

Intro to Japanese EC market Preferences and behavior of Japanese consumers Rakuten Group Introduction Rakuten Ichiba (marketplace) Introduction Overview of Rakuten’s Cross Boarder Program How to Onboard (fees and steps) 25

Annual Transaction € 24 Billion in 2016 * 44,453 merchants on Rakuten Ichiba 87.5 Million people Log into Rakuten every 3 months *Gross Merchandise Sales of overall domestic EC 26

B2B2C Products, not C2C + B2C (Largest GMS in merchants (Auction-style, free (Commodity items, pure Japan; Exclusive shops attract price competition) Merchant Support small/casual merchants) System) 27

More than 50% of Ecommerce Transaction Take Place in One of The 3 Major Players 28

*Mobile GMS ratio = Ichiba Mobile GMS / Total Ichiba GMS (includes feature phones, smartphones, and tablets) 29

Brands and retailers can control their own storefront, product pages, and customer experiences within the marketplace Major Global Rakuten E-commerce Competitors VS Shop Product Centric Centric 30

Amazon Rakuten Brandin g Pricing Tell your customers Commodity items, what makes pure price your products competition so special! 31

Own Branded Web Site Online Shopping Mall Benefit Concern • • Strong Membership & point program Hard to drive traffic at first • • Customers can’t find the page Localized to the domestic customers • • Support from EC Consultant Difficult to do market research • • Well known sales campaigns No support from local team • • Payment info is already saved Hesitant to register credit card info 32

Intro to Japanese EC market Preferences and behavior of Japanese consumers Rakuten Group Introduction Rakuten Ichiba (marketplace) Introduction Overview of Rakuten’s Cross Boarder Program How to Onboard (fees and steps) 33

Taking out barriers such as language, operation, and payment expanded cross boarder trading from overseas merchants to Japan. 34

Opening a Merchant Account Ongoing Account Management Sales E-Commerce Consultant Consultant • Japan market knowledge • Performance feedback and • Account setup advice improvement consulting • Store design suggestions • Marketing strategies • Merchandising guidance • Promotional guidance 35

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One example of Rakuten Sponsored Campaign (no fees to merchants) 40

Intro to Japanese EC market Preferences and behavior of Japanese consumers Rakuten Group Introduction Rakuten Ichiba (marketplace) Introduction Overview of Rakuten’s Cross Boarder Program How to Onboard (fees and steps) 41

Around € 125 42 Reference: Japan Customs (http://www.customs.go.jp/)

Non-Japanese Company Operated by Japanese entity Shipping: Domestic YES Operated by service partner Shipping: Cross-boarder & domestic Japanese Legal Entity NO 43

Customer Support Cross Boarder Overseas Service JP Customer Rakuten Inc. Seller Partner Page Item Data Creation Purchase Shipping Order Data Data Information Money Money Payment Transfer Transfer Sign up for Rakuten Ichiba Oversea Warehouse Support from Rakuten Private Import Products are sent to the customer from oversea warehouse. Responsibility ✓ Customer Service ✓ Buyer ✓ Market place ✓ Store Operation ✓ Shipping ✓ Importer ✓ Service provider ✓ Handle Payment 44

Fees are negotiable with each of the service partners. The fees listed below are all basic fees for your reference only. For further details on their services and exact costs, please feel free to directly contact the service partners. Please ask your Rakuten representative for the service partners’ contact information. 300,000JPY 1,600,000JPY 250,000JPY contract (less than 30 items) 11,924 EUR 1,863 EUR Initial Cost 5,000USD 2,235 EUR Page Setup Fee 100,000 JPY 450,000JPY 70,000JPY 2,000 ～ 3,353 EUR 521 EUR 745 EUR Monthly None 5,000USD Running Cost 7% ～ 12% 7 ～ 15% 15% ～ 35% 10 ～ 15% Commission 3% Translation 15JPY / word ask JPY8/word Photoshoot 10,000JPY ask ask Optional Fees Included in Customer support ask 200,000JPY commission 45

90% of new shops choose either Standard or Beginners Plan 46