It was announced on Tuesday that Japanese marketplace Rakuten would be closing down its UK operations. “We regret to inform you that following a strategic review of its operations in Europe, Rakuten has decided to consider plans to close Rakuten.co.uk at the end of August.”, UK Marketplace Country Manager Patrick Kelly wrote to partners and customers. Although it came as a surprise to many, UK online retailers will have to move quickly to make plans and anticipate what happens next. Volo’s message of diversification has never been so important.
The history of Rakuten
Rakuten was the successor to Play.com (founded in 1998 as Play247.com), a retailer which also ran its own marketplace. Play was bought out by Rakuten (rebranding to rakuten.co.uk in 2014), the biggest online marketplace operator in Japan run by CEO Hiroshi Mikitani. Mikitani attributed Rakuten’s success to its focus on the merchant. It allowed merchants significant options to personalise their listings and shop branding and to fully distinguish themselves from competitors.
Rakuten also believed however that merchants should pay more up front subscription fees for their shops and lower final value fees, a contrast from the other marketplaces. This was coupled with an entirely new technology platform which resulted in merchants having to do a large amount of work to migrate their listings to the new platform. Rakuten also had the problem of gaining established brand recognition in the UK after the play.com years. The marketplace was starting from scratch in terms of achieving Google traffic, for instance.
Volo’s emphasis on diversifying across online channels has always played an important role in creating a great ecommerce strategy. Rakuten really did seem to be a likely plausible opponent to Amazon and eBay, but there are other marketplaces that are starting to flex their ‘virtual’ muscles. Polish marketplace Allegro has shown some exciting stats. “The Allegro marketplace accounts for more than 50% of the Polish ecommerce market and has 14 million registered users, making it the number one destination for British brands looking to export to the country”, says Laurence Guy, Pentagon. According to this recent Tamebay article, they are also actively looking for British brands. Website stores are also a key additional channel to further diversify your offering outside of marketplaces, with the advantage that you can re-market to your marketplace customers. This will allow them to come direct through your site (increasing your Google traffic and contributing to your brand awareness).
What does this mean for the market?
It’s also not all doom and gloom for Rakuten. The marketplace doesn’t seem to have pulled back operations in other European countries such as France or Germany. However, it is a shame that it is withdrawing from the UK. A relaxation of seller fees and an increased investment in marketing may have been the extra boost it needed. The UK would welcome a competent third force in marketplaces to break the eBay / Amazon reign, such as the Allegro marketplace. This will give merchants more control and diversification of their sales channels.
Volo is happy to help with any questions or advice customers might have about the marketplace. If you would like to learn more please contact your Customer Success Manager, or contact us here. We wish Rakuten and its staff all the best for the future.
You can join the discussion about Rakuten on Tamebay here.