Japan's Rakuten defends e-mall charging model

October 21, 2013
Rakuten chairman and CEO Hiroshi Mikitani at a business strategy briefing in Tokyo on October 18, 2013

The multi-millionaire boss of Japanese e-mall operator Rakuten on Monday defended the pay-model that levies charges on merchants, ignoring a move by arch-rival Yahoo Japan to eliminate fees.

Chairman and CEO Hiroshi Mikitani ruled out following suit on the plan announced by fellow business mogul Masayoshi Son and seen in some quarters as the opening salvo of a possible duel.

"Our basic policy is to offer good services for online tenants, so that they can make profits and customers can buy good products conveniently for reasonable prices," Mikitani said at a Tokyo business forum.

"That is the way in which we can also make reasonable profits. We want to build this win-win-win relationship. Having said so, I don't really care about the recent announcement" by Yahoo Japan, he said.

Yahoo Japan's Son earlier this month unveiled a new strategy for e-commerce business, announcing he would eliminate all fees and royalties for merchants in the Yahoo Shopping e-mall and make it free to sell items on its Yahoo Auction.

The maverick Son, who has catapulted to worldwide attention with a series of enormous overseas buyouts, including a $21.6 billion takeover of US telecom giant Sprint, is banking on a bump in users that will allow him to charge advertisers more.

Two days after the announcement, the company said it had received 10,000 applications for people to set up shop in its virtual mall.

Rakuten chairman and CEO Hiroshi Mikitani launches the company's electronic book player "Kobo Touch", in Tokyo on July 2, 2012

Shops previously had to pay an initial fee of 21,000 yen ($210) and a monthly fee of 25,000 yen, along with commissions of up to six percent.

Still, Yahoo Shopping very much plays second fiddle to Rakuten in the Japanese online mall market, with 20,000 tenants against the more than 40,000 Rakuten Ichiba claims.

Speaking to the Nikkei Global Management Forum in Tokyo on Monday, Mikitani said he would prefer that the Japanese government deregulate the Internet.

"We should make it free completely, because it would create innovations that we have not seen," he said.

"We should change the way of thinking from making money by charging for the Internet communications to making new (online) service and exporting the service."

Mikitani, whose empire now includes Canadian e-reader company Kobo and Singapore-based video-on-demand provider Viki, said digital content was becoming more and more borderless.

"We are creating our own service," he said. "Online shops in Rakuten Ichiba are encouraged to offer good service and products... We play the role of their (e-commerce) consultant, so that tenants can learn to improve their service and attract fans."

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