How Does Rakuten Make Money? Business Model Explained

Rakuten, the Japanese e-commerce giant, has made waves in the global marketplace. But have you ever wondered how does Rakuten make money? How does this digital powerhouse rake in the profits? In this intriguing exploration, we’ll unveil the secrets behind Rakuten’s revenue streams and dissect its innovative business model.

From its roots as an online marketplace to its forays into fintech, streaming, and more. We’ll uncover the intricate web of strategies that fuels Rakuten’s financial success. Get ready to dive into the world of e-commerce, loyalty programs, and digital services. Because we are going to unravel the captivating story of how Rakuten transforms clicks into cash.

Stay tuned!

(A) Rakuten: A Brief Overview of the Company

Rakuten is a multinational conglomerate headquartered in Tokyo, Japan. Founded in 1997 by Hiroshi Mikitani, it has evolved into a diversified tech giant. Originally an online marketplace, Rakuten now operates in various sectors, including e-commerce, digital services, fintech, and telecommunications. 

It offers a wide range of products and services, from e-commerce platforms to financial services, streaming content, and mobile communications. Rakuten is known for its customer loyalty programs, like Rakuten Super Points, which incentivize user engagement. 

The company has expanded globally through strategic acquisitions, making it a significant player in the international e-commerce and digital landscape.

Before diving deeper into Rakuten business model, let’s have a brief overview of the company-

Now let’s delve into the Rakuten business model. Also, we will cover how does Rakuten makes money.

(B) Working Strategies: How Does Rakuten Work?

Rakuten’s business model is characterized by several key strategies that have contributed to its success.

(B.1) Rakuten’s E-Commerce Marketplace

(B.2) Financial Services of Rakuten

(B.3) Digital Services of Rakuten

(B.4) Rakuten Membership Programs

(B.5) Partnership Program of Rakuten

Rakuten’s diverse working strategies range from e-commerce and financial services to digital content and membership programs. These working strategies are the value propositions of Rakuten. Altogether, they form a comprehensive and innovative business model that caters to a wide range of customer needs and preferences. These sources collectively contribute to Rakuten’s growth and success in the global digital economy.

(C) Revenue Sources: How does Rakuten make money?

Rakuten generates revenue through various sources across its diversified business operations. In this section, you will get the answer of – How does Rakuten make money? 

Here are the primary revenue sources of Rakuten-

(C.1) E-commerce Marketplace

• Commission Fees: Rakuten charges third-party sellers a commission on each sale made through its platform. The commission rate varies depending on the product category.
• Listing Fees: Sellers may pay listing fees to feature their products more prominently on Rakuten’s platform or for additional visibility.
• Advertising and Promotion: Sellers can pay for advertising and promotional services on Rakuten, such as sponsored product listings, to boost their products’ visibility and sales.

(C.2) Rakuten Super Points Program

• Super Points Redemption: While Rakuten issues Super Points to customers as part of its loyalty program, it also earns revenue when customers redeem these points for discounts. Rakuten deducts the discounted amount from its earnings.

(C.3) Financial Services

• Interest and Fees: Rakuten Bank and Rakuten Securities generate revenue through interest on loans, credit card fees, brokerage fees, and other financial services fees.

(C.4) Mobile Services

• Subscription Fees: Rakuten Mobile charges customers monthly subscription fees for mobile plans and services.
• Data and Voice Usage Fees: Rakuten Mobile also earns revenue from data usage, voice calls, and text messages used by its mobile customers.

(C.5) Digital Content Streaming

• Subscription Fees: Rakuten’s digital content streaming platforms, such as Rakuten TV and Rakuten Viki, earn revenue from subscription fees paid by users to access premium content.
• Advertising: Revenue is generated through advertising placements within these streaming services, including video ads, banners, and sponsorships.

(C.6) Rakuten Advertising

• Advertising Services: Rakuten Advertising provides marketing and advertising solutions to businesses, earning revenue from advertising campaigns, sponsored content, and affiliate marketing commissions.

(C.7) Rakuten Cash Back

• Commission Fees: Rakuten earns a commission from partner retailers when users make purchases through Rakuten’s platform and receive cashback rewards.

(C.8) Rakuten Travel

• Booking Commissions: Rakuten Travel earns commissions from hotels, airlines, and other travel-related services for bookings made through its platform.
• Advertisement Fees: Hotels and other travel businesses may pay for advertising and visibility on the Rakuten Travel platform.

(C.9) Rakuten Financial Services

• Cross-Selling: Rakuten leverages its e-commerce platform to cross-sell financial products such as insurance and credit cards, earning referral fees and commissions.

(C.10) Rakuten Communications Platform (RCP)

• Subscription and Usage Fees: Rakuten generates revenue from businesses that use its cloud-based communication and collaboration services through subscription fees and usage charges.

(C.11) Partnerships and Investments

• Equity and Dividends: Rakuten invests in various companies and receives dividends or profits from its equity stakes in these firms.

(C.12) Data Monetization

• Data-Driven Advertising: Rakuten uses customer data to offer targeted advertising solutions to businesses, generating revenue through advertising campaigns that leverage its data insights.

Rakuten’s diverse revenue sources span e-commerce, financial services, mobile, digital content, advertising, and partnerships. All of them have allowed it to create a robust and resilient business model. Thus, Rakuten effectively taps into multiple sectors of the digital economy. This diversity helps Rakuten navigate market fluctuations and maintain a strong financial position.

(D) Marketing Strategies of Rakuten

Rakuten employs a variety of marketing strategies. They help it to promote its brand, engage customers, and drive revenue across its diverse portfolio of services and products. Some of its key marketing strategies are-

(D.1) Affiliate Marketing

• Rakuten runs one of the largest affiliate marketing networks in the world. This strategy involves partnering with publishers, bloggers, and influencers who promote Rakuten’s products and services in exchange for commissions on referred sales.
• This strategy helps Rakuten make money and tap into the reach and influence of online content creators, driving traffic and sales through affiliate referrals.

(D.2) Customer Loyalty Programs

• Rakuten places a strong emphasis on customer loyalty through programs like Rakuten Super Points. By offering customers points for their purchases, Rakuten incentivizes repeat business and encourages users to stay engaged with its platform.
• These loyalty programs not only drive sales but also foster a sense of brand loyalty and community among customers.

(D.3) Digital Advertising and Retargeting

• Rakuten employs digital advertising across various channels to target potential customers. They use retargeting techniques to re-engage users who have shown interest in products or services but didn’t complete a purchase.
• This approach helps Rakuten maximize its marketing ROI by rekindling the interest of potential customers and encouraging them to convert.

(D.4) Partnerships and Sponsorships

• Rakuten forms strategic partnerships and sponsorships with sports teams, events, and entertainment properties, such as FC Barcelona and the Golden State Warriors. These partnerships help increase brand visibility and global recognition.
• Rakuten leverages these collaborations for co-branding initiatives, marketing campaigns, and exclusive offers to fans and customers.

(D.5) Content Marketing

• Content marketing plays a significant role in Rakuten money-making strategy. They produce and share valuable content, including blog posts, videos, and articles, to educate and engage their audience.
• This content showcases Rakuten’s expertise in various industries, such as e-commerce, finance, and technology, while also attracting organic traffic from search engines.

(D.6) Personalization and Recommendation Engines

• Rakuten employs sophisticated recommendation algorithms to personalize the shopping experience for each user. These algorithms analyze user behavior, past purchases, and preferences to suggest relevant products and content.
• By tailoring the user experience, Rakuten increases the likelihood of users finding products they are interested in, leading to higher conversion rates.

(D.7) Cross-promotion within the Ecosystem

• Rakuten integrates its services within its ecosystem, promoting cross-promotion opportunities. For example, users of Rakuten Mobile may receive exclusive e-commerce discounts, and e-commerce customers may discover Rakuten’s digital content or financial services.
• This strategy encourages users to explore multiple Rakuten services, increasing customer lifetime value and engagement.

(D.8) Social media marketing

• Rakuten maintains a strong presence on social media platforms, where it engages with customers, shares promotions, and provides updates on its products and services.
• Social media marketing helps Rakuten connect with its audience on a more personal level and facilitates communication and feedback.

(D.9) Data-Driven Sights

• Rakuten leverages the vast amount of data it collects from customer interactions to make informed marketing decisions. It analyzes customer behavior and preferences to refine its marketing strategies continually.
• This data-driven approach enables Rakuten to optimize its ad spend, tailor content, and improve customer experiences.

(D.10) Sustainability and Corporate Social Responsibility (CSR)

• Rakuten’s commitment to sustainability and CSR initiatives is incorporated into its marketing efforts. It communicates its environmental and social responsibility efforts to resonate with consumers who prioritize ethical and sustainable brands.
• This strategy aligns with the values of socially conscious consumers and strengthens Rakuten money-making strategy and brand reputation.

Rakuten employs a multifaceted marketing strategy that combines affiliate marketing, customer loyalty programs, digital advertising, content marketing, and data-driven insights. By fostering brand loyalty, leveraging partnerships, and continuously innovating its marketing approach. Rakuten strives to maintain its position as a global leader in e-commerce, digital services, and financial technology.

(E) SWOT Analysis of Rakuten Business Model

(E.1) Strengths

• Diversified Ecosystem: Rakuten boasts a diverse portfolio of services, including e-commerce, financial services, digital content, and telecommunications. This diversification reduces reliance on a single industry and spreads risk.
• Global Presence: Rakuten has expanded its footprint internationally, establishing a strong presence in various countries. Its global reach enhances brand recognition and revenue potential.
• Customer Loyalty Programs: The Rakuten Super Points loyalty program incentivizes repeat business and fosters customer retention. It contributes to a loyal customer base and increased sales. With this Rakuten makes money consistently.
• Innovation Culture: Rakuten fosters a culture of innovation, continually exploring new technologies and business models. This approach allows the company to adapt to market trends and customer preferences.

(E.2) Weaknesses

• Heavy Reliance on Japan: While expanding globally, Rakuten still generates a significant portion of its revenue in its home market of Japan. Overreliance on a single market poses risks.
• Competitive E-Commerce Landscape: In the e-commerce sector, Rakuten competes with giants like Amazon and Alibaba. Achieving differentiation and growth in this highly competitive space can be challenging.
• Mobile Infrastructure Investment: Rakuten Mobile’s expansion requires substantial infrastructure investments. This venture may take time to achieve profitability and poses financial risks.

(E.3) Opportunities

• Global E-Commerce Growth: The e-commerce industry continues to expand globally. Rakuten can capitalize on this growth by increasing its international presence and market share.
• Digital Content Demand: The demand for digital content, such as streaming services and e-books, is rising. Rakuten’s content platforms have opportunities for growth, especially in new markets.
• Financial Services Innovation: Rakuten can leverage its fintech initiatives to offer innovative financial products and services, attracting a broader customer base and increasing revenue streams. (We have explained it in the section- How does Rakuten make money?)

(E.4) Threats

• Intense Competition: Rakuten faces fierce competition in all its sectors from well-established players. Sustaining profitability and market share amid such competition is a significant threat.
• Regulatory Challenges: Regulatory changes, especially in financial services and telecommunications, can impact Rakuten’s operations and profitability.
• Economic Volatility: Economic downturns and market fluctuations can affect consumer spending patterns, potentially reducing demand for Rakuten’s services and products.
• Cybersecurity Risks: As an e-commerce and fintech company, Rakuten is vulnerable to cybersecurity threats and data breaches, which can damage its reputation and finances.

Rakuten’s strengths lie in its diversified ecosystem and global presence, while its weaknesses include market concentration and intense competition. The company has opportunities in e-commerce growth, digital content, and financial services innovation. 

However, it faces threats from competitors, regulatory challenges, economic volatility, and cybersecurity risks. Rakuten’s ability to navigate these factors will determine its future success and growth.

(F) Conclusion

Rakuten’s business model is a testament to diversification and innovation. The company’s multifaceted approach, spanning e-commerce, financial services, digital content, and more, showcases its adaptability and commitment to meeting diverse customer needs. 

Rakuten’s loyalty programs, such as Rakuten Super Points, foster customer retention, while strategic partnerships and global expansion enhance brand visibility. The ability to seamlessly integrate services within its ecosystem and embrace emerging technologies reflects Rakuten’s forward-thinking mindset. 

By now you must have got the answer to the fundamental question- How does Rakuten make money? Through the intricate revenue sources, from e-commerce commissions and financial services fees to digital content sales and advertising. Rakuten’s enduring success lies in its ability to balance tradition with innovation, catering to a broad customer base. Thus, it stays at the forefront of industry trends!