Deep decryption business model of Japan electric business giant Lotte Company

(This article is the 2010 Business Review August Special feeds, will be written before the "Japanese electric business giant Lotte Reviews" series has been revised and commented on the full text, welcome to discuss)

E-commerce Market These two years is a very hot field, so the E-commerce business model in the end is what, how many forms also with the industry colleagues hanging on the mouth of the topic often discussed, for example, many people should have heard of Consumer-to-consumer and so on. These terms actually come from the mature e-commerce market in foreign countries, such as ebay and Amazon, respectively, are seen as an example of Consumer-to-consumer and the business model in E-commerce. But if we look to Japan, which is closer to us, the leading E-commerce company called Lotte (www.rakuten.co.jp), it has a lot of unique business model, some experience is even more suitable for the Chinese market as a reference.

First of all, briefly introduce the core data of the Japanese electric business giant:

Company was founded in 1997, 3 years after the JASDAQ (Japan Stock Exchange) listing, jsd:4755, as of October 23, 2009, Lotte's harsh cap is 812.9 billion yen, 2008 sales of 250 billion yen; As of 2009 Q2 , there are 59 million members and 29,000 merchants; all Japanese websites ranked fifth in traffic;

According to Lotte's own positioning, its main business Lotte Market business model is between ebay and Amazon, the so-called B2B2C mode, or can be interpreted as the Network Mall mode. Here the first B is Rakuten itself, the second B is to join the Lotte Merchants (merchants), and then by these merchants to sell specific goods to personal sellers C. Lotte Market in 1997 just when the online only 13 shops, the use of the profit model is similar to the line under the Mall to collect rent of 475 U.S. dollars per year "booth fee." It is said that later a large chunk of income growth comes from the Japanese people's preference for local specialties – many small cities have many historic shops that specialize in local specialties, these are often the generation of family-run shop is slowly through the Lotte Market, the trading platform to help the Internet to sell this new channel, It also solves the problem that buyers used to buy only by themselves. (China here is very special, Taobao has always been and ebay and Rakuten mode are different, to a certain extent, between the two)

The e-commerce mode of Rakuten Market is B2B2C

When it comes to more specific models of profitability, as can be seen from Rakuten's earnings figures, Rakuten's revenues can be divided into advertising, marginal transaction fees, fixed fees and other major components. Advertising revenue is relatively easy to understand, such as Taobao through the through train is similar. and fixed fees and trading marginal fees are also contributed by the seller to join, can be understood as a large shopping mall to pay a certain amount of fixed booth fee, and then if the seller's income to reach a certain level, but also to pay a certain amount of the market. From the calendar year's data appear Rakuten's advertising revenue and transaction marginal charges are steadily rising, and the proportion of fixed fees collected from the merchant is declining, such a revenue structure compared to the current Taobao almost all from advertising will be healthy.

Figure II: Rakuten market revenue data dismantling

After reading the Lotte Market business model and revenue structure, if the vision to be more extensive to the entire Lotte Group's strategic layout can also find some more thoughtful things. Strategy (strategy) specifically refers to the development goals and plans that a company needs to determine based on its external environment and its own circumstances, although there is no guarantee that a company with good strategic thinking will be able to succeed (because there are executive level), but it can be said that a no or only the wrong strategy of the company must fail.

So how does Rakuten describe its core strategy? – "The objective of Rakuten Group is to converge the Internet Services and the Membership Business", translated into Chinese is " The goal of Lotte Group is to aggregate Internet services and membership patterns.

Figure III: Lotte Group's core strategy

And the vast majority (European and American) Internet companies rely on traffic to the mode of advertising revenue, Lotte Group advocates "maximizing Lifetime value of members– to maximize the lifetime value of members", The revenue comes mainly from providing Rakuten members with a wide range of service charges and commissions, and then adding a snowball effect.

Figure IV: Lotte Group Business philosophy

The term Ecosystem (ecosystem) describes an enterprise strategy from another perspective. The ecological system in the natural biological perspective is an ecological whole formed by the continuous energy and material exchange between the living organisms and the physical environment around them. A business ecosystem can be interpreted as an economic union of a company and its surroundings (including customers, suppliers, competitors, etc.). Some of the industry's top companies are key issues in how to create their own ecosystems, including Microsoft and Intel, which are good examples of past successes.

And Rakuten has proposed its own ecosystem (Figure V) – at the center is the current large Rakuten membership database, next to the six ring is Lotte's current 6 main business, including E-commerce, travel industry, securities, communications, portal media, credit card and payment, while in the platform layer with Rakuten Super points ( Rakuten Super Points The business, and has its own pay platform and banks to do the overall support.

From the complexity of this ecosystem than Taobao before the "big Taobao" strategy has not, but also to praise the Lotte Group's ability to business integration, several pieces of business are through the way of investment mergers and acquisitions. Rakuten currently has about fifty or sixty companies, if you use a PPT to introduce them all at least one day to finish. The reason why Lotte Group can be so bold in the investment and acquisition estimates and founder Hiroshi Mikitani (Hiroshi Mikitani) itself and its core team of consultants and banking background is inseparable. Unlike some of the leaders who focus on a single core area, SANMU that it is a good way to improve the stability of the business, so that each business can form a interlocking network layout to achieve the 1+1>2 effect.

Figure V: Rakuten Ecosystem

After having a discreet strategic orientation with the Rakuten ecosystem, what is the implementation level that leads to the rapid success of Rakuten's core business in Japan? As an e-commerce platform, especially the Lotte market this model is called B2B2C, how to better for the seller (B) service is the most important, because this is the final form of "snowball" effect of the first step. In the Rakuten market, B2B2C's second "B" is in fact mostly Japanese small and medium-sized enterprises. Rakuten today became the first (and second, Amazon Japan) market for Japan's electricity markets, relying on a set of exclusive combinations of years of discipline, including: The Backend management system RMS, ECC e-commerce advisor and Lotte University. and Lotte Market in the seller side precipitated many years of various layouts compared to Taobao as China's electric business platform in these points in fact, there are still some gaps.

Admin system RMS (Rakuten Merchant Server)

Rakuten's pride of the RMS system mainly includes the following parts, the goal is to make the Internet is not familiar with the store can easily set up and manage their own Lotte shop, familiar with Taobao sellers system readers can compare themselves:

R-storefront: The most core modules, mainly including shop building and Web page editing and other basic functions; R-backoffice: Accept orders and customer management, such as being able to help store managers generate regular sales reports and automatically print order receipts, etc. R-datatool: Electronic commerce must be indispensable data analysis module, to be able to view the number of visitors per day, the sales of different periods of time and the attributes of a single customer; R-mail: Make send marketing email, send the scope also support refinement customization, For example, you can focus on new users who have been shopping for the last 30 days or who have not returned from shopping for more than half a year. This service is a fee-based service, but the effect is very good, there are about 40% Lotte Market user orders are imported through these marketing messages, this and many Taobao sellers rely mainly on search rankings or through-train ads are very different The other two relatively small modules are r-auction (support for the auction shopping function) and forum (the message board in the shop);

Figure VI: The RMS system that the Rakuten Market prides itself on

For example, using the storefront of Lotte RMS to build a store architecture is as follows: The landscape can be divided into shops and commodity dimensions, vertical merchandise axis is divided into shops – categories – specific goods, the store can be completed in accordance with the structure of a shop easily.

Figure VII: An example demonstration of Lotte Market Shop

ECC e-commerce advisor known as "the second store Chief"

The purpose and role of ECC e-commerce consultants are similar to those of Lotte University to further assist sellers to familiarize themselves with the system and to quickly apply some of their past successes. There is a very inflammatory language on the investment page of Lotte Mall in Taiwan – "professional = The show of successful experience!" Lotte Market accumulated in 12 more than 600.07 million shops in the network shop experience, through the guidance of the Lotte Market Advisory Group, the Novice can quickly enter the situation, open shop veteran can also learn from other stores operating experience, the store operating better! ”

To put it simply, the ECC consultant is a 1 to 1 consultant for all sellers from the Rakuten platform, each with about 100-150 sellers, each with a unique experience in a particular commodity category. ECC Electrical Business Consultants will be on the display of goods, promotional proposals, such as the recommendations of some of the more common difficulties in the use of the accumulated knowledge base in the Lotte Market to guide the sellers, from different angles to assist the seller to enhance the turnover of the shop, because their own performance assessment part of the business is also from

In the current domestic mainstream E-commerce platform (Taobao or PAT) internal operations managers in fact, part of the job content and Lotte's ECC electric business consultant is similar, but not like the Lotte Market to achieve the ultimate, for example, it is obvious that each seller is not able to provide a special advisory services, And can not be used in the performance evaluation of how many sellers as a test point. Here or Rakuten clearly positioned themselves in the B2B2C mode, rather than the Consumer-to-consumer model of the fact that inseparable. At the same time, because the Rakuten market revenue model originally included directly to each seller charge part, so the employment of ECC Electric Consultant's manpower cost can be transferred to the seller, born with scalability.

Attending and not attending is the different Lotte University

Lotte University in January 2000, as the name suggests to the shop owner to learn where the seller (is a fee-based service project). The original curriculum planner is said to be founder Sanmu, inspired by the thinking he learned in his Harvard MBA program.

The main two features of Lotte University:

in the past, most of the stores are based on the feeling to run the shop, through the training of Lotte University can learn how to plan, organize their own shop methods; The store long through the university form the link (SNS effect), may exchange the experience, to the performance enhancement has the mutually reinforcing effect;

As of today, Lotte University of Japan has provided guidance for more than 70,000 stores, participated in the total of more than 80% of the store, after learning the effect is obvious, the average attendance of the shop than the shop has not attended more than 3 times times higher.

Figure Eight: the Lotte University effect

From some Lotte University course name and introduction examples can be seen and "Taobao University" style is markedly different:

Shop Success Tips & Events Lottery Courses analysis of successful network store operation basic type of popular store operation mode-consumer view design reverse customer preference for "Don't buy" situation? Precision & Efficient set of customer marketing method to make customers fascinated and moved by the consumer relationship creation method attentive hospitality hospitality the customer is moved and fascinated by the hospitality of the way is the key analysis of the store of Word-of-mouth? How to smooth out dissatisfied customers ' corresponding methods the necessary elements of the charming shop to surpass the customer's expectation value and manipulate the customer's expectations store charm increase formula

At the same time in the Lotte University's promotional page dedicated to a student voice column, whether the choice of shop representatives or text description are written more approachable, which highlights is also:

1. How does Lotte University's curriculum help itself to translate the past experience of offline sales into a methodology that can also be used for online sales?

2. Through the exchange with other students in the same period quickly realize their own shortcomings, or to produce "my shop can do it" morale

The last additional two points to add include the Lotte Market Exclusive magazine and the Lotte Sellers Conference (EXPO)

Rakuten Ichiba Dream Magazine in early 2005, is the exclusive reading of Lotte Sellers, content is mainly to introduce the successful experience of the store, the current circulation has been about 30,000 volumes. In order to further subdivide the reader, Lotte even at the end of 2008 launched a shop for less than a year to open the seller's "Rakuten Ichiba DREAM One" publication. Relative to Taobao before and Zhejiang newspaper group launched the "Taobao World" publication positioning is mainly to buyers, positioning is quite different, also see the follow-up Taobao can play its line under the linkage of the advantages.

Also in July 2009, six cities in Japan convened a store-length seller held Lotte Expo2009, the total attendance of more than 5000 people, such a large seller rally is another Lotte market can firmly grasp the hearts of each seller one of the reasons. And when Rakuten catches the hearts of the sellers who are serious about doing business, and gives them training and tools, these sellers will naturally help the Rakuten market to capture the hearts of the final shoppers.

Reviews

If as a project owner, "The ability to zoom in and zoom out" is a necessary quality, that is, you need to be able to look at the whole thing from a 100,000-foot altitude (know the big picture) , but on the other hand can understand and pay attention to detail ability (attention to details). And more importantly, you know when you need to adjust yourself to do this "zoom in" and "Zoom Out", depending on the circumstances.

If from the Internet industry, "zoom in" to see a problem when we focus on product design details, such as the interaction process is friendly, "zoom out" to see the problem more need to think about business model, industrial chain, organizational structure and so on.

For most for-profit companies, the Business model says how the company makes money, so the easiest way to look at an already profitable business model is to see its revenue structure first. The so-called "free business model", which was preceded by the word "long Tail" by Chris Anderson, is essentially a gimmick, but it's also about providing a free primary service for a large number of users, and then relying on ads or charging extra for the premium features of the old bridge.

The case of Japan electric giant Rakuten, which is described above, is indeed in some places more similar to China's (compared to European and American companies), where it should be related to culture, national conditions and so on. It is also the company called Lotte, announced in January this year with Baidu investment 50 million U.S. dollars officially into the Chinese e-commerce market, today just officially on the line called "Le Cool Days" of China's Lotte version of the home –http://www.rakuten.com.cn/, From the style of the home page it seems that the project is set up by the Japanese Lotte team to the main operation, but also wish them follow-up development smoothly.

C2c:consumer-to-consumer, refers to the E-commerce platform for individual sellers and individual buyers to trade with each other

B2c:business-to-consumer, a vertical E-commerce site that directly provides personal inventory for individual sellers

Lotte Group in 2004 bought Ctrip 20% shares this thing many people should still remember, SANMU in 5 years after the shot is also earned a sum.

Source: Http://webkeji.net/2010/08/rakuten-business-model-full