Japan's Rakuten Prepares To Enter The U.S.—And Amazon Prepares To Greet Them

The CEO of Rakuten, the $4.7 billion global retailer (although it's preparing to be in 27 countries, the bulk of its current revenue is in its native Japan), used his keynote speech at the Internet Retailer (IRCE) show in Chicago on Wednesday (June 5) to make a pitch to American E-commerce companies to join Rakuten and sell through his site. The not-so-subtle subtext: Amazon (NASDAQ:AMZN), we're coming for you.

Rakuten wouldn't be the first to make such a move, but its results in other countries coupled with its non-traditional way of working with retailer gives it a fighting chance of making a difference. Although we'll touch on the advantages and challenges Rakuten will have, one thing is clear: Rakuten and Amazon's approaches are 180 degrees different. For starters—and this will get the attention of the Jakob Nielsen devotees among the Web designer crowd—Rakuten wants long initial Web pages with lots of video, opting for the "scrolling is better than clicking" school of thought.

From Rakuten's perspective, its model is the anti-Amazon. In E-commerce today, said CEO Hiroshi Mikitani, "your friends can become your enemies and your enemies can become your friends."

Instead of having a marketplace for retailers to fill in the gaps of its product offerings, Rakuten's products consist solely of what the marketplace offers. Therefore, there's theoretically no possibility of competing against the, if you will, landlord.

Amazon Marketplace retailers have often complained that the situation for them is much worse, in that Amazon will not only let Marketplace sellers access smaller niche markets, but if that category starts to sell well, Amazon has sometimes chosen to take back that category and sell directly. In effect, Amazon has used Marketplace to do market research about categories it may want to enter.

This difference lets Rakuten put its retail partners out front, promoting their brands and their personal areas. Rakuten will also provide tools and counseling as to how it suggests pages look. That brings us to another key difference between the two: Amazon is utilitarian, fast and efficient, an ideal site for a time-crunched American who knows that they need to replace the toaster oven that just caught on fire. The shopper knows what they want and prefers a site that gets the purchase done as quickly and painlessly as possible.

Rakuten's philosophy is the opposite.Rakuten's philosophy is the opposite, creating a site that Bernard Luthi, the COO for Rakuten.com Shopping (that was Buy.com before Rakuten bought and rebranded it), said was one designed for shopping, not necessarily buying and certainly not necessarily buying right now.

Rakuten's approach therefore places an emphasis on storytelling, including features about the product and how it's grown or manufactured. And in a move that design-wise is radically different from many major U.S. sites, the company wants very long pages, with lots of video and pictures and elements. They prefer to have shoppers scrolling than clicking. (Here's a sample Rakuten page.)

Will this likely give Amazon a reason to worry, given how much importance it places on its marketplace? That could truly go either way—and that really should worry Amazon.

The best argument in favor of Rakuten faring well in the U.S. is that a very large number of Amazon sellers are quite angry with Amazon's policies. The best argument in favor of Amazon emerging mostly unscathed? Those sellers generally make better dollars from Amazon than they can anywhere else. Being upset with Amazon is one thing: alienating the cash cow is quite another.

Some merchants might want to try selling on both platforms, but Amazon could easily crack down on its rules, forcing merchants to make a choice. Amazon knows that if it forces such a choice soon—before Rakuten has a chance to attract a lot of American shoppers—it will fare well.

Today, the U.S. Rakuten site has about 3,000 U.S. merchants, COO Luthi said, but almost all of them were simply the old Buy.com merchants. He said the real fireworks are likely to start in mid-August when the site will run a "super sale," which he described as a week-long Black Friday.

Amazon has would have the option of fighting back by sweetening its marketplace contracts and procedures (and even money). One move that would quiet resentment would be agreeing to let merchants permanently own categories and then allowing them to more prominently promote themselves in the Amazon listings.

Rakuten has said that it would give its merchants access to email addresses and other information about its shoppers, something that Amazon has been hesitant to do. (Example: StorefrontBacktalk has no idea who subscribes to the Amazon Kindle version of StorefrontBacktalk. We know the numberof subscribers, but that's it.)

From the global competitive perspective, Amazon is well entrenched and has many ways to fight off Rakuten in its U.S. home turf. But from the marketplace retailer perspective, if Rakuten makes an aggressive play for them, it might force Amazon to be a lot friendlier. In that light, Mikitani's comment about E-commerce friends turning into enemies and enemies turning into friends could have an entirely different meaning.