Building a three-domain ecosystem: the Tabi-no-Mado and DLJ acquisitions (2003)

A design that earns from “lending the place” and finance

The heart of this decision was that, to break its dependence on the mall alone, Rakuten bundled several businesses together through acquisitions in which it did not involve itself deeply in operations. Travel, securities and cards carry neither logistics nor inventory; Rakuten held the traffic and the membership base and earned on fees and transaction volume. Within the same online retailing, and in contrast to an Amazon that poured vast sums into logistics and attacked through direct sales, Rakuten chose to earn by lending the place and through finance. The “no-touch model,” as Chairman and President Mikitani called it, was a choice to widen the range of its businesses all at once without bearing inventory risk.

And yet the design of taking finance in-house brought a weight of its own. Securities, and later banking, pushed up both assets and liabilities together, and consolidated total assets swelled from $2.8B (¥308bn) for the year ended December 2004 to $15.0B (¥1.66tn) a year later. Compounded by impairments on overseas businesses, the year ended December 2008 brought a net loss of $531.3M (¥55bn), the first since the company’s founding. Even so, the 2003–2004 design of binding several businesses under a single ID took hold as a points-based economic zone, and became a pattern Rakuten returned to every time it widened its businesses — into life and casualty insurance later, and on into telecommunications. How to step off the single leg of shopping — this run of acquisitions was the first practice to give that question the answer of an “ecosystem.”