Founding Rakuten Ichiba, the merchant-first mall (1997)

The market that a breakthrough price opened

The heart of this founding decision was a bet placed, before any question of technology or selection, on how far Rakuten could widen the base of sellers. Online retailing at the time was something well-capitalized firms took on at high cost. President Mikitani did the opposite: with a flat fee of $413 (¥50,000) a month and tools that required no specialist knowledge, he turned even small shopkeepers and farmers who had never touched a computer into sellers. The more sellers there were, the deeper the selection and the traffic grew, and that in turn drew still more shops. The breakthrough price was not mere discounting but the design of an entrance built to keep that cycle turning.

Yet the flat fee, as the company grew, also turned into a wall. As users multiplied and the load and cost on the system swelled, a fixed fee let revenue rise only with the number of shops. In 2002 Rakuten introduced usage-based charging tied to monthly sales, stepping into the revision of its fee structure that it would call its “second founding.” Even so, the 1997 choice to open a storefront to individual shopkeepers for $413 (¥50,000) a month remade Japanese online retailing from the preserve of a few large players into a market with a broad base. What sets this founding decision apart is that it reshaped the market itself not through scale or capital, but through the question of whom it opened a storefront to.