Rene Abe, CEO, Rakuten Brazil
Photo: Rene Abe and members of the Rakuten Brazil team prepare for Black Friday 2016.

Taking the time to understand local cultures is essential for businesses hoping to compete globally. And nowhere was this lesson more applicable than when Rakuten came to Brazil.

Rakuten first entered the South American powerhouse in 2011, following its acquisition of Ikeda, a leading local platform-provider that helped retailers to build their own e-commerce businesses. The business model seemed to fit nicely with Brazilian merchants’ preference for retaining control of their own e-commerce initiatives – rather than joining an online marketplace like the model run by Rakuten in Japan and elsewhere. But, the truth is we soon suffered as competitors emerged and began to undercut us on price.

Rene Abe discussed e-commerce in Brazil at the Rakuten Expo 2016, held in São Paulo in October.

Rene Abe speaks at the Rakuten Expo 2016, held in Sao Paulo in October.

The right thing to do

That was when our local insight really came into play. In quick succession, we introduced Rakuten Genesis, a platform offered to Brazil’s merchants at no cost for setup and maintenance, enabling them to set up their own e-commerce sites within days. Then, in just six months, we developed our own proprietary payment processing gateway.

Next, we launched middleware providing total integration with retailers’ back-offices, unifying orders, inventory and sales information in one integrated framework. Called Rakuten Nexus, the system also connects customers to several online marketplaces in Brazil, allowing them to list and publicize their products in multiple forums and manage them through a single dashboard.

We changed our business model. We used local insights to build a system suited to the Brazilian market – instead of trying to get the Brazil market to suit the system we had. We also made financial services a key element for Rakuten in the country. This wasn’t an easy change, moving from a fee-based model to one that earns a percentage per financial transaction and ties customers to contracts. But, in Brazil, it was the right thing to do.

E-commerce in Brazil is booming, with the country expected to close 2016 with annual growth of 8% in e-commerce, reaching a total of BRL 44.6 billion in sales.

E-commerce in Brazil is expected to close 2016 with annual growth of 8%, reaching a total sales value of BRL 44.6 billion.

E-commerce is booming in Brazil

This approach positions us well to take advantage of the rapid growth we are now seeing in Brazilian e-commerce. The nation is expected to close 2016 with growth of 8% in e-commerce, reaching a total of BRL 44.6 billion in sales, according to E-bit’s Webshoppers report. We also know that a total of 23.1 million consumers performed at least one online purchase in the first half of 2016, a volume 31% higher than in 2015, boosted by the migration of sales from physical retail to online channels.

For Rakuten, our next goal is to use artificial intelligence to analyze the data accumulating in the Nexus middleware to offer unique marketing solutions. This will enable our clients to dramatically improve the assertiveness of their digital campaigns.

We also want to see Genesis break into the top five platforms in terms of volume of processed sales and hope our company becomes the number one e-commerce solutions provider for enterprises in Brazil. If one thing’s for certain, it’s that we’ll need deep local knowledge and insight to achieve those goals. But, considering what we’ve achieved so far, we’re confident we’ve got what it takes.