Online, meet offline: Rakuten is teaming up with Japan Post to converge expertise

Rakuten is partnering with one of Japan’s oldest, most respected institutions: Japan Post.

As part of a capital alliance announced in March, Japan Post Holdings made an investment amounting to an 8.32% stake in Rakuten Group. At the press conference in Tokyo, President & CEO Hiroya Masuda took to the stage with Rakuten Group CEO Mickey Mikitani to share plans to strengthen collaboration across a range of fields, including logistics, mobile, digital transformation and more.

Japan’s postal office has been around for some 150 years, and today serves customers from 24,000 locations around the country. Its savings arm, JP Bank, is no spring chicken either. Founded in 1875, it has become one of the largest financial systems in the world with around 120 million savings accounts ― one for nearly every person in Japan.

As the world moves further and further online, the post office remains a dependable rock for Japan’s less tech-savvy residents.

By comparison, Rakuten is the new kid on the block. Founded in 1997, it grew in tandem with the proliferation of the internet to encompass not only online shopping, but online financial services, mobile carrier services and countless other internet-based businesses.

This marriage of old and new has excited many observers. While the two parties offer a number of similar and complementary services ― banking, insurance, logistics ― each comes from a very different background, namely: Japan Post from the physical world, and Rakuten from the virtual.

Bringing the post office into the digital age

Rakuten’s standing as a digital leader in Japan was one major selling point for Japan Post’s investment. Over its 24 year history, Rakuten has accumulated extensive online business experience through the operation of more than 70 services in Japan, including banking, cashless payments, insurance and more.

From the perspective of our Group strengths across a physical network of post offices nationwide and a robust logistics system, the cutting-edge digital technology and deep knowhow leveraged by the Rakuten Group in a diverse business portfolio of Internet services position them as an ideal partner.

Japan Post Holdings President & CEO Hiroya Masuda

Mikitani has long been a champion of Japan’s digital transformation, and future collaboration between Rakuten and Japan Post represents a major step forward on that journey. Rakuten Group plans to dispatch “digital transformation specialists” to help with Japan Post Group’s transformation into the digital age.

Japan Post also stands to benefit from having access to Rakuten’s powerful data, which covers everything from e-commerce and logistics to online marketing. Collaborations in the financial field, including cashless payments and insurance, are also under consideration.

A physical presence for Rakuten’s virtual services

Japan Post conducts the majority of its business from its network of 24,000 post offices around Japan. For Rakuten, this represents a rare opportunity to take its virtual services into the real world.

The new partners are planning to make use of Japan Post’s offices by opening counters in event spaces to allow new users to sign up for the recently launched Rakuten Mobile. The agreement also offers Rakuten Mobile access to new locations for base station antennas at post offices across Japan, allowing it to expand its coverage network at an even more explosive pace.

These plans open up an even broader potential market for Rakuten Mobile. In a country with an aging population like that of Japan’s, the analog-native demographic is one that no company can afford to ignore.

A marriage of e-commerce and logistics

Logistics is yet another exciting part of the partnership for both parties. With the accelerated growth of online shopping through platforms like Rakuten Ichiba, there has naturally been a spike in demand for home delivery services, which just so happens to be a pillar of Japan Post’s business.

The company’s shipping services have been indispensable for many Rakuten Ichiba merchants, and the relationship between the two companies goes back a long way. With this new agreement, the partners will be able to work closer together than ever before.

For the past several years, Rakuten has been building out its own delivery network to support merchants on its platform. The partnership could allow both companies to take advantage of each other’s fulfillment and distribution centers, as well as expand usage of Japan Post’s Yu-Pack home delivery service.

But the partnership doesn’t stop there: Plans are in the works to build shared logistics centers and develop shared delivery and pick-up systems, taking Rakuten’s logistics game to the next level and further empowering Rakuten Ichiba’s merchants. Discussions are also being held about the formation of a new company to build a digital transformation platform to revolutionize logistics industry operations.

Rakuten will undoubtedly benefit from having access to a century and a half of logistical expertise, but that isn’t stopping the partners from focusing on the future. Plans call for deeper development of artificial intelligence and automation to further enhance the logistical capabilities of both companies.

A partnership of trust

The Japanese government is the majority owner of Japan Post Holdings ― of which Japan Post, JP Bank and Japan Post Insurance are subsidiaries. This, together with 150 years of history, has made the group one of the most trusted institutions in the country.

Even as the world moves further and further online, the post office remains a dependable rock for Japan’s less tech-savvy residents. With this new marriage of physical and virtual expertise, Rakuten now has an opportunity to build trust and empower these users as they explore the digital age.