Mickey Mikitani, Chairman and CEO, Rakuten Group
2024 is the year Rakuten evolves into an AI empowerment company.
At last month’s Rakuten Ichiba New Year Conference, I spoke to over 8,000 merchants from across the country about the future of Japan’s largest online shopping mall.
About 30 years ago, many of these merchants were selling their wares in physical stores, or through catalogs. The arrival of the internet changed that forever, and the rise of the smartphone did it once more.
Now, artificial intelligence is promising to transform everything yet again. Only this time, it will not only transform the way we sell things, but every aspect of business, from hiring to marketing. It will be a massive revolution, possibly even bigger than the internet.
I believe that there is no future without AI, and that Rakuten must take a proactive approach to embracing AI tools to augment human capabilities.
Rakuten’s robust data will fuel the GenAI wave
Until last year, most of us had a very different understanding of AI. Predictive AI was in the spotlight, astounding us by trawling vast swathes of data to find invisible patterns – detecting potential cancers that even radiologists might miss, or beating the world champion of the exceptionally complex board game Go.
In 2023, the spotlight shifted to something new: generative AI. Revolutionary large language models like ChatGPT suddenly brought the tech within the grasp of the general public. With almost human-like creativity, GenAI has shown potential for making entire movies from scratch, or even inventing new compounds for use in medicine.
So why is Rakuten, a company with roots in e-commerce, taking on AI in such a big way? And why did OpenAI, the pioneers behind ChatGPT, choose to partner with us?
One major keyword comes to mind: data. Developing an AI requires a lot of it, and Rakuten has some of what I believe to be the best data in the world.
Our 100 million members in Japan earned some 660 billion yen worth of Rakuten Points last year, doing everything from shopping and travel to banking, investing and using their cellphones. Rakuten Group platforms are handling tens of billions of transactions each year.
This level of data quality – linked by a single membership – is something that even major data-driven Silicon Valley companies don’t have. They may have search data, or behavioral data – but can they sell ski gear to someone who has just booked a trip to Hokkaido, or furniture to someone who has just taken out a home loan?
This, together with our incredible community of some 6,000 talented engineers and researchers in Rakuten offices across the globe, has put Rakuten in a unique position to take on the AI age.
How we’re leveraging AI tools around the ecosystem
The Rakuten Ecosystem has grown into what it is today through a combination of Rakuten Points – Japan’s leading loyalty points program – and a proactive approach to leveraging data. 2024 is the year we add AI to the mix, which I believe will stoke exponential growth.
Rakuten’s AI-nization has already begun: On Rakuten Travel, for example, in the future we are preparing to launch an AI concierge system that can provide travelers with custom travel plans based on conversational queries – say, I want to go somewhere with nice scenery in late March and eat local delicacies, within a budget of X.
Hotel providers, meanwhile, will be able to use our AI tools to automatically draw up attractive accommodation plans based on simple keywords – late check-in, no meals – and even have graphics for the room drawn up automatically.
We’re also seeing incredible results with our deep learning-powered recommendation engine on our second-hand goods marketplace Rakuten Rakuma. Conversions are up as much as 30%, and we’re preparing to launch a similar system on Rakuten Ichiba.
Our insurance businesses employ a virtual secretary called “ARIA” who advises Rakuten insurance agents, and Rakuten Securities has built its own AI assistant to answer questions from users about investment products and strategies.
Rakuten Mobile, too, is benefiting enormously from AI. One reason we are able to operate the network so affordably is that we are proactively leveraging AI tools for everything from network management and operations to system monitoring and security.
AI-nization on Rakuten Ichiba
Our overarching goals with AI can be summed up by our Triple 20 strategy: We want to boost marketing efficiency by 20%, operational efficiency by 20%, and the efficiency of our clients by 20%.
For our clients, we are currently collaborating with OpenAI to roll out Rakuten AI for Business – a platform designed to empower businesses with easy-to-use AI tools.
So how can AI serve our clients on Japan’s largest online shopping mall, Rakuten Ichiba? One way we plan to do this is through web design. Until now, it’s been a question of laying out elements on a two-dimensional plane. Now, our AI can make specific suggestions for better, more dynamic layouts.
Product descriptions can be generated automatically, referencing details in a product’s title, image and information from online sources. Product photos can be edited on the fly, even changing the background to determine whether a certain scenario resonates better with a certain kind of shopper.
Everyday store operations are also in our scope. Going forward, merchants will be able to use AI chatbots to start conversations and respond to customer inquiries.
Advertising assistance will be another major use case: AI will be able to automatically determine whether something falls within regulations, and even suggest how to present a banner or the best catch copy.
Unlocking the power of semantic search
Another major part of e-commerce is search – it’s how most customers find what they need, after all. With AI, we can move away from the rather inorganic keyword search in favor of something more concierge-like.
To this end, we’re making great strides in semantic search – search based on what the query means rather than the keywords it contains. Queries made in natural language (“show me some handbags that are appropriate for use at the office”) will now yield better results, even recognizing the best images to display in the results field.
Trials of this new search technology have shown that it has the potential to boost conversions enormously – by as much as 2.7 percentage points. These are just a few of the ways AI will fuel growth on Rakuten Ichiba.
Through all this, we cannot forget that AI is a tool, meant to augment human capabilities. Our biggest goal is to make these tools as easy as possible to use – this is what I mean by evolving Rakuten into an AI empowerment company.
No Humans, No Future
Last year, Rakuten’s domestic gross merchandise sales topped six trillion yen, and we’re aiming for 10 trillion by 2030. I truly believe that AI is a pivotal piece of this puzzle – to the point that we are employing the slogan No AI, No Future.
But what I believe is really crucial is how we employ AI. At Rakuten, we truly value organic, human connections. Our mission has always been to empower the merchants who give Rakuten Ichiba its characteristic human touch.
Japan has an incredible spirit of service. I hope we can take this spirit and use AI to deliver it to more people. That’s why I want to add to our slogan – No AI, No Future; but No Humans, No Future.