DoCoMo, Rakuten to Form Strategic Alliance in Internet Auction Services
Japan’s top mobile carrier DoCoMo and leading online mall operator Rakuten have forged a capital alliance to expand mobile auction services. Rakuten will spin off its peer-2-peer (P2P) auction network, Rakuten Flea Market, into a separate entity, Rakuten Auction, Inc from Dec. 1st. DoCoMo will then invest 4.2 billion yen ($37 million) starting Dec. 16 for a 40 percent share of the new firm. The deal does not include Rakuten’s profitable B2C (Business-2-Consumer) Super Auction site, which offers new goods from its huge listing of online mall operators. Rakuten currently has around 17.3 million users; DoCoMo 45 million subscribers.
Anxious to break the news to the media, the planned tie-up was announced at a hastily called press conference in Tokyo’s Okura Hotel with virtually no details on how the two firms plan on tweaking the service to attract DoCoMo users or differentiate it from KDDI’s EZ Web auAuction or even Rakuten’s current somewhat limited mobile auction portal. DoCoMo President Masao Nakamura and Rakuten President Hiroshi Mikitani were ill prepared to answer questions from the media pressing for more details.
Nakamura did say there would be benefits exclusive to DoCoMo subscribers plus a choice of payment methods but would not elaborate. That those payment choices will include the Felica O-saifu Ketai (mobile wallet) is probably a safe bet. Both Rakuten and DoCoMo refused to estimate when Rakuten’s enhanced mobile auction service would roll out citing development of new shared servers as one reason for the delay.
Rakuten’s motto is Shopping is Entertainment and auctions form a very important act in that show. The company lists around 5.3 million goods on its Rakuten Flea Market auction site. Mobile auctions currently account for ten percent of Rakuten’s total auction-based income. Rakuten’s Mikitani told the press, “We hope to raise that figure to 50 percent very soon.”
The investment echoes rival KDDI’s move last spring to secure a 30 percent stake in DeNA, which operates the online Bidders auction site. Together they created the au Auction mobile site over KDDI’s EZ Web service. DeNA also runs the all-carrier-access Mobaku (Mobile Auction) site which is independent of their Bidders PC portal. Simple and easy to use, Mobaku lets sellers take a photo of the item with their cell phone then upload directly to the site. The majority of users according to DeNA are women in their late teens to twenties. The site is run by the company’s subsidiary Mobaoku Co., Ltd.
DoCoMo’s decision to invest directly in a content provider indicates times are changing for the carrier. Strong content alliances with a certain measure of creative control reserved for DoCoMo are seen as an important link in enhanced services and revenue sharing opportunities as the market approaches both saturation and number portability.
Rakuten reportedly plans on expanding its online mall business to the US early next year. The company recently announced its intentions to purchase US-based Internet ad agency LinkShare for around $425 million.
— Gail Nakada