As part of their strategic relationship, Walmart and Rakuten have opened their first ecommerce store in Japan. We look at the model being used and implications for future expansion.
Products fulfilled from US inventory
Earlier this year, Walmart and Tokyo-based Rakuten, announced a strategic alliance designed to optimise each company’s strengths and assets to expand their reach to new consumer groups. The Walmart Rakuten Ichiba Store is featured within Rakuten Ichiba, the largest ecommerce store in Japan. The new store provides Japanese consumers with access to products sourced from Walmart’s US ranges. Categories featured include clothing, outdoor goods and toys, with around 1,200 items initially offered. Orders are fulfilled in the US and flown to consumers in Japan. The product price incorporates shipping, duties and taxes.
New online grocery service
A key element of the strategic partnership was the development of a new online grocery delivery service, Rakuten Seiyu Netsuper. This launched in October, offering a more convenient shopping experience that meets the changing needs of customers in Japan. In addition to offering deliveries from Walmart’s stores, the service has established a dedicated fulfillment centre to increase capacity. Both these new services help Walmart to expand its grocery footprint in Japan, a country where its stores numbers have been relatively static for several years.
Adding new eBooks capability to the ecosystem
In addition, Walmart and Rakuten Kobo Inc. have formed an exclusive retail alliance that enables Walmart to sell eBooks and audiobooks and Rakuten Kobo eReaders, in Walmart stores and online at Walmart.com. As one of the country’s largest booksellers, a digital platform enhances its appeal, while also pitching it directly against Amazon and its Kindle e-reader.
A model for future international ecommerce expansion
Although Walmart has operated in Japan since 2002, the Walmart Rakuten Ichiba Store is a model which could be replicated in other countries where it does not have a physical presence. In Japan, Walmart benefits from an established customer base, but trades under the Seiyu brand. Physical stores are not essential to this model. Key elements are a strategic partnership with an ecommerce marketplace leader and a logistics infrastructure to support home delivery.
As orders are being fulfilled from the US, there is limited infrastructure development required in the new country of operation. With Walmart having high brand recognition globally and a reputation for price leadership, there is likely to be strong demand for its products. Walmart has established similar stores in China through its partnership with JD.com.