Amazon Inc. and Rakuten Inc.

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Business strategy of Amazon Inc. One of the world's biggest innovators in internet retail is Amazon. It has several moving elements and runs on a single business model. First, the business produces goods like tablets and sells them straight to customers (Noren). Customers can only browse the inventory the company has on its storefront and receive what they buy from the inventory that is kept in various warehouses thanks to digital product infrastructure and digital mobile infrastructure (Kalakota & Robinson 28). Second, Amazon provides other shops with a chance to sell on its online marketplace. The partner retailers are primarily those that sell uncommon products or products that have a purchase price that is significantly high. The model strategies include tightening the grip of e-commerce and marketplace.

With various e-commerce applications, Amazon provides the simplest online shopping and delivery and integrates e-commerce into the daily life of its customers. Amazon Echo, a smart speaker has a personal assistant software, Alexa,that understands several spoken comments and can easily integrate with apps such as uber, Just Eat and Spotify to enable the user to enjoy a variety of services via its platform. By inventing new strategies of running an e-commerce business. With AmazonGo app, customers can stroll into shops, pick what they want and buy it without queuing. Music streaming is also possible through Amazon apps. Amazon Dash Wand allows customers to create personal shopping lists. Little gizmo uses a barcode scanner and voice recognition. People can scan the label or speak the word into the microphone to add an item to the shopping list. Such strategy seeks to ensue every customer that uses Amazon to do online business is guaranteed of happiness to use the platform.

Amazon resorted to targeting the home market in its recent marketing strategies. The company also has a subscription-based business model whereby customers are allowed to own prime accounts. With the accounts, they can secure benefits such as a free same day shipping or two-day shipping on the eligible item and streaming media such as movies or digital music. The company has also invested significantly in customer services. It is currently recruiting service providers around the country to do background checks licensing and insurance. The professionals employed by Amazon seek to provide satisfactory services to ensure everyone gets value for his money. Amazon’s model typically seeks to make Amazon own the entire journey of customer purchases and facilitate a seamless transition from the daily life to the virtual world of online shopping.

Rakuten Inc. Business Model. Rakuten offers a broad range of online and offline services such as travel, digital contests, and communication. Other services include money transfer such as credit cards, securities, banking, securities professional sports and the electronic money. Similar to Amazon’s loyalty program, Rakuten has linked its diverse services through loyalty and common membership program to create a unique ecosystem. When the members use its services, they earn points referred to a Rakuten super point. The services can be used to enjoy other services. Ideally, Rakuten’s member loyalty strategy enhances user engagement across a variety of platforms and services.

Rakuten has invented a single member ID that enables customers across Japan to access different services across the company’s ecosystem with an intention of expanding its ecosystem to acquire at least one billion users globally. Similar to Amazon, Rakuten has also invested in technologies such as artificial intelligence solutions that facilitate harnessing of big data that is generated across multiple facets to improve to enable the company make the next moves. Personalizing and utilizing online data intelligently is perceived to be the gateway to tailoring services that adapt to changing needs and lifestyles of its diverse members. One of its innovations, Rakuten Ichipa, brings diverse and unique merchants together to create a vibrant and lively online shopping mall.

What is more, Rakuten Inc. has embraced a dynamic corporate culture to facilitate an exchange of diverse ideas. Its employees come from approximately 70 countries. There are systems in place that ensures they reach their potential such as using the English language as the primary language for communication. However, unlike Amazon which invests significantly in promotional and engagement programs, Rakuten’s ecosystem is such that acquiring new customers is not costly and the lifetime value of each member is optimal. The strategy drives the growth of the gross transaction value.

Management

Rakuten Inc. Management. Rakuten invests largely on different partners, especially companies that are at their earliest stages of growth and startups to build services that can have a lasting impact on the digital age that is increasingly competitive. The company has a dedicated team based on Tokyo and Singapore and has networks with traditional venture funds with the unique access to the global businesses of Rakuten to enable the company to unlock their expertise and distribution. The primary goal of Rakuten is empowering the society through entrepreneurship and innovation.

Rakuten’s management seeks to facilitate excellence among its employees while providing high-quality products and services. Its management makes a range of decisions based on its shared belief that corporate governance is indispensable and managers and workers should be driven by desire to make Rakuten a global innovation company and maximize its corporate value. To do so, Rakuten appoints a variety of experts to act as directors and auditors of the company. At the top is the board of directors that leads the entire company. The current board of directors is comprised of Hiroshi Mikitani, the chairman and the CEO and Masayuki Hosaka, the vice chairman(Rakuten). Below them, there are various divisions and divisional managers including finance and accounting, corporate culture compliance, ad business, HR and administration and Operation, and marketing divisions. The affiliate companies include e-commerce, life and leisure, media and communications, investment, card payments, security, bank, insurance, investment, new service, sports, insurance and interactive companies.

People are hired from outside to act as auditors and advisors of the board of directors. The persons are required to act independently under the supervision of the board of directors. The primary goal of such approach to leadership is facilitating objectivity in decision-making. All individuals that are hired to manage the company are required to act in accordance with the company’s code of ethics. Under the Rakuten group regulations, every employee and executive must observe the set rules to facilitate attainment of the company’s goals and ensure sustenance of the company's philosophy. The people that are employed as managers are responsible for management of risks, internal controls and compliance and make efforts to make mitigate risks and embark on regular training to enhance competitiveness. Risk management rules enable the company to address risk factors that can hinder attainment of the goals of the enterprise. Affiliate companies to Rakuten group are also required to comply with the regulatory requirements for the company. Training is done when it is necessary to ensure that such compliance is adhered to by every stakeholder.

Amazon Inc. Management. The company seeks to create leadership that is not driven by fear, and exploitation of Workers. The Company emphasizes integrity, kindness, and inspiration among employees and workers. The management is guided by the central mission of Amazon; delivering goods to Americans at low prices and blistering speeds. The management of Amazon is leaner than that of Rakuten. On the basis of structure, Amazon is managed hierarchically. Rather than Rakuten that hires people from outside, Amazon is managed by its CEO and founder. At the highest level, the company has two CEOs, who are followed by three senior vice presidents and one global controller that is responsible for presidents. The current CEO and president, Jeff Bezos focuses on enhancing customer satisfaction by minimizing delays, defects and running out of stock. The CEO is the chief decision-maker and is responsible for different aspects of the business as opposed to Rakuten where the board of directors make decisions under close supervision of CEOs and auditors. The worldwide controller reports directly to him. The current phenomenal success that the company has achieved. Vertical lines of command affect the retail system. The management has higher expectations for employees than Rakuten. For instance, employees can work for extra hours to meet customer demands customer service employees are required to answer approximately twelve emails per minute the high expectations have enhanced the management to create an incredibly efficient machine that is popular in making same day deliveries across several cities in the USA.

Amazon Inc. has functional organization structure too. Functional units facilitate effective focusing on business models as the basis for determining interactions among different organizational components. Each major function has a dedicated team with senior manager to facilitate successful operations of e-commerce functions then the entire organization. The company has also had geographical divisions where groups are based in different geographical divisions and with different business goals such as adjusting the running of the business to suit different economic conditions.

Finances

Rakuten Inc. Finance. In 2014, the revenue of Rakuten. Inc. was 598,565 million yen. The revenue rose to 713,555 million yen in 2015. In 2016, the company depicted a slight increase in its revenue to 781,986 million yen. The operating income in 2014 was 106, 397 million in 2014. The income dropped to 94, 869 million yen in 2016 and further to 78,512 million yen in 2016. Rakuten’s net income in 201 was 71,103 million yen and dropped to 44, 280 million yen in 2015. The year 2016 saw a further drop in the net income of the company to 38435 million yen (Rakuten).

The total equity attributable to owners of the company in 2014 was 421,562 million, It rose to 662,044 million in 2015 and rose further to 68,2391in 2016. The company's total assets were 3,680,695 Million yen in 2014, 4,269,953 in 2015 and 4,604,672 in 2016. On the other hand, the basic earnings per share were 53.15yen in 2014, and dropped to 32.33yen in 2015 and finally 26.96 yen in 2016.Lastly, Rakuten’s return on equity was 19.6 yen in 2014,8.2 yen in 2015 and 5.7 yen in 2016.Apparently, while the operating and net income, earning per share and return on equity of Rakuten is falling the total equity attributable to the owners is rising.

Amazon financials. In 2014, the net income of Amazon Inc. was 88.99 billion dollars. It rose to107.01 billion dollars, and finally 135.99 billion dollars in 2016.The gross income was 26, 24 billion dollars in 2013 and rose to 35.36 billion dollars in 2015 and reached 47.72 billion dollars in 2015. In 2014, Amazon made a loss of 241 million dollars but the subsequent year saw the company make a profit 596 million dollars in 2015 and 2.37 billion dollars in 2016 (MarketWatch). The basic earnings per share (EPS) was -0.52 in 2014 but in 2015, the earnings were 1.28 in 2015 and rose to 4.90 in 2016. Apparently, while the net profits and earnings per share are dropping in Rakuten, Amazon is experiencing a tremendous rise in profits and earnings per share.

Marketing strategy

Rakuten Inc. To the present, Rakuten Inc. has employed experiences that develop strategies that can deliver incremental revenue, increase customer footprint and drive sales continuously among the expanding audience. To do so, Rakuten Inc. has emphasized on television, social media and traditional publishers to take advantage of customer moments and engage them. The Company establishes the places where most of their consumers are likely to spend much of their time and invests its advertising on them. Comprehensive displays ensure the message reaches new audiences, drives high-value traffic and increases conversion from the visitors to the site. The primary goal is to produce personalized ads that reflect on the affinities and preferences of consumers.

Rakuten Inc. marketing is data-driven(Rakuten). The company collects a variety of behavioral data as well as data from its trusted partners to enable it to reach new audiences with compelling advertising experiences. The company engages with customers continues to influence them to purchase goods on its platform. Afterwards, the company devises data proprietary algorithms, premium placements and cross-device targeting available all along the customer journey to facilitate optimization.

The company emphasizes on marketer transparency and commitment the marketers. Strict measures are implemented to ensure there is a high level of brand safety during campaigns. The company emphasize that customers have a right to know the details of placement and performance. With such strategies, the marketing professional understands too touch-points and strategies that drive conversion and optimize performance across the entire marketing program of Rakuten Inc.

Amazon Marketing strategies. Amazon's success has been facilitated by an emphasis on marketing efficiency and customer-centric worldview. In each step of the customer journey, there is the emphasis on minimal time wastage and delivery of goods to customers without delay strategy of making shopping easy, seamless and instantly gratifying by using different strategies. For this reason, the company does not sell slow-moving commodities (Noren). One of the tactics employed is email marketing. More specifically, Amazon has an extremely refined email strategy which entails utilizing every opportunity to market within a transactional email. The company has invented nine types of marketing and transactional emails that take users through onboarding, transactional purchase, upsells and review solicitation. Similar to Rakuten, Amazon utilizes analytics across a wide variety of activities (Davenport 2). Such emails make the account holders of Amazon accustomed to the site and its services. With such approach, Amazon makes its customers continue speaking and purchasing. The company has also pioneered highly personalized product recommendation emails that are based on purchase history, the value of the previous order, location, age and gender as well as onsite browsing.

Works Cited

Davenport, Thomas H. "Competing on analytics." harvard business review 84.1 (2006): 98.

Noren, Eric. Analysis of Amazon Business Models Digital Business Models: 2013 July 8. Accessed: 2017 December 5. Web. http://www.digitalbusinessmodelguru.com/2013/07/analysis-of-amazon-business-model.html

Kalakota, Ravi, and Marcia Robinson. e-Business. Roadmap for Success: Addison Wesley, (1999). 28 Print

MarketWatch. Annual Financials for Amazon.com Inc

Rokuten. Financial Data. Consolidated. Accessed: December 5, 2017. Web https://global.rakuten.com/corp/investors/financial/data.html

Rakuten. Our Strengths Ecosystem of Services with membership at the Core. Accessed: December 5. 2017. https://global.rakuten.com/corp/about/strength.html

March 02, 2023
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Business Science

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Corporations Technology

Subject area:

Amazon Company Innovation

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