Gunjo · Business Intelligence for the AI Era
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Hiroshi Mikitani and Rakuten: Japan's Internet Expansion Pioneer from Virtual Shopping Street to AI Lifestyle Ecosystem

Founded: Hiroshi Mikitani · Rakuten Group

JOURNEY

Key Fields

FIELD STAMPS
IndustryE-commerce / Retail
RegionJapan
ScaleGiant
ChannelOnline

Origin

In 1997, 31-year-old Hiroshi Mikitani resigned from the Industrial Bank of Japan and rented an apartment in Tokyo's Meguro Ward for 50,000 yen per month to found Rakuten Market. The initial vision was to create a 'virtual shopping street' allowing small and medium-sized merchants to set up shop at extremely low costs. On the eve of launch, he and his staff spent sleepless nights in a room with just computers and internet cables, surviving the cold start by door-to-door merchant visits and handwritten store-opening guides. Deeply moved by the 1995 Great Hanshin Earthquake and feeling that life is short, compounded by his father's early death from cancer, Mikitani decided to stop working for a bank and venture into internet entrepreneurship, aiming to transform the inefficiency of Japan's retail industry using e-commerce.

Milestones

1997
Foundation Inflection Point
In May 1997, Hiroshi Mikitani resigned from the Industrial Bank of Japan and rented an apartment in Meguro Ward, Tokyo, for 50,000 yen per month as an office to found Rakuten Market. Starting with a team of only six, they used grassroots methods such as free store setup and proactive merchant visits to attract their first wave of sellers. Daily website traffic was extremely low with virtually no revenue in the first few months. Mikitani sustained operations using personal savings and loans from friends and family, coming close to a shutdown at one point.
2000
Early Growth Growth
In 1999, the number of merchants on Rakuten Market surpassed 1,000. In June 2000, Rakuten went public on the Mothers section of the Tokyo Stock Exchange, raising approximately 10 billion yen. Following the IPO, Mikitani initiated aggressive expansion, using the 'Rakuten Super Points' loyalty program to lock in user loyalty and strengthening infrastructure through acquisitions such as an Israeli e-commerce tech company. Within two years, the merchant count grew to over 5,000, and GMV surged from around 5 billion yen in 1999 to over 50 billion yen in 2001.
2005
Ecosystem Expansion Turning Point
In 2005, Rakuten acquired Japanese securities brokerage DLJ Direct SFG Securities, officially entering the financial sector and renaming it Rakuten Securities. Rakuten Bank was launched the same year, and the embryonic form of Mikitani's 'E-commerce + Finance + Points' closed loop began to emerge. Points earned from shopping could be directly used for investments and financial product deductions, significantly boosting user stickiness and cross-business traffic flow. In fiscal 2005, Rakuten Group's revenue surpassed 100 billion yen, with e-commerce GMV exceeding 1 trillion yen.
2014
International Expansion Failure
To realize its 'globalization' vision, Rakuten acquired U.S. e-commerce site Buy.com, French e-commerce site PriceMinister, UK e-commerce site Play.com, and Spanish e-commerce site Wuaki.tv between 2010 onward, investing over $1 billion cumulatively. However, overseas operations continued to suffer losses; in fiscal 2014, the overseas e-commerce division lost approximately 20 billion yen. Buy.com (later renamed Rakuten.com) struggled with sluggish user growth and failed to compete head-on with Amazon. Ultimately, in 2019, Rakuten sold its U.S. e-commerce business to Walmart's partner, bringing its global e-commerce expansion to a strategic retreat.
2017
Mobile Communications Inflection Point
In 2017, Mikitani announced entry into the Japanese mobile communications market as the fourth major carrier, with Rakuten Mobile launching commercial service in 2020. Initially, it shocked the industry with a fully virtualized cloud-native network and low-priced plans. The project accumulated over 1.5 trillion yen (approx. $14 billion) in investments, and operating deficits from 2020 to 2023 totaled over 400 billion yen, becoming Rakuten Group's largest bleeding point. Starting in the second half of 2023, through base station sharing and tariff adjustments, deficits gradually narrowed, and the mobile business achieved a single-quarter profit in 2025.
2026
AI Transformation Growth
At Rakuten's New Year conference in early 2026, Mikitani set a GMV target of 10 trillion yen, clearly positioning AI and mobile as dual engines. Building on the September 2025 'Rakuten AI Optimism' conference—which unveiled Rakuten's proprietary AI assistant—the company plans to embed AI across e-commerce search, customer service, financial risk management, and travel recommendations. Concurrently, Rakuten Mobile partnered with Starlink to test direct-to-cell satellite services, aiming to cover all of Japan and remote areas with space internet, creating an AI ecosystem spanning all lifestyle scenarios.

Turning Points

  • The 2005 acquisition of a securities company marked entry into finance, upgrading points from an e-commerce tool to a cross-business token and establishing the foundational logic of the ecosystem's closed loop.
  • The 2017 announcement to enter mobile communications—willingly trading years of hundreds of billions of yen in losses for a self-built network and user gateway—was both a high-stakes gamble and a strategic watershed.
  • The 2019 sale of the U.S. e-commerce business acknowledged failure in head-on competition with Amazon, pivoting completely to a defensive counteroffensive centered on the domestic Japanese ecosystem.
  • The 2025 single-quarter turnaround of the mobile business signaled a financial inflection point for the 8-year communications gamble, providing a cash cow pivot for AI investments.
  • The 2026 target of 10 trillion yen in GMV positions AI as the new orchestration hub connecting e-commerce, finance, and mobile.

Failures & Pitfalls

  • The overseas e-commerce acquisition wave from 2010 to 2019 ended in failure, with assets like Buy.com disposed of at a loss and cumulative losses exceeding $1 billion.
  • Rakuten Mobile's early overemphasis on price wars resulted in user growth falling short of expectations, with cumulative operating deficits in the communications division exceeding 400 billion yen from 2020 to 2023.
  • In 2014, Rakuten Shopping's mobile experience lagged behind, losing market share to Amazon Japan and Yahoo! Shopping, temporarily causing stagnation in GMV growth.
  • In 2021, insufficient base station coverage for Rakuten Mobile led to widespread communication outages and user complaints, damaging its service quality reputation.
  • In 2023, Rakuten Bank's overseas expansion stalled, and negotiations for point-interoperability with domestic Japanese banks fell through, resulting in financial ecosystem integration falling short of expectations.

关键成功要素

  • The points system acts as the ecosystem's adhesive; Rakuten Super Points are universally usable across e-commerce, finance, and travel, making user loyalty difficult for a single competitor to poach.
  • Acquisition rather than organic buildout was a shortcut to entering finance; the 2005 securities acquisition and 2008 bank establishment allowed Rakuten to complete its financial license layout within three years.
  • Despite massive losses, the mobile business serves a strategic gateway role; a self-built network allows Rakuten to control the last-mile user entry point and provides the pipeline for deploying AI services.
  • Anchored by members and points, the six major businesses of e-commerce, finance, mobile, travel, and offline retail cross-promote traffic, ensuring volatility in any single business does not drag down the whole.
  • The AI Optimism strategy positions AI as a lever to reduce operating costs and enhance two-sided network effects rather than just a nice-to-have feature.

Lessons

  • Cross-industry ecosystem expansion must be anchored by core user assets (points) as a hub; otherwise, businesses remain a mere assortment rather than a closed loop.
  • Without localized supply chains and brand mindset, overseas expansion cannot shake domestic giants like Amazon no matter how much capital is invested.
  • Infrastructure-level investments (mobile networks) require an exceptionally long tolerance period; financial inflection points may appear in the eighth or ninth year, and leadership must have the conviction to weather cycles.
  • When platform companies extend from e-commerce to finance, regulatory compliance costs and trust-building far exceed customer acquisition subsidies; haste makes waste.
  • AI transformation should not chase buzzwords; instead, companies should follow Rakuten's path of establishing a data closed loop (point transactions, financial behavior, mobile network) before discussing algorithmic empowerment.

Core Data

  • 年流通总额：FY2024 domestic e-commerce GMV was approx. 6.5 trillion yen, with a 2026 target of 10 trillion yen
  • 累计融资额：IPO in 2000 raised approx. 10 billion yen; cumulative mobile business investment exceeds 1.5 trillion yen
  • 乐天Mobile用户数：Exceeded 8 million subscriptions by the end of 2025
  • 移动业务营业赤字：Cumulative operating deficit exceeded 400 billion yen from 2020 to 2023, turning profitable in Q4 2025
  • 乐天会员数：Approx. 140 million global Rakuten members, with over 110 million domestic points members in Japan
  • 集团营收：FY2024 consolidated revenue was approx. 2.2 trillion yen
  • 员工规模：Global workforce of approx. 30,000 employees

Competitors / Peers

Rakuten's biggest domestic rivals in Japan are Amazon Japan and Yahoo! Shopping (LINE Yahoo), which hold clear advantages in e-commerce delivery speed and low-price perception. On the financial side, its direct competitor is SBI Securities, which is similarly adept at ecosystem integration. In mobile communications, it battles head-to-head with the three major carriers: NTT Docomo, KDDI, and SoftBank. Unlike Amazon's all-category direct retail and logistics approach, Rakuten adheres to a platform + points + ecosystem closed loop model, competing through merchant flexibility and membership perks. Following its 2026 AI transformation, Rakuten also faces indirect competition from Google and OpenAI regarding AI assistant gateways; successfully embedding AI capabilities into its own ecosystem rather than devolving into a generic tool remains key to defending its moat.

Sources

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⚠️ This entry draws on self-reported accounts and public reporting, not independently verified, and is not investment, startup, or legal advice; revenue figures are case-specific and not representative of typical results.