According to (Applegate, et al., 2009) business model defines the linkages among key strategy, capabilities, and value drivers of business performance. From the business model perspectives, it also defines the uniqueness of the business’s product and services from other companies. It also defines the ways that the business can make profit. Business model is used to represent informal and formal descriptions and core aspects of the company including: what the company does, their target market, their product and services they offering, operational processes and the policies that abide the company and the workers within the company. It also is the analytical representation or illustration of an organization’s business processes (Business, 2014). From the two definitions, deductions could be that, business model involve strategies that the business itself make and take to implement ways to generate profit and also making sure that their consumers get best services and goods. Business model also defines uniqueness of the business from competitors.
Rakuten uses aggregator business model, of which is a model that describes a business that collects information about goods and services from different types of shops and put them together on their websites (Aggregator, 2014). Rakuten was started as online shopping mall where consumers can order online or view products that are offered by different shops in the online mall. Consumers were charged shipping fee and shop owners will be charged a fixed fee, to be signed under Rakuten’s online shopping mall.
Rakuten’s business strategy is providing online shopping mall, targeting consumers who always busy and cannot afford to go physically to the stores. One of the advantages of online shopping mall was the ability to compare products which are offered by different stores. It also didn’t charge consumers for using this service and also the registering was optional, but it was for convenience so is to not to re-enter your details when ordering. It is time saving because customer does everything without leaving the house. Rakuten provided the merchants with free education to help them be internet wise and charged them as little as ¥15,000, for each e-learning course. It also providing merchants to have their products is made available online with a cheap monthly fee, compared to other online shopping malls. To survive the competition Rakuten charged a fixed amount, 50 000 yens, a month. They will make money because merchants were bound to have paid this fee, whether they made any sale or not. This made the company to keep generating revenue, because none of the companies left Rakuten, which means that they received this monthly fee in time. Rakuten had another way of generating revenue, which is a support to their main revenue generator, which the e-magazine which delivered latest news about Rakuten and the merchants to their consumers. As they (Rakuten) introduced a new type of contract, Rakuten lite, they also introduced a new way to increase revenue. Instead of making lot revenue in subscription fee, they generated a lot in transaction fee. Merchants were charged a fee of 2% to 3% in monthly shop sales. Consumers find that online shopping was extremely low and time saving. Instead of physically going to the stores, spending hours in transport and also having to compare prices by physically leaving one shop to another, was time wasting. Rakuten Merchant Server (RMS), made consumer’s life easy. Because RMS was the software that was used by merchants to create their storefronts on the internet, which made transactions, web site traffic and communication between merchant and their customers possible. As time went by, Rakuten implemented software that allowed side by side viewing of products, which enabled the comparison easy and time saving.
Rakuten business model may be seen as relying on the information technology (I.T.) but going through case study, will...
Cited: March 21, 2014.] https://www-304.ibm.com/connections/files/app#/file/9e255588-2c39-49fd-ac2d-0a6e2b13aa24.
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