Rakuten, the Japanese e-commerce giant leading a $100 million investment in Pinterest, valuing the company at $1.5 billion, will be making two major contributions to the image-based social network as it gears up for its next stage of growth: the funds to take the image-based social network into new international markets, and a business model.
First up, Rakuten’s home market of Japan, where “Pinterest is growing very fast,” notes Rakuten’s CEO, Hiroshi Mikitani, in an interview with TechCrunch. He wants Rakuten to grow right there with it by using Rakuten’s services to become the basis for buying things off the site.
There are already some building blocks in place for this. First of all, Rakuten already pins on Pinterest through at least a couple of official accounts: Rakuten Commerce and Rakuten Travel.
On the other hand, there is Rakuten’s existing e-commerce presence in the country. Mikitani notes that 75 percent of Japan’s internet population — equivalent to about 80 million people — already have a Rakuten ID — this is similar to an Apple ID, or an Amazon ID, in that there are payment details associated with it.
It is this ID that will potentially become the lynchpin of a commercial service on Pinterest: “We want to enable our users to pin their own images with our ID,” he says. “Users can click and buy with it, and in the future we can create more new services.” He notes that the “rich, graphic social network” can be used for “so many interesting ideas using the Rakuten ID.” One other area, TechCrunch understands, is for users logged in with Rakuten IDs to pin images and then use those pins to buy items away from Pinterest, on Rakuten’s own Rakuten Ichiba site.
And because Pinterest is so buzzy right now, it can be used as a way of reigniting some of Rakuten’s legacy business. The company has a lot of “sleeping customers,” as Mikitani calls them. These are people who have IDs but are not regular users of Rakuten’s services. “This is a good way of getting them to start using those Rakuten IDs again.”
The other area where he would like to see more development is in the area of mobile commerce. Mikitani tells me that already, 25 percent of all Rakuten sales in Japan originate on a mobile device, and that proportion is growing. “There should be a huge synergy with Pinterest there,” he says. “We are going to promote their app using our presence here in Japan.”
International growth. The $100 million investment, which was led by Rakuten with participation from Andreessen Horowitz, Bessemer Venture Partners, and FirstMark Capital, as well as a number of angel investors, will also give Pinterest the financial muscle to extend its service into new international markets. Pinterest, perhaps above all social networks, has a lot of potential as an international product — one that can work across borders– because while sites like Facebook and Twitter are text-led, Pinterest is focused around images, and therefore less limited by language barriers.
Of course, a lot of Pinterest’s growth today and in the future will be non-commercial, but the potential for commerce is very much there, too. (We wrote just the other day about another example, Curalate, which has created a social marketing service for brands to visually track how and where their images are getting used across the site.) Within that trend, Rakuten is looking at how to leverage its Pinterest investment in its international business outside of Japan, as well.
Mikitani points out that while Facebook is an “extremely powerful social network”, when it comes to shopping and e-commerce, Pinterest’s image-led service “has stronger potential.”
Facebook and Twitter, he says, are about connecting you with your friends and contacts, while Pinterest is about connecting people with the same interests via graphic images. Apart from the fact that products are put right there for you to see, you can also imagine how that social set-up can be developed into a commercial model (group buying is one that comes to mind here).
Rakuten has holdings that extend well beyond Japan, and include properties like Buy.com in the U.S., Kobo e-reader and e-books, Priceminister in France — in all, operations based in 10 countries and extending to 17 countries in total. Mikitani says that he is hopeful that the kinds of groundwork it wants to lay in Japan will also be extended to the rest of its footprint.
For example, Mikitani points out that Kobo already has a “great partnership” with Facebook to encourage people to post excerpts and read more using Kobo, which it would like to extend to Pinterest, too: “Facebook is why Kobo is growing so fast right now,” he says. “We will see more of Kobo in Pinterest, too, I think.” And buy.com — which is slowly, gradually, getting rebranded as Rakuten — is another site you could imagine could get linked up more closely with Pinterest.
But this is not to rule out other partnerships with other e-commerce players. “We are totally open to other e-commerce partnerships,” he says. “Pinterest should work with them.”
Pinterest is a social networking site with a visually-pleasing “virtual pinboard” interface. Users collect photos and link to products they love, creating their own pinboards and following the pinboards of other people whom they find interesting. The site has experienced rapid growth in recent months.
Rakuten, Inc. (JASDAQ: 4755), is one of the world’s leading Internet service companies, providing a variety of consumer and business-focused services including e-commerce, travel, banking, securities, credit card, e-money, e-book, portal & media, online marketing and professional sports. Rakuten is expanding globally and currently has operations throughout Asia, Western Europe and North America. Founded in 1997, Rakuten is headquartered in Tokyo, with over 10,000 employees worldwide.