Watch Out Amazon, Japan’s Rakuten Buys E-Commerce Fulfillment Company Webgistix To Expand Further In The US

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Japanese e-commerce giant Rakuten is acquiring Webgistix, a U.S.-based logistics and services company specializing in fulfillment technology for e-commerce retailers. The acquisition is Rakuten’s second logistics investment outside of Japan. Financial terms of the deal are not being disclosed at this time.

Founded in 2001, Webgistix allows e-commerce companies to manage their supply chains with software for order fulfillment, freight management and shipment optimization. The company also owns a strategic network of company-operated fulfillment centers that enable merchants to reach 98 percent of e-commerce customers in the U.S. within 1-2 business days via ground delivery. Essentially, Webgistix is Rakuten’s answer to Amazon Prime in the U.S. Webgistix, which is profitable, took one round of an undisclosed amount of outside funding.

Rakuten operates a number of web and mobile properties, chief of which is Rakuten Ichiba, the largest online retailer in Japan. It is also one of the largest e-commerce companies in the world, as measured by sales, and sells in 20 countries, including the U.S. via its marketplace

The company has made a number of interesting M&A and investment moves over the past few years, including buying Play.com (the UK property), Buy.com in 2010 (now Rakuten.com), Kobo and, earlier this year, Grommet. Last year, Rakuten led Pinterest’s $100 million round.

Boosting logistics infrastructure and fulfillment has been a major priority for the marketplace. In August 2012, Rakuten Logistics began offering Rakuten Ichiba Merchants “Rakuten Super Logistics,” which includes fulfillment service solutions, incoming/outgoing inventory management, storage, packaging, delivery, customer service and more. In November 2012 Rakuten bought French warehousing automation and logistics company Alpha Direct Services, which helped build out logistics across Europe and Japan.

The acquisition of Webgistix will provide warehouse and fulfillment services to US-based Rakuten.com Shopping merchants, says Hiroshi Mikitani, chairman and CEO of Rakuten. “We want to empower merchants to be able to ship anywhere in the world,” he explains. Empowering the merchant, he adds, is part of Rakuten’s focus. That’s why merchants are able to create customizable storefronts on the marketplace. The next piece of the puzzle, says Mikitani, was adding fulfillment.

Webgistix’s CEO and founder Joseph DiSorbo explains that the company provides a two-day delivery model that competes directly with Amazon Prime. “U.S. retailers on Rakuten’s platform will reap the benefits similar to Amazon Prime,” he says. While Amazon is a formidable competitor, the “game has not been won on the global marketplace, and Rakuten is empowering merchants in a different way,” DiSorbo says.

Whether Mikitani and Rakuten can take on Amazon in a meaningful way is yet to be determined. Clearly, the company has no hesitations in acquiring its way into market share and technologies. As of last year, Rakuten was seeing about $5 billion per year in revenues and is growing fast in mobile.