Why Rakuten Getting into Bed with Viber is a Good Thing for the Online Superstore’s Stockholders

Hiroshi Mikitani is the brains behind Japanese e-commerce giant ‘Rakuten Inc’. The company boasts an impressive portfolio that includes the ‘Rakuten’ online marketplace, a travel agency, credit cards and even a baseball team. Since the billionaire CEO dropped a whopping $900 million on loss-making internet call and messaging app ‘Viber’, questions over Mr. Mikitani’s decision to pay such an enormous amount of money for customers it is not quite clear whether or not he will make money from has been rampant among Rakuten investors. After announcing its plans to buy ‘Viber’, ‘Rakuten Inc’ plummeted in Tokyo trading. With such a negative reaction from the company and public, no-one would have blamed Mikitani if he backed away and spent his hard-earned cash elsewhere. However, I don’t believe it was that kind of spirit that made Hiroshi Mikitani the owner of the world’s third-largest market in e-business, behind Amazon and eBay. His success was birthed from a desire to provide a shopping experience based on communication and connection. To Mikitani,‘Viber’ will add an extra 300 million customers to his already 200 million-strong worldwide consumer base, to which he can shop his existing products with ease. With one purchase he now has access to half a billion people worldwide. Worth every penny if you ask me. No-one can predict the future, but if I were a sketchy Rakuten investor, I would relax and bet that the ‘Viber’ deal will work out just fine for me, with Mikitani at the helm.

References:

 Frischkorn, B. (2014). Investors Deliver Message on Rakuten’s Plan to Buy Viber. Available: http://blogs.wsj.com/moneybeat/2014/02/17/investors-deliver-message-on-rakutens-plan-to-buy-viber/. Last accessed 03/03/2014.

Tabuchi, H. (2014). As War for Web Messaging Users Grows, Rakuten Buys Viber for $900 Million. Available: http://dealbook.nytimes.com/2014/02/14/rakutenjapanese-e-commerce-giant-to-buy-viber-for-900-million/?_php=true&_type=blogs&action=click&module=Search®ion=searchResults%230&version=&url=http%3A%2F%. Last accessed 03/03/2014.

Mikitani, H. (2013). Rakuten’s CEO on Humanizing E-Commerce.Available: http://hbr.org/2013/11/rakutens-ceo-on-humanizing-e-commerce/ar/1. Last accessed 03/03/2014.

Yasu, M & Mukai, A. (2014). Rakuten Drops on $900 Million Deal to Buy Viber Message App. Available: http://www.bloomberg.com/news/2014-02-17/rakuten-falls-on-900-million-deal-to-acquire-viber-message-app.html. Last accessed 03/03/2014.