President Chain in joint venture with Japanese company for online shopping site

March 28, 2008

The Taiwanese company President Chain Store Corp has entered a joint venture with Rakuten of Japan to create a new online shopping website, according to a report by the Economic Daily News.

The joint venture, Rakuten Taiwan, will be modeled largely on the Rakuten Shopping Mall website, which is Japan's top shopping website. The site is a 'virtual mall' of thousands of online stores, where businesses pay a fee to operate their own store.

Rakuten will hold a 51% stake in the venture, while President Chain, which runs the nation's largest convenience store chain of 7-Eleven stores, will hold a 49% stake.

50 businesses have already signed on to create stores on the Rakuten Taiwan website, according to Hiroshi Mikitani, President and founder of Rakuten, who was in Taiwan for a press conference announcing the joint venture. Mikitani noted that the Taiwan venture was enjoying a stronger start than anticipated, given that Rakuten's Japan site only had 13 stores when started in 1997.

Most of the stores that have already signed on are selling foods, cosmetics and apparel, said Rakuten Taiwan general manager Jiang Kao-yu. Jiang believes there is much potential for Taiwanese fashion, and says he expects that fashion stores will become the main driver of Rakuten Taiwan's business.

Rakuten also offers a service to businesses called "Rakuten University", where stores can participate in a course on running an online business for a fee, according to Hsu Chung-ren, CEO of Rakuten Taiwan, who also spoke at the press conference.

The EDN report says that Rakuten Taiwan will charge businesses comparatively higher fees than its current counterparts, PChome and Yahoo. Rakuten says that it will charges between NTD 5,000 and 10,000 per month. PChome charges a one-time free of NTD 25,000, and a 2% per-transaction fee.

But a representative at PChome, which is one of Taiwan's largest online stores, says that it is eyeing a different market in Taiwan. PChome understands the business model of Taiwan's small and medium businesses, said the representative. Since it went online in Oct. 2005, the number of stores on the PChome website has grown from 100 to 4,165, according to the company.

President Chain says that the Rakuten Taiwan site will launch in Q2 this year. The company says that it expects the website to break even in its second year, and to bring in 3,000 new stores within three years.

(Economic Daily News, Taipei Times)

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