Rakuten buys Buy.com – Can it compete with Amazon?

Why would an online shopping company trade a domain name as memorable as Buy.com for something as difficult to pronounce as Rakuten? In February American online shoppers will get the answer, as Japan’s largest online retailer completes its re-branding of the perennial e-commerce underachiever, which it purchased in 2010.

Rakuten is often labelled an Amazon competitor, but its business model has much more to do with Amazon’s loosely affiliated “Marketplace” sellers. Like a brick-and-mortar mall its business isn’t retailing so much as real estate; it rents space in its database to a strange mix of resellers, well-known brands, and entrepreneurs. Rakuten is nothing if not bustling; it’s online shopping at its wildest, like eBay without the bidding.

Ideally, the resulting economies of scale benefit buyers—who get a consistent return policy, a trusted name, and a huge variety of products—and sellers, who get a ready-made storefront and the pleasure of outsourcing the riskier parts of customer service. In Japan that’s a wildly successful enterprise; it’s been a boon for the country’s tiny mom-and-pop shops, who still control large swaths of the country’s brick-and-mortar retail presence.

But Americans used to Amazon might find the whole experience a little bewildering; depending on what you’re looking for the experience is less “shopping mall” than “flea market,” with seemingly identical items piled on top of each other in slightly different configurations. And Amazon hasn’t taken the threat lying down; they’ve made significant inroads in Japan while Rakuten prepares to launch in America.

Rakuten has done the ground-work, expanding rapidly from its Japanese base; in addition to Buy.com they recently purchased Kobo, a Canadian company that competes with Amazon in the e-reader space. But now that they’ve shuttered Buy.com the real online shopping work begins: They have to figure out why someone should shop at Rakuten when her browser’s already pointed at Amazon.

Mobile Phones: More Important Than Ever in Landing Sales

As of 2012, more American adults use a Smartphone than a basic mobile phone.

That wasn’t the case a year ago. In May 2011, the Pew Internet and American Life Project reported the results from a survey, where 35 percent of adults said they owned a Smartphone. By February 2012, that number jumped to 46 percent.

The number of adults who don’t own a phone dropped, too. In 2011 during the same survey, 17 percent of adults reported that they didn’t own a mobile. Only 12 percent said the same in 2012.

Mobile Phones: More Important Than Ever In Landing Sales

Online shopping activity in 2012 reflects this trend. In late November, after the rush of Black Friday sales, PayPal released that phone-based shopping numbers were way up – global mobile payments went up 193 percent on Black Friday from 2011 to 2012.

Which cities saw the most mobile purchasing behavior? According to PayPal, Houston ranked first, with Chicago, Los Angeles, Miami, and New York trailing closely behind.

EBay, which owns PayPal, saw a similar overall jump in mobile-based purchases. It released that they saw the total mobile volume of transactions increase 153 percent this shopping season.

Even if potential shoppers don’t make a mobile-based purchase, they may browse your store through a mobile device. IBM reported that, while 13 percent of shoppers performed a transaction through their Smartphone or tablet, 18 percent visited the retail store on their mobile device.

So, how can retailers capitalize on this trend?

First, make your official website mobile-friendly. When you visit your site online, do you have to zoom in and out to navigate, dragging the screen in various directions to get to the information you need? If so, you have a fixed site that is great for traditional computers, but less accommodating to mobile visitors.

Plenty of web developers are skilled at adapting fixed sites into responsive designs that automatically change to suit the user’s viewing experience. It would be a good investment to hire a developer to make those changes on your website.

Releasing a mobile app can help expedite the shopping process, but only if it is a smooth, frustration-free experience. Resist the urge to further modify your app in the weeks before an anticipated rush of activity. New features aren’t worth it if, in the end, they still have some bugs that disrupt the customer’s checkout.

Also, don’t forget to perform testing. Set clear benchmarks so you can observe positive trends and not-so-positive kinks that you need to work out. Hone in the mobile operating systems and devices that many of your customers use. Make sure your website and app works seamlessly with those technologies, since they’ll be your primary money makers.

Black Friday 2012 has shown is that mobile shopping is on the rise and it’s here to stay. Retailers who want to stay in the game would benefit from responding to the trend sooner rather than later, so they can benefit from the uptick in online, on-the-go, mobile shopping activity.