Kobo to grow at speed under Rakuten

Kobo to grow at speed under Rakuten

E-book retailer Kobo has the capability to grow at three times the speed under its new owner Rakuten.

In his first UK interview, Kentaro Hyakuno, the head of global business at the firm, told The Bookseller that Kobo and Rakuten will grow together at rapid speed, as they share the same ambitions for global expansion. The company has also revealed its plans for retailer Play.com.

Kobo was sold to Rakuten for $135m (£198.4m) in November, two months after it was announced that the Japanese e-commerce firm had bought Amazon rival Play.com in September for £25m, marking a new chapter in its European expansion plan.

Hyakuno said: "Kobo is quite mobile. [The business model is] very quick and light to expand. They have just entered the Netherlands at very, very surprising speed, and we can expand into new countries—they can be ahead of us and we can go in after them. Kobo's global expansion strategy and ours are quite similar, but I think they can do it faster than us. Although in some cases we already have a footprint and then we would support them."

He added: "I think we are experiencing not only double but triple the speed in terms of growth and expansion."

Kobo entered the Netherlands in January, partnering with Dutch retailer Libris Blz, taking a step beyond the European expansion it announced in March in the territories of Germany, Spain, Italy, France and Holland. Rakuten, by contrast, currently trades in Brazil, China, France, Germany, Indonesia, Japan, Taiwan, Thailand, the UK and the US.

Rakuten believes that the purchase of Play.com will now mean a faster service for customers because the company has the advantage of staff located all over the world, who are available 24 hours a day. Since its formal takeover in October, Rakuten said it has focused on training Play.com staff to understand its "empowerment" marketplace business model, which Hyakuno claims distinguishes the company from its rival, Amazon.

Under this model, Rakuten says marketplace sellers, for example bookshops on Play.com's marketplace PlayTrade, are treated as "true partners" of the business, and can therefore operate "without fear of being undercut by the very marketplace through which they are retailing." Through the company's "eco-system", its intention is to "create new value by driving convergence between the internet and traditional bricks-and-mortar businesses."

Hyakuno said: "Clearly, Amazon is our competitor but our business models are quite different. Our business model is to make sure we empower our clients—publishers and booksellers—to see the benefit of our businesses. Now, with Kobo we can further enhance this model with our partners."

He added: "We are working with SMEs [small and medium-sized business enterprises] in the UK and expanding our marketplace so that we are going to provide a platform to many UK SMEs, as well as on the Kobo side where we want to empower and work with booksellers and publishers to make sure they have the opportunity to grow with us."

Hyakuno said that Rakuten's intention was to win market share in the book industry. He said of Play.com that "performance-wise the marketshare is growing quite nicely—better than expected." As to whether it would follow its rival into the0 publishing industry, Hyakuno said: "If there is an opportunity—if it will give that empowerment to our partners and create a win-win-win situation, then we would look into it, yes . . . but probably on a limited scale."

In terms of Play and Kobo working together, Hyakuno said: "As a group we can have a very big synergy. Play will provide better service by transferring our knowledge and skills from Japan and other family companies. Kobo, on the other hand, are doing global expansion and we work very closely together and Play and Kobo will work together."