Interview with Neel Grover,

Story by Benjamin F. Kuo


It's been almost two years since Aliso Viejo-based was acquired by Japanese ecommerce giant Rakuten. How has that affected the company--both in culture, as well as a business? We caught up with Neel Grover, CEO and President of the firm, to hear a bit more about life and changes under Rakuten.

How has life under Rakuten been?

Neel Grover: It's been great. We were acquired in June of 2010, and it's been 21 months now, almost two years. There have been some changes, the vast amount of which have been great. The core of what we do and the core of's culture is the same. We're hard working, we like to have fun, and we've got a relatively young group with a long tenure. I think the average tenure now is north of six years, and we have several employees over ten years, with a few in the thirteen and fourteen years of service.

Rakuten has a very philosophy of treating merchants really well, and really takes it to a new level. When we were acquired, there were two main parts of our business. The first was our first party business, using the virtual drop ship model, which was what the company was built on. We partnered with the world's largest distributors, Ingram Micro and others, to provide great services, prices, and products to consumers. Several years ago, we added the third party marketplace, which lets small to mid sized businesses sell to consumers through our basket. That is growing nicely. That is what Rakuten exclusively does, and exclusively focuses on. It's more like eBay, but they do it with a more hands on approach with people. There are more than 10,000 people in Japan, and they're the third largest site behind Amazon and eBay, doing over 15 billion, with a 14 billion market cap in Japan.

What kinds of changes have you been making?

Neel Grover: We've been transforming the site and experience quite a bit. We have traditionally have focused on a product centric approach, where a consumer comes to our site to help find the lowest prices on a product easier. We still have that, and now have over 12.5 million products, and let you find the lowest prices on those products. However, we're also focusing on merchants a lot more. WE want you to discover what you're looking for, but also to explore and learn about new products, technology, and industries. We're now selling a lot more soft goods products, like apparel, jewelry, home and outdoor products. Those are growing much more rapidly than technology products. Although we still have our first party business, the marketplace is now, by far, the majority of our business, and is growing rapidly. We've also hired a lot. We pride ourselves as being very efficient, and have been a relatively small enteprise for the size of our sales. At the time of the acquisition, we had 150 employees. More recently, we hired a little over 50 in the last six months.

If you look at what we do, and look at what an Amazon or even eBay does, is they start with technology, and tend not to be very friendly to merchants. They look at merchants as assets, and as a method of getting to product. We really look instead as merchants as partners, and our teams are all incentivized to drive and grow sales for our merchants. The entire employee base is incentivized that way, and we're really about empowering merchants and empowering commerce locally here in the U.S. We've gone from just focusing on the largest to midsize businesses, to small mom-and-pop merchants, and we see that really growing more and more. Small businesses really are the big thing for us in the coming years.

Is Amazon's marketplace the largest competition for what you're doing?

Neel Grover: Amazon is definitely the largest competition we have here. But we do things really differently, particularly in how we treat our merchants. Amazon is really a terrific technology company, but they are really looking how to best source their products at the cheapest price. When a merchant shows them a product that will sell, they will go ahead and buy those products directly, and frankly, put those merchants out of business. We don't buy products ourselves, ever. We have literally a handful of products we own, and we won't ever compete with our own merchants in that regard. We're here to help them grow. We like to think of ourselves as their home away from home. They can build a storefront, brand it so the customers know who they are, use tools to email our customers directly, without us getting involved. It goes through our system and communications stay within We even have tools to allow them to have real time chats with our customers, all of which is very different from the Amazon approach.

How independent have you been able to be under a big corporate owner?

Neel Grover: We definitely have a fair amount of independence. There is more reporting, for sure. As you can imagine, Japanese companies are very thorough in reporting. But, I think that's been a positive thing for the company. Overall, there's a lot of autonomy. I do have more meetings, and I fly to Japan a lot, and we have lots of video conference calls, but we also now have a great network to learn from. Rakuten is doing 15 billion in sales in Japan, and there's lots we can learn from them, and we now have sister companies around the globe, with the second largest site in France as our sister company, the fourth largest e-commerce site in the UK, it goes around the globe. We are able to get on calls together and there is lots of knowledge sharing of our experience. We all have a common foe globally, and ultimately, we're working on the same goal of creating the best experience for end customers to purchase, and for merchants to sell. There's been a tremendous benefit for being part of the Rakuten network.

What's the biggest reason a merchant would decide to sell their products on, when there are also other big competitors out there like Amazon and eBay?

Neel Grover: We actually have a lot of our merchants also selling on Amazon and eBay, and also selling on our site. There's a couple of things we offer. One, is we allow you to have a unique brand. You can have your own storefront, your store away from your store. Some of our merchants don't even have their own e-commerce site, so we create a branded storefront for them. has their own store on, where we post videos, you can see their products, and get editorial content. We brand through the experience, and market and promote them to the customer. That's a difference in our experience. The other thing, is the connection through Japan. As I mentioned, we're doing 15 billion in sales a year and growing in Japan, and if you list on our site, you are also selling in Japan. We take of everything to ship your product to Japan, handling customs, duties, and translation. The other thing we're doing are running marketplaces for companies like Best Buy. If you are looking for the 35,00 products on Best Buy, that's powered by Rakuten and Those are just some of the benefits of working with us.

What's the biggest challenge you have?

Neel Grover: The biggest challenge is becoming the biggest company out there, globally, not third, where we are collectively right now. There's lot to do in the U.S. to get us there. We're focusing on our site and experience, and what we're delivering to merchants. We're also looking at strategically partnering with large brick and mortar stores, to help turn their in-store experiences into online experiences, like we do with Best Buy. If you look at what has been doing, they've done a great job, but it's causing brick and mortar stores great pain. We offer a great way to help them through their own site, as well as's own site.



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