Walmart joins Rakuten to counter Amazon’s dominance

Bloomberg

Wal-Mart Stores Inc. has forged another alliance to counter Amazon.com Inc., partnering with Japan’s Rakuten Inc. to sell e-books in the US and improve its online grocery business in Asia’s second-largest economy.
The collaboration will bring Rakuten’s Kobo device and e-book catalog to Walmart’s US stores later this year, the companies said in a statement. The partnership also includes a revamp of Walmart’s online grocery service in Japan that will roll out in the third quarter. The news sent Rakuten shares up 4.5 percent in Tokyo, their biggest gain in more than eight months.
The alliance with the so-called Amazon of Japan is Walmart’s latest step to team up with technology companies that can help it battle the Seattle e-commerce giant. It aligned with Google to let shoppers order by voice over Google Home devices, and it’s also working with Uber Technologies Inc. to deliver groceries in some cities. The move could also goose sales at Seiyu, Walmart’s struggling Japanese unit.
“We are excited to collaborate with the top online shopping destination in Japan,” Walmart CEO Doug McMillon said.
Japanese shoppers can’t escape Rakuten. About one in four online purchases take place on its marketplace, Ichiba, and the company has expanded into sports, credit cards and even family planning. But the 21-year-old company has little cachet outside its home market, so CEO Hiroshi Mikitani has made investments abroad, with moves including a $1 billion deal for online coupon service Ebates and a stake in ride-sharing service Lyft.

Borders Bust
For Kobo, the partnership could offer another shot at the US market. Founded in Canada, the e-book company initially entered the US through a partnership with Borders Inc. That ended unceremoniously when the book chain went bankrupt in 2011, forcing Kobo to sell through its own website and a few hundred independent book stores. Soon after, Rakuten bought Kobo for $315 million. The business has 30 million readers globally.
“It’s been a while since we’ve been active in the US market,” Rakuten Kobo CEO Michael Tamblyn said. Walmart made for a good partner because it provides scale, operational prowess and access to a large group of book customers, he said.
Walmart will become the exclusive retailer of the Kobo brand in the US, and will begin offering Kobo’s nearly 6 million eBook and audio book titles later this year. The retailer will also sell digital book cards in stores, enabling them to carry a broader selection of titles. The companies will introduce a co-branded app to access e-book content. A spokeswoman for Bentonville, Arkansas-based Wal-Mart declined to say at what price it would offer e-readers, e-books.
The US e-books market has slowed, with net revenue declining 5.3 percent from January through August 2017, according to the Association of American Publishers. It’s also getting more crowded as Apple Inc. is working on a redesigned version of its own e-book reading application for iPhones and iPads.
Amazon entered Japan in 2000 and it’s now the company’s second-biggest market outside the US, after Germany. The online retailer has fought a slump in tablet sales by introducing lower-cost versions, extending battery life and adding its digital assistant Alexa to read books aloud. Amazon ranks No. 3 in global tablet sales behind Apple and Samsung, according to IDC.
Walmart’s new online grocery delivery service in Japan, dubbed “Rakuten Seiyu Netsuper,” will be more convenient for shoppers and offer an expanded assortment of items like meal kits and cut vegetables. The business will boost capacity by opening an online grocery centre this year.