Merchants here cite high fees for closure of Rakuten

Merchants here cite high fees for closure of Rakuten

News that Japan's Rakuten will close its online marketplace here by next month did not surprise some retailers, who say it is costly to do business on it.

Several merchants told The Straits Times they were charged an annual fee to sell their wares on Rakuten's site, which is not the case at many other similar sites. Mr Jay Zhou, for example, sold beauty products on Rakuten for less than a year.

His annual fee was more than $4,000, but he had sales of about $2,000.

On top of the annual fee, merchants said they were charged a 10 or 20 per cent sales commission by Rakuten.

Other sites usually take a cut of 10 per cent or less.

Many covered these costs by selling their goods at higher prices on Rakuten than on other sites.

Rakuten's Singapore site, launched in January 2014, had nearly 500 merchants as of December last year.

In an e-mail to its merchants, Rakuten said the market environment has been more challenging than expected and it was unable to continue its business model here.

Mr Andrew Tan, founder of a Singapore-based Japanese lifestyle boutique, said Rakuten's cost structure may not have worked here as the online shopping environment is very price-sensitive.

Mr Amos Tan, marketing and retail lecturer at Singapore Polytechnic, said charging merchants an annual fee will probably not work in Singapore.

"Smaller business owners won't be able to afford it. When the market is saturated, merchants know how to do their research. There are so many platforms that don't require them to pay such fees."

Asked if its cost structure affected its market share here, a Rakuten spokesman said only that it is closing its e-commerce marketplaces in Singapore, Malaysia and Indonesia as part of an e-commerce transformation that is key to its "global strategy map for the future".

Despite the brickbats from some, there are others who have good experiences, such as Singapore-based Japanese pastry shop Snaffle's.

Shop manager E. K. Koh said Snaffle's enjoyed a 15 per cent rise in sales after signing up with Rakuten two years ago. It also provided good customer service, she added.

One customer who will miss the site is civil servant Xavier Chan, 35, who has been buying things from it every month since October last year.

She said: "Shipping is rather quick and they have sellers from Japan. That's what I like."

This article was first published on February 17, 2016.
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