What Rakuten Does & It's Rapid Growth

 

Another Friday Feedback is in the books, read along to catch up! 



 

On October 29th, 2018 our own Andrew Maff sat down with Jeremy Brooks, he is a Manager of clients implementations of Rakuten, to talk about what Rakuten does and how fast it is growing.

 

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READ ALONG WITH JEREMY BROOKS ON RAKUTEN'S RAPID GROWTH

Jeremy Brooks: I'm the manager of the Client Implementations Group with Rakuten Super Logistics. Rakuten Super Logistics is an arm of the large Rakuten company that is not quite as well known in the U.S. as they are in Japan. In Japan, these guys are the 8,000 pound gorilla of everything and everything else beyond that. Rapidly growing in the United States, Rakuten owns several businesses: Kobo, Ebates, Rakuten Marketing, some pretty well-known brands. We are the logistics arm of Rakuten, so Rakuten Super Logistics obviously. So we have multiple warehouses across the country. We store people's stuff in order to ship it out for 'em, so we connect with various E-commerce platforms. We integrate with these platforms either with direct connections, or over our API. We ship out orders. We accept returns. And we do all of the logistics that they need us to do to fulfill their business. So that's kinda what we do.

Andrew Maff: Nice. What do you think the barrier is there on why Rakuten itself is so large in Japan but not so much in the U.S. at least as of right now?

Jeremy Brooks: For our business line, it's really newness. So Rakuten Super Logistics started out as a smaller, kind of mom-and-pop company called Webgistix based in upstate New York, grew organically over several years, and really we're kind of at the point of morphing from a medium-to-large small business to becoming an enterprise and behaving in an enterprise manner using best practices for: how do you as an enterprise? How do you utilize your technology? How do you create partnerships?
We are growing extremely fast. In fact, we are moving out of our headquarters here very soon because we've outgrown the building. We're in the process of adding a lot more warehouses, looking at an international footprint here very soon, so it's really just that we're growing organically and are now figuring out how utilize the resources of big Uncle Rakuten to help us grow as fast as we need to.

Andrew Maff: And you guys are based out of Vegas, right?

Jeremy Brooks: We are. We're based in sunny, extremely hot Las Vegas, Nevada.

Andrew Maff: So you're growing out. Are you leaving Vegas, or are you guys just doing a new location in Vegas?

Jeremy Brooks: No, we're literally moving like a mile away I think-

Andrew Maff: Oh there you go.

Jeremy Brooks: ... so we don't have to go that far. We can still eat at the same restaurants for lunch.

Andrew Maff: Nice. So would you say that your competitor for Super Logistics is basically FBA for the most part?

Jeremy Brooks: FBA is a large competitor. We behave differently in a lot of ways. We can provide ... So we have a bit of an usual relationship with Amazon because they're both partner and competitor in certain ways. So they are our quasi-partner in that we integrate with them, so a lot of customers will do the FBM, fulfilled by merchant, model and use us as their 3PL. But obviously we compete directly with Amazon for their FBA service, which puts us in a little bit of an unusual spot where sometimes we don't get the resources that we would like to have for troubleshooting vast integrations and things like that, but we can provide services that they can't. We're a smaller company, so we can be more dynamic. We can be more responsive. We actually have people that you can get on the phone and talk to. But no, we don't have 25 warehouses per square foot per square meter in [inaudible 00:04:01] in the U.S.
So we try and walk that line: how do we best keep a solid strong relationship with them as an integrator, knowing that we're never gonna compete head-to-head with their FBA service? They're too big. But that's not really the space that we're in, so it's not something that comes up as a huge competitive disadvantage for us.

Andrew Maff: But you still have a two-day delivery option, do you not?

Jeremy Brooks: We do. We absolutely do. We have second day. We have same day, as long as it it's in our ordering system in time. When I'm talking about they're not really a direct competitor, I'm talking in terms of scale. They really operate in a completely different sphere from anybody in the world, so we compete in our space very strongly within folks in our ... We try to, as they say in Britain, we try to punch above our weight. [inaudible 00:04:57] FBA is maybe a little bit higher than that, but we're growing and we look forward to the day when we can compete toe-to-toe with Amazon.

Andrew Maff: Yeah, 'cause it is interesting, like obviously I looked into a little more. Obviously we just did a webinar with you guys, what, two weeks ago now I believe. And the more I dug in, I realized that you guys integrate with a lot, whether it's Shopify, Amazon, obviously Rakuten, but you also do like Walmart, and Ebay, and Jet, and you guys are all in there. So you guys really can act as a 3PL in most cases, so someone like ... 'Cause I know one of the issues we have with a lot of sellers all the time is that they may wanna do FBM because, for whatever reason, they can't go FBA, but they don't wanna deal with having to get something out in two days and all that extra stuff, and the more that I looked into you guys, I'm like, "It's very interesting that you actually integrate with Amazon," so you're playing nicely with the competitor, which is a smart move. So it actually does still benefit you and give a lot of sellers that extra edge.

Jeremy Brooks: Yeah, absolutely, but it does put us in a bit of an unusual spot, but to be frank we have clients that will leave FBA and become FBM and move over to us because some of the things that we can offer that they can't. We can be smaller and more agile, be more responsive to their needs, you know, a lot of things that you're not gonna get from mega massive corporation like Amazon.

Andrew Maff: So besides the fact that you clearly are connected to Rakuten, which is a monster, what really differentiates you from really just going with another 3PL?

Jeremy Brooks: So comparing us to some of our largest competitors, we get, all day long ... I'm not gonna name names, but the folks that are around the same size as us and larger, we have folks come in from them constantly. Probably of the last 10 clients we've onboarded, I can identify probably three or four that have come in from our biggest competitors. And these are big clients. These are pretty sizable guys. And the things that they tell us are that they weren't responsive, or the technology just wasn't there, or they were very limited in the options that they could provide in terms of integratability, that they didn't feel that the support was there when something goes wrong, which happens. When you get computer systems talking to each other, things go wrong. When you have thousands of SKUs in a warehouse with a bunch of people that you can't sit on a throne and look down at them all day long, you have to have some trust. And if you lose that trust, things kinda start creeping south from there, and I find that that's happened a lot. 
From an E-commerce standpoint, the world is really getting to the point where we're all under this big flashlight. Brick and mortars are going away rapidly. Some major names that 10-15 years ago we would have thought are gonna be eternal companies are going away from a brick and mortar standpoint. Toys R Us is a great example. A lot of retail's leaving the malls. Malls are shutting down wholesale. Everything is going to E-commerce, and what's happening as a result of that is everything is out in the open, so it wasn't that long ago where you could find a little pocket ... "Oh I found this guy in China, and he manufactures this thing, and I can move them over to the United States, and I can move them over to the United States, and I can resell them and make a killing because I'm the only one that offers this product."
Well we're not really in that environment necessarily because everybody has access to the same information. Everybody has access to the same products. Once a secret gets out ... I've been an Amazon seller in the past. I've been in E-commerce for about 23 years, and as online seller on Amazon, Ebay, Jet, Walmart over the years, I could tell you it's hyper-competitive. It gets down to ... There's some products ... If you get a product that's commoditized where it's not that hard to find, you're literally chasing pennies. And some guy from China will come in and say, "You know what? I don't care if I lose money on this. I just don't want you to get the sale."
So you end up in the situation where you as a client, or us as a 3PL, we don't want to chase pennies. We want to compete on service. We want to be able to tell our customers, "Hey when you're comparing us to the other 3PLs, you can have my phone number if there's something wrong with the integration." You know, we have a team of people that can work with you. We have prebuilt integrations on multiple platforms. Like you mentioned we work with Shopify, Jet, Walmart, BigCommerce, WooCommerce. You have a lot of different options, and we try to compete in ways that are meaningful to them. These are ... We know who are customers are. These are people trying to run their businesses. 
Our sweet spot is probably large or small businesses, maybe smaller enterprises, and we try and structure our business in a way that caters to them. We understand who they are. Like I've said, I've been a merchant for many, many years. I [inaudible 00:10:04] E-commerce, and I know the pains that they go through, and we try to use that perspective and that empathy to help them get through what they need to to get up and running and start making money.

Andrew Maff: That really explains your more organic growth because customer service ... You know, even, we're a marketing company, and we don't help with customer service, and we always say the most important thing you can really spend your money on and put some time and effort into is customer service because of the organic growth of people just spreading word of mouth. It's really hard to grow that way, though, especially in the beginning because you gotta work with so many people and give such great customer service that they finally start telling people, 'cause you really can't get on a phone and start talking to, for you guys, a potential client or, for an E-commerce seller, a potential customer and talk to them, be like, "Oh, don't worry. We have great customer service." Everyone says that, but it's hard to prove until you're actually in the situation to actually prove it out.

Jeremy Brooks: It really is, and you know, you can talk a good game all day long, but where the rubber meets the road ... And this is where, like I said earlier, we're finding that a lot of our new clients are coming from our competitors because when the rubber hit the road, they slid into a ditch and found what they were selling wasn't exactly what they were getting. So now they're giving us a shot.

Andrew Maff: So customer service was the one thing you mentioned that separates you, and then also it's on the technology side. So I get ... We always try to venture a little bit outside of the digital marketing aspect. We find a lot of sellers ... As you mentioned, it's so hyper-competitive. But no one really cares about the customer service side. They really just want to transact, and then the relationship's done with the customer. It's like, "Okay. I got my money. Bye. I'm gonna move onto the next person." So we really try to preach giving it an experience and doing a whole thing, like stick something in the box they wouldn't expect, or sometimes we have more comical clients, and we'll do like glitter bomb style stuff when you open up a box and all that. And I'm sure, for 3PL, we have to be a nightmare agency for your client to be working with because we're like, "Well yeah, but we also want you to stick this exploding envelope in there," like there's that extra stuff. 
So is the technology really there that these sellers have the ability to just put anything that they want into a box and do packages and bundles and kits and all that extra stuff?

Jeremy Brooks: We try to be as flexible as ... It's kind of a fine line that we walk. So the more exceptions we create, it makes it more difficult for us to do business. But we've definitely realized that to be able to do that is a huge differentiator. So we put some technology in place within our environment that can allow people to do little, like ... What's the best way to kinda describe this? Phantom SKUs and things like that where you can say, "Well, this isn't something that's necessarily gonna be on the box, but I want you to grab a handful of glitter and throw it in every box." Yeah, some horrible, horrible thing like that.

Andrew Maff: Yeah, it's us. Sorry.

Jeremy Brooks: [inaudible 00:13:10] possible 'cause it does mean a lot to our clients. You know, we have some folks that'll come to us with unusual requests, and sometimes it's a little ... Either it's gonna be too expensive for us to deal with, or it's gonna create something that's just not sustainable, but to be honest a lot of the times we end up looking at it, and do the math, and find a way to make it work, and do our best to accommodate. I could tell you stories. We have some unusual things in some of our warehouses.

Andrew Maff: Aw, come on. Give me one. Give me one really weird thing.

Jeremy Brooks: Oh, I can't. We've got some competitive, some folks that don't want me to talk about things like that-

Andrew Maff: Ah, NDAs are no fun!

Jeremy Brooks: But yeah, we definitely have ... I mean, it could be something as simple as marketing flyers, you 
know? We have some clients that we have a strong enough relationship with them where they may have their own pack station, and they know that for every order of this type, then you grab this particular thing and put it in there. A marketing insert or certain ones are packed in a very specific way because that's what their customers expect to see.
We had one guy here recently send us a video saying, "Well I have five things that need to go in the box, and it may seem crazy, but I need you to pack them in the box in this very specific order: one, two, three, four, five." And, okay. We'll do that for your because it means a lot to you, even if we don't completely understand why we need to do it. It's the end result that you want, and that's what your customers expect, so we'll do that to help you out.

Andrew Maff: Jeremy, really appreciate it. Thanks for chatting with me. I don't like to take up more of your Friday than I have to, but really appreciate it. Would love it if you'd kind of give a little closing remarks, let everybody know where they can find more information, and we'll call it a day.

Jeremy Brooks: Absolutely, thanks for the opportunity. It's been a lot of fun. You can get more information about us, our integrations and our services, at Rakuten R-A-K-U-T-E-N, RakutenSL.com. Short for Rakuten Super Logistics.

Andrew Maff: Appreciate it, man. Thank you so much.

Jeremy Brooks: Thank you.

Andrew Maff: Enjoy your Friday. Have a good one.

Jeremy Brooks: All right.

Andrew Maff: All right.

 

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