Online fees clash are another step in Softbank-Rakuten rivalry

Business - October 12th, 2013
softbank

SoftBank Corp founder Masayoshi Son eliminated fees charged by online portal Yahoo Japan Corp to its merchants, putting two of Japan’s biggest internet moguls in a head to head clash.

Son’s move was seen as a direct challenge to Hiroshi Mikitani, head of the country’s biggest online shopping mall—and Yahoo Japan’s rival—Rakuten Inc.

Yahoo Japan, 36%-owned by SoftBank, wiped out shopping business charges for online stores on the search and retail site. Shops selling goods on Yahoo Japan used to pay an initial fee of 21,000 yen and a monthly fee of 25,000 yen, as well as a commission of 1.7% and 6.0% of sales.

Yahoo Japan gets more than half of its revenue from advertising. Son figures lower fees will increase market share and, eventually, ad sales.

Rakuten, on the other hand, charges businesses fees to operate shops on its site. Rakuten has about 29% of Japan’s 4-trillion yen e-commerce market and charges vendors about 10% of sales, according to estimates by Nicholas Tanner, an analyst at BGC Partners in Singapore.

The elimination of fees could mean an exodus of online merchants to Yahoo Japan from Rakuten, according to the Wall Street Journal.

The budding price war has shocked Japan’s conservative business culture, and investors wiped out as much as $4.3 billion in both companies’ market values.

Rakuten’s share price sank 11.7% and Yahoo Japan dropped 6.5% on Tuesday.

Son and Mikitani, Japan’s second- and third-wealthiest men, are expected to face off in many more clashes as their empires seek new revenues.

“In a fight between Son and Mikitani, I would place bets on Masayoshi Son,” said Gerhard Fasol, president of the Tokyo-based technology consulting firm, Eurotechnology Japan.

by Maesie Bertumen

Image: jasewong/Flickr