Value Creation for Sustainable Growth Our Vision Empowerment Empower Japan. Empower the World. http://global.rakuten.com/corp/sustainability/ Corporate Philosophy Empowerment of Individuals and Society through the Internet From the day Rakuten was founded, we have dedicated ourselves to empowering people and society through the Internet. This principle has driven the growth and development of our business and is reflected in the mission Empower Japan. Empower the world. A commitment to contributing to society through our business activities is our most important value. To achieve sustained growth for Rakuten and a sustainable society, each Rakuten Group employee in Japan and overseas shares common values and puts the corporate philosophy into practice with a powerful sense of mission. Our Value Creation Model Rakuten Ecosystem a Globally Pioneering Business Model The Rakuten Ecosystem, our unique business model, consists of three core businesses: Internet Services, Internet Finance, and Digital Content. It is a user-friendly business model based on the concept Single brand, single membership, under which Rakuten members are issued a single global Rakuten ID that provides access to a wide variety of services offered by the Rakuten Group. In addition, by promoting member migration within the Ecosystem through the Rakuten Super Points rewards program, we seek to maximize profit per member and simultaneously aim to maximize corporate value by creating cross-business synergies. Rakuten Ecosystem Rakuten Membership Credit Card Banking Securities Finance Life Insurance etc. 1 Use Rakuten Service Marketplace Travel etc. Brand Strategy & Membership Rakuten Membership E-Book Video Streaming E-commerce TV Programs Digital etc. Content 3 2 Redeem Rakuten Super Points Earn Rakuten Super Points 26
Our Brand Value and Customer Satisfaction Maximization of Lifetime Value per Member Through the Rakuten Ecosystem, we utilize a member database, a key business asset, to provide services that are fun and convenient for Rakuten members and pursue synergies among our businesses, including expansion of gross merchandise sales (transaction volume) and maximization of lifetime value per member. In addition, under the concept of Shopping is Entertainment, we constantly develop new services, such as our rewards program and customer review system, that make shopping a pleasant and entertaining experience for members. The results of these efforts are reflected in the high scores achieved by Rakuten Group companies such as Rakuten Card in customer satisfaction surveys and brand rankings in Japan. Maintaining Top Web Brand Position in Japan Rank in 2014 Rank in 2013 Rank in 2012 Site Name 1 1 1 Rakuten Ichiba 2 2 2 Yahoo! Japan 3 3 4 Amazon.co.jp 4 5 3 Google Nikkei BP Consulting, Inc. Web Brand Survey 2014 Autumn-Winter December 2014, 2013 and 2012. Our Membership Results of Value Creation Accompanying enhancement of brand value, the number of Rakuten members is increasing dramatically, with membership (logged-in) in Japan exceeding 70.3 million at the end of 2014. The number of unique buyers, members who have purchased multiple services during a quarter, exceeded 15.8 million in the fourth quarter of 2014. In addition, the cross-use ratio, the percentage of users of services for which Rakuten Super Points are awarded and who also use other services, reached 59.2%. These figures clearly indicate the impact of the Rakuten Ecosystem business model. Number of Unique Buyers* (Million) 20 15 10 5 0 +2.1% YoY * Unique Buyers: Number of buyers sorted by e-mail address with purchasing records during the listed 3-month period. Cross-use Ratio* (%) 70 60 50 40 30 20 10 59.2% 0 * Purchasing ratio of Rakuten members who have utilized two or more Rakuten services during the past 12 months of the listed month. Applicable services are limited to those which can earn Rakuten Super Points. 27
Value Creation for Sustainable Growth Investments for Growth Various Support for Partners We consider our business partners, who have worked alongside us and shared in our success, to be essential to the Rakuten Group s growth. Since the opening of Rakuten Ichiba in 1997, we have provided various forms of support for merchants. We provide consulting services for Rakuten Ichiba merchants through e-commerce consultants, whose task is to help our business partners increase their sales and solve problems affecting their activities. In addition, we opened Rakuten University in 2000 as a provider of e-commerce service expertise for merchants. Furthermore, we hold Rakuten Conferences and Rakuten Expos twice a year at six locations across Japan and once a year at 13 locations outside Japan. We utilize these events as forums for sharing our business strategy and close communication with merchants. Rakuten Ichiba Number of Merchants 44,000 42,000 40,000 38,000 41,442 Rakuten Ichiba GMS per Merchant (Millions of yen) 60 50 40 30 20 10 48.1 million 36,000 0 Rakuten Ichiba a Safe, Secure Shopping Environment Rakuten implements a variety of measures at every stage to maintain a safe and secure shopping mall environment. Customer Support Goods ordered in Rakuten Ichiba are indemnified under the Rakuten Safe Shopping Service. If a Rakuten member (free registration) experiences problems with goods after payment, such as non-delivery or damage, the amount paid will be reimbursed up to a maximum of 300,000. Merchants Settlement Methods Delivery of Goods All merchants wishing to open stores in Rakuten Ichiba undergo a rigorous screening process. The goods offered must comply not only with laws and regulations, but also with our guidelines, and daily checks are carried out to ensure that non-compliant items are not on sale. There is also a contact point for customers to report inappropriate goods. Rakuten offers a variety of settlement methods and has created systems to provide enhanced security. The credit card settlement process used in Rakuten Ichiba complies with the PCIDSS*, while bank transfers are paid into special merchant accounts in the Rakuten Ichiba Branch of the Rakuten Bank to prevent fraudulent transactions. We have enhanced registration systems for estimated shipping dates and other shipping-related information for goods ordered in Rakuten Ichiba. Estimated shipping times are displayed on product pages and other locations, and customers can check the delivery status of their products from their purchase records. * The Payment Card Industry Data Security Standards (PCIDSS) were jointly established by five international credit card brands to protect information concerning credit card accounts and transaction. 28
Support and Education for Employees Rakuten provides a variety of information-sharing Englishnization opportunities to enable all Rakuten Group employees to work The average TOEIC (English test) score toward the same goal as members of one big team. Forums at Rakuten for information sharing include morning meetings held at 8 a.m. every Tuesday streamed live to over 50 offices in Japan over 800 points (April 2015) and overseas so that all employees are able to attend. In addition, the Englishnization Project launched in 2010 About 30% of new staff recruits at Tokyo HQ in 2012-13 have been non-japanese to make English the official language throughout the Rakuten organization has steadily produced results, and 80% more than 90% of Japanese employees have attained their target TOEIC scores. This initiative has contributed to the recruitment of personnel from overseas, and in fiscal 2014 approximately 80% of newly recruited engineers in Japan were foreign nationals. This has yielded tremendous benefits, including the recruitment of highly talented people and active communication with overseas subsidiaries. CSR Topics Rakuten Mobile Library: From Disaster Recovery to Providing Reading Environments to Children around the World In 2012, Rakuten Mobile Library was launched to provide a reading environment for children in areas devastated by the Great East-Japan Earthquake. By 2014, we had delivered books and Kobo e-book readers to children and families, a total of 13,197 people. To expand our initiative globally, we held Rakuten Mobile Library at Paris in 2014. Children and family in France spent fun experience. After the event, total 482 titles were donated to Secours populaire, the French NPO engaged with social issues including that of children without families. Rakuten s Forest: Reviving Forests and Protecting Biological Diversity Deforestation is a major challenge among various countries. In Japan, excessive plantations led to a breakdown in ecological balance especially for the golden eagle, mascot of our baseball team, Tohoku Rakuten Golden Eagles. To protect eagles, Rakuten started initiatives within six prefectures in Japan. We also started to contribute deforestation problems in worldwide, such as in Indonesia, where deforestation has been especially rampant. Rakuten s Forest is an initiative sustained by donations from Rakuten merchants, customers and stakeholders. Specific activities are conducted in collaboration with local governments and ministry officials in order to tackle local challenges. 29
Board of Directors, s and Company Auditors (As of July 1, 2015) Toru Shimada Yasufumi Hirai Masayuki Hosaka Executive Vice President and Representative Director Executive Vice President, Representative Director and CIO Executive Vice President and Representative Director Yoshihisa Yamada Masatada Kobayashi Akio Sugihara Executive Vice President, Representative Director and CFO Managing Executive Officer and Director and Director Kazunori Takeda Kentaro Hyakuno Hiroaki Yasutake Takahito Aiki and Director Managing Executive Officer, Director and CSO and Director Koji Ando Yuji Kusunoki Masato Takahashi Kenji Hirose Charles B. Baxter Yoshiaki Senoo Takeo Hirata Katsuyuki Yamaguchi Director Company Auditor *1 Company Auditor *1 Company Auditor *1 Hiroshi Mikitani Chairman, President and CEO Hiroshi Takahashi Substitute Company Auditor *2 30 *1: Outside auditor stipulated under Corporate Law of Japan *2: Substitute company auditor stipulated under Corporate Law of Japan
Outside Directors (As of March 27, 2015) Year Appointed Positions Held Area of Expertise Koichi Kusano Director * 1 1999 Attorney and Senior Partner of Nishimura & Asahi Legal: Mr. Kusano has drawn on his wideranging knowledge and experience as a lawyer, as well as on his expertise in corporate law, to provide advice and opinions on Rakuten s operations. He has served as a director for 15 years and four months. Ken Kutaragi Director * 1, * 2 2010 Former CEO and Honorary Chairman of Sony Computer Entertainment Inc. Entertainment and Technology: Mr. Kutaragi has provided Rakuten with managementrelated suggestions and insights based on his specialized knowledge of the entertainment industry and technology, as well as his wideranging corporate management experience. He has served as a director for five years. Hiroshi Fukino Director * 1, * 2 2008 Former Representative Director and Chairman of Dell Japan Inc. Management Consulting: Mr. Fukino has used his expertise as a management consultant and his extensive corporate management experience to contribute management-related advice and ideas. He has been a director for the last seven years. Jun Murai Director * 1, * 2 2012 Dean of Faculty of Environment and Information Studies of Keio University Internet Technology: Mr. Murai has given Rakuten management-related recommendations based on his knowledge and experience as an academic expert on Internet technology. He has served as a director for three years. Youngme Moon Director * 1 2015 Senior Associate Dean of Strategy and Innovation and Donald K. David Professor of Harvard Business School Business Strategy: Ms. Moon has provided advice and opinions on the business operations of Rakuten from her viewpoint as an academic expert on business administration. She is a newly appointed director. *1: Outside director stipulated under Corporate Law of Japan *2: Independent director specified by the regulations of Tokyo Stock Echange, Inc. 31