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Japanese e-commerce giant Rakuten planning acquisitions to enter India

rakutenJapanese membership-based Internet services company Rakuten, is planning to enter the Indian market and launch services within eight months, reports Mint. Rakuten is looking at setting up operations in travel and hospitality sector, apart from considering an acquisition for setting up back-end solutions such as logistics, according to sources who spoke to the publication. Rakuten spokesperson Minori Nakayama however, refused to confirm or deny the news.

The company’s travel booking services has over 1.8 million room nights booked per month. It has access to more than 20,000 domestic and 15,000 international hotels and has a presence in South Korea and China.

In India, Rakuten will compete against services such as MakeMyTrip, Yatra, Cleartrip and GoIbibo; all travel websites that have started pushing hospitality related services off late to increase revenues. Even bus booking service such as Naspers-owned redBus had also added a hotels section last week. In our Outlook14 report on travel industry in India, almost all players had stressed on the importance of hotels business for increasing revenues.

In the e-commerce space, Rakuten will be competing against Indian companies such as Flipkart and Snapdeal, apart from foreign companies such as Amazon and eBay. The company could look at Amazon on how to set up an e-commerce business in India and expand it rapidly.

Rakuten had acquired internet telephony and messaging company Viber, for $900 million earlier this year. The company had said that it will integrate the messaging services to other offerings by the company. Viber India head Anubhav Nayyar had said in an interview that the app has 17 million users in India, without disclosing how many of them were active users.

The company had also launched its eBook reader Kobo in India, last year in partnership with Crossword bookstores, WHSmith and Croma chain of electronic stores. It is not clear how many devices the company has sold in the country till now.

Financials: Rakuten reported revenues of $5.09 billion and net profit of $427 million for 2013, with more than half of the revenue coming from its Internet finance business. The company has 90 million users for its services in Japan and 60 million around the world, of which 18 million are users of the Canadian e-reader Kobo (which it acquired in 2012).

The company had reported revenues of $86.65 million from its travel business in Q4 2013 and $339 million annually. It had also reported an operating income of $34.72 million for the last quarter of 2013 and $127 million for the whole year. Overall, Rakuten reported a 15.2% year-on-year increase in gross transaction value from the travels business in 2013.

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