Rakuten Group, Inc. (hereinafter “Rakuten”) announces today that Rakuten and Japan Post Co., Ltd. (hereinafter “Japan Post”), a subsidiary of Japan Post Holdings Co., Ltd. (hereinafter “Japan Post Holdings”) have signed an integration contract (hereinafter “Integration Contract”) where Rakuten and Japan Post agree that Rakuten establishes JP Rakuten Logistics, LLC. (hereinafter “JP Rakuten Logistics”) as a wholly-owned subsidiary of Rakuten, and succeeds the logistics business conducted by Rakuten to JP Rakuten Logistics (hereinafter the “Company Split”), and Rakuten and Japan Post subsequently acquires the equity interest of JP Rakuten Logistics (hereinafter the “Investment”). Rakuten and Japan Post also signed a shareholders agreement (hereinafter the “Shareholders Agreement”) regarding the operation of JP Rakuten Logistics.
The company split contract (hereinafter the “Company Split Contract”) of the Company Split is scheduled to be in May 2021, and the effective date of the Company Split is scheduled to be on July 1, 2021. The payment date of the Investment is scheduled to be on July 1, 2021 after the effect of the Company Split.
Since in the Company Split, a wholly-owned subsidiary of Rakuten is taking over a business division, some disclosure items and details are omitted.
1. Purpose and background
Rakuten and Japan Post, a consolidated subsidiary of Japan Post Holdings, have already been pursuing an alliance, and we plan to further strengthen our cooperation. In December 2020, we signed a basic agreement for a strategic alliance aimed at realizing a healthy and sustainable logistics environment. In addition, not limited to the logistics field, we also aim to enhance services through collaboration with the Japan Post Group (hereinafter “Japan Post and its affiliates”; the same shall apply hereinafter), in terms of marketing and base stations for fintech and mobile users. In March 2021, we decided that strengthening the relationship with the Japan Post Group in order to proceed with the examination of alliances in the establishment, etc. and other areas would lead to the improvement of the competitiveness and mobility of the Group. As stated in "Notice Regarding Partial Completion of Payment for Issuance of New Shares and Disposal of Treasury Stock through Third-Party Allotment” on March 29, 2021, Rakuten issued new shares by third-party allotment to Japan Post.
In the Japanese logistics industry, issues have arisen over sustainable provision of stable logistics services that respond to the increasing demand for unattended redelivery and labor shortages, due to the increase in cargo flow following an expansion of the domestic e-commerce market, and the diversifying demands of baggage senders and receivers. Under these circumstances, in 2018, we set up a comprehensive logistics and delivery service "One Delivery" concept that manages the mechanism from ordering to delivery of products from "Rakuten Ichiba" in a unified manner, including storage to shipping of products. We have expanded the fulfillment centers of our logistics service "Rakuten Super Logistics" nationwide.
Furthermore, by operating an efficient fulfillment centers that have introduced equipment for labor saving and automation, and by utilizing our purchasing data and AI technology to forecast orders and link inventory information to perform optimal inventory allocation, we have improved delivery speed and reduced fulfillment cost and delivery cost.
Against this background, Rakuten and Japan Post have agreed to establish a new company in which both companies will invest, with the aim of improving efficiency by building joint logistics bases, common delivery systems, and receiving services, mainly in the logistics field. In the future, the two companies will strengthen cooperation, build a new logistics DX platform, and encourage other e-commerce and logistics companies to participate in the platform, thereby creating a domestic logistics environment where we will contribute to the soundness of Rakuten and the realization of a sustainable society.
Specifically, by incorporating the labor-saving and automated fulfillment centers that we have invested and developed into the delivery network of Japan Post, and by jointly operating it through a joint venture, we will realize improvements in distribution DX and customer UX. We aim for "Improvements in customer UX)" (Note 1), Reduction in lead time" (Note 2), “More efficient logistics” (Note 3), and "Maximization of capacity" (Note 4). We will also jointly work on next-generation delivery using drones and UGVs.
At the beginning of the joint venture, we will mainly handle packages of E-Commerce services provided by Rakuten centered on Rakuten Ichiba, but in the future we aim to build an open platform in which other delivery companies and shippers can also participate.
(Note 1) "Improvements in customer UX" means developing a smartphone app that responds to diversifying customer needs, leveling delivery work, and streamlining delivery work by batch delivery of packages, and building a UI for the app. etc.
(Note 2) “Reduction in lead time” means shipping from fulfillment centers to integrate fulfillment centers and distribution networks, expand areas where same-day delivery is possible, mainly in urban areas, and expand next-day delivery in other areas. By linking the time and the operating time of the delivery network more closely, the time from ordering to delivery can be shortened.
(Note 3) “More efficient logistics” means improving productivity by eliminating duplicate work of both companies by integrating the operations of our company and Japan Post, reducing redelivery, and improving delivery efficiency by utilizing batch delivery of packages. Optimization of delivery routes such as the trunk network from the distribution center to the delivery station and the last mile delivery network utilizing AI, and reduction of delivery costs by introducing flexible operations.
(Note 4) “Maximization of capacity” means expanding the shipping capacity of distribution centers through joint investment in the future and improving delivery efficiency, in addition to expanding the fulfillment centers that will be succeeded by JP Rakuten Logistics through this split.