Rakuten Ichiba opened with 13 stores. Six people traveling the country signed up only about 5 a month

The founder’s own numbers point the other way.

Five stores a month.

Rakuten Ichiba opened in May 1997.

Rakuten’s official timeline records that day’s setup in three numbers: six employees, one server, 13 stores.

How did it grow from those 13 stores? In a 2010 essay of his own, Hiroshi Mikitani looked back.

Even with six staff visiting shops around the country, they could win only about five stores a month.

Reckoned backwards from Rakuten Ichiba’s size today, the number is too small to notice.

Yet six people traveling the country for five stores a month shows clearly where an online mall first spent its time.

This column lays the official timeline, Mikitani’s essay and a third-party compilation side by side. It reads how the store count moved from opening to the over-the-counter listing.

Listed companies fall outside the criteria for case articles, so it’s handled as a column rather than a case.

From 13 stores to about 1,800

The three opening-day numbers are in the official timeline, and five a month is in Mikitani’s own essay.

The store fee and store counts from 1998 on come from a third-party compilation citing Nikkei Business and others. They weren’t confirmed in company documents.

It had the server. What it lacked were shops

According to the third-party compilation, Mikitani came from the Industrial Bank of Japan and left it in May 1996.

MDM was founded in February 1997, when he was 31.

Nine months passed from leaving the bank to founding the company, and three more from founding to opening Rakuten Ichiba.

The securities report gives the company’s purpose as developing servers for online commerce and running Rakuten Ichiba.

So the company began by building, for itself, the system that would let shops sell online. It did that before gathering any shops.

On opening day it had one server.

What it lacked were the shops to line up on it.

Six people traveling the country, five stores a month

According to Mikitani’s essay, large companies were struggling with online shopping malls at the time, and people around him were negative.

He writes that he too was told “it can’t possibly work.” Even so, he visited small and medium shops across the country himself to sell.

Divide five stores a month by six people.

That’s under one store per person per month.

Travel the country, listen to shop owners, get them to decide to open a store. Each signing took that much time.

In the essay, Mikitani writes that as he listened to shop owners, he came to feel online shopping could invigorate small regional shops.

The slowness of five a month was also the number of times the founder talked directly with shop owners.

A fixed ¥50,000 a month, six months in advance

According to the third-party compilation, Rakuten Ichiba’s store fee was a fixed ¥50,000 a month.

The same compilation says malls run by department stores charged in units of ¥1 million a month. And merchants paid six months in advance.

From the merchant’s side, six months at ¥50,000 is ¥300,000. For a small shop, that keeps the up-front cost of opening online within reach.

From the mall’s side, every time a shop signed, six months of cash came in first.

No material in which the company or Mikitani explains the effect of prepayment was read, though. This remains our reading.

About 320 stores in a year and seven months, with a gap in between

According to the compilation, the store count reached about 320 by December 1998.

That’s roughly 25 times the 13 stores, in a year and seven months from opening. By 1999 it had grown to about 1,800.

The same compilation says the company posted ordinary profits for two consecutive years from the year ended December 1998. In the year the store count reached about 320, the company was starting to turn a profit.

At five stores a month, 320 stores would be out of reach in a year and seven months.

The pattern of growth must have changed somewhere.

What changed isn’t written in the sources read. Mikitani’s essay tells of the five-store period, and the compilation records the results of 320 and 1,800. Nothing found connects the two.

What we can state plainly is the order.

Rakuten Ichiba’s first year and a half consisted of building the system, then time spent by people visiting shops one at a time.

One server was enough. What was short were the shops, and the feet of six people filled that gap.

1. February 1997: founded with ¥10 million

   Before gathering shops, it builds the servers that let shops sell online.

2. May 1997: opens with 13 stores

   Six people travel the country for about five stores a month.

3. December 1998: about 320 stores

   Two straight years of ordinary profit begin. By 1999, about 1,800 stores.

4. April 2000: over-the-counter listing

   Less than three years after opening, it raises about ¥49.5 billion.

That’s the range of its first three years, for a company that started with ¥10 million of capital.

A mall that began as a shop found its first users differently

Even among companies that built systems for shops, the starts differ.

Shopify began with software its founders wrote for their own snowboard shop. They were the shop, so they didn’t need to go looking for their first user.

Rakuten Ichiba began as a company that wasn’t a shop, gathering shops. It found its first users by visiting them one at a time.

The list setting Rakuten beside other legendary companies is in the column tracing 22 founding stories to their sources.

What could not be confirmed

The number five a month survives

Seen after its success, Rakuten Ichiba’s founding looks like riding a great wave of the internet.

What the official timeline keeps are small numbers: six people, one server, 13 stores. What the founder’s essay keeps is the slowness of traveling the country for five stores a month.

A mall’s value is set by its number of shops.

What first gathered those shops was neither a server nor advertising. It was the number of times six people went to meet shop owners.

The founder wrote that slowness down himself, in numbers. We consider it the most valuable record of this company’s founding years.