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Japan's Rakuten losing shine as business model grows rusty

Rakuten President Hiroshi Mikitani

TOKYO -- E-commerce pioneer Rakuten is showing its age, failing to keep pace as sprightlier rivals ride shifting consumer currents and hatch novel services appealing to online shoppers drawn to convenience and word-of-mouth marketing.

The 20-year-old Japanese internet giant's group operating profit slid 12% on the year to 48.7 billion yen ($481 million) for the January-June half. Profit in domestic e-commerce operations tumbled 25% to 17.5 billion yen in the second quarter, even as their revenue rose 7% to 72.5 billion yen. President Hiroshi Mikitani has demanded that the segment produce 40% annual growth. But removing such services as travel from the mix indicates that the core "marketplace" retail business hardly grew at all.

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