Japanese e-commerce platform Rakuten plans to raise $2.2 billion by selling shares to investors including Tencent, Walmart and Japan Post, to fight harsh competition in the space.

Though the online retailer’s sales were boosted by the pandemic, they face harsh competition from Amazon, which boasts a high market share in Japan.

Rakuten will use the proceeds to invest in logistics, artificial intelligence (AI), and its burgeoning mobile network – the losses of which tripled in the past financial year.

According to the filing made on Friday, Japan Post will acquire a stake of 8.32 per cent in Rakuten, while the Chinese internet leader and the U.S. retail giant will take smaller portions.

Shares of Rakuten and Japan Post rose 8.6 per cent and 4.9 per cent respectively in Nikkei trading.

According to a presentation about the tie-up, the partnership will combine Rakuten’s 100 million membership base and Japan Post’s well established logistics network, which includes about 24,000 post offices.

Rakuten and Japan Post said they plan to launch joint logistics centres, share delivery and pick-up systems, and combine data to find efficiencies.

Rakuten also said consumers will be able to sign up to Rakuten’s services via their post office network, and that the two companies will work together on payments and insurance.

Further details of the partnership are set to be announced in April.

“The alliance will focus on e-commerce first, where having access to Japan Post’s network will be a crucial advantage,” Rakuten chief executive Hiroshi Mikitani said at a press briefing in Tokyo. “We will also look into partnership in mobile and other businesses.”

“If Japan Post integrates some of Rakuten’s online services to its huge nationwide network, this can be a reasonably big win for both,” said Amir Anvarzadeh, a market strategist at Asymmetric Advisors in Singapore. “It adds one more reason to own their shares.”

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