Online retailer Rakuten Inc. said Friday it has decided to effectively postpone its plan to offer free shipping from March 18 following a backlash from retailers, who would shoulder the cost.
The e-commerce giant said its plan to ship all orders over ¥3,980 ($38) free of charge, excluding some areas, will begin only with retailers who are willing to shoulder the shipping cost as initially planned.
Rakuten also said it plans to provide financial support for retailers offering free shipping if their sales or profits decline.
The decision comes after the Fair Trade Commission last week asked the Tokyo District Court for a rare injunction on Rakuten’s plan after investigating the company for potential violations of the antimonopoly law.
The antitrust watchdog opened its investigation in January, looking into whether the company was abusing its dominant position over smaller merchants who depend on its platform.
The watchdog, which last made that kind of a request in 2004, has been stepping up scrutiny of Rakuten and other tech giants, including Google LLC, Amazon.com Inc., Apple Inc. and Facebook Inc., collectively dubbed GAFA, to determine whether they are abusing their market positions.
Some retailers objected to Rakuten’s new policy, and others willing to introduce free shipping asked it to delay the service because some tenants are having difficulty securing workers and goods due to the coronavirus outbreak.
The company has said the free shipping policy will contribute to higher sales for online merchants.
A group of around 450 merchants submitted a petition to the FTC claiming that Rakuten is using its dominant position to force them to cover the cost of shipping.
The move is a big blow to Rakuten President Hiroshi Mikitani, who had said at a news conference last month that the company would go ahead with the plan regardless of the FTC’s probe.
He had insisted the new policy is essential for Rakuten and retailers on its marketplace to survive intensifying competition with rivals such as Amazon.com.
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