Rakuten is set on challenging Amazon’s global dominance by appealing to the third-party merchants Amazon works with today and by growing it’s digital content business to compete with the Kindle.

We recently learned about the company’s strategy through the eyes of Neel Grover, the CEO of Buy.com, Rakuten’s online shopping subsidiary in the U.S.

For now, Rakuten is admittedly Amazon’s much smaller competitor, though it is dominant in Japan.

The publicly held company is worth $14.5 billion compared to Amazon’s $85 billion market capitalization, and it pales in comparison to Amazon’s mass in the U.S. Buy.com is ranked 410th here versus Amazon’s sixth-place standing, according to Compete.

But Grover said Rakuten has a two-part plan for going up against Amazon.

First, it will target and partner with third-party resellers and merchants.

Amazon does this, too, but often ends up competing with the merchants because it has its own warehouses and products that it is selling, he said.

“Oftentimes Amazon will compete with the retailer. [Third-party merchants] teach Amazon what to buy and sell, which is ultimately not good for the merchant,” he said.

Rakuten, on the other hand, does not own any warehouses or any inventory itself and instead gives retailers — brick and mortar or e-commerce — the tools and traffic to support their own businesses.

In May 2010, Rakuten acquired Buy.com.

“I sought out Rakuten. … I thought their model was one that would give us a unique differentiator in the U.S. and we could learn and bring their model to our site and customers,” Grover said. “We are still in the final stages of transforming, and it’s taken a bit of time to get it transformed.”

But, he confidently added, “It will win out in the long-term.”

A similar approach is being taken by eBay, another e-commerce giant in the U.S.

The second part of Rakuten’s plan is to go after Amazon’s growing digital business, spanning music, e-books and other content.

In November, the Japanese company purchased Kobo, a runner-up in the e-reader race behind the Kindle and Barnes & Noble’s Nook. It paid $315 million in cash for the Canadian company.

Rakuten is banking on the Kobo in assisting with its move into providing downloadable media to consumers, starting with e-books.

At the time of the acquisition, Kobo CEO Michael Serbinis told All Things D that Rakuten will give Kobo the financial backing to grow internationally, as well as compete in the U.S.

“The U.S. is absolutely important. It’s fundamental. We have millions of U.S. users today, and we plan to grow that substantially, and internationally it represents a big opportunity as well,” he said.

Earlier this month, Buy.com started linking to Kobo from its site, so that consumers have the option of buying a physical copy of a book or a digital version. Other integration efforts are also under way.

It also wants to get into other digital content, like music. Back in 1999, Buy.com was one of the original sites to have a digital music store, but Grover said it was a pretty poor experience because of all the restrictions that record labels were mandating. A lot of that has now changed.

“We are definitely looking as a group at all digital content. … We are looking at different solutions, but today we have not continued on with our initial music store,” he said.

As with Kobo and Buy.com, acquisitions are always an option, he said.

“We’ll continue to look at everything that would make our business better. It hasn’t been shy over the past two years. We have a global vision to create an e-commerce marketplace offering all goods, and we continue to see that grow.”

And going up against Amazon, some serious growth is what Rakuten and Buy.com will need.

Rakuten is a dominant e-commerce company in Japan, but also operates internationally through other brands, including Buy.com in the U.S. It said the acquisition of Kobo will assist the company in its move to provide downloadable media to consumers, starting with e-books.

More details were revealed this afternoon in a conference call with Hiroshi Mikitani, chairman and CEO of Rakuten, and Kobo CEO Michael Serbinis.

In response to my question on the call, Serbinis said Rakuten will give Kobo the financial backing and market reach to grow internationally, as well as compete in the U.S., where he says the device has achieved high single-digit market share.

“The U.S. is absolutely important. It’s fundamental. We have millions of U.S. users today, and we plan to grow that substantially, and internationally represents a big opportunity as well,” Serbinis said.

Upon closing the acquisition, Kobo said it will continue to maintain its headquarters, management team and employees based in Toronto, Canada.

Kobo, which turns two next month, had recently raised $50 million in capital from investors, including Indigo Books & Music and Cheung Kong Holdings. Indigo says it will take home about $140 million from the transaction, which represents a return of more than 300 percent.

And who knows? Maybe John Chambers, Steve Ballmer and Brian Roberts will indeed say something important today and tomorrow at Quadrangle’s Foursquare conference. Chrysler’s Robert Nardelli is speaking too. He might have something newsworthy to say.

But you are unlikely to read about it.

That’s because there’s no press allowed at the private equity shop’s annual conference, which starts this afternoon at New York’s Plaza Hotel.

Or rather, there’s some press at the event. But they’ll be on stage. And they won’t be telling their readers and listeners what they saw and heard.

CNBC’s David Faber, Becky Quick and Maria Bartiromo, for instance, will be moderating panels over the next few days. So will the New York Times’ Andrew Ross Sorkin. And network TV news bigshots Katie Couric, George Stephanopoulos and Brian Williams will answer questions themselves (Portfolio’s Matt Cooper will be moderating that one).

Am I crabby because I asked (nicely) and couldn’t get in myself? Nah. It’s Quadrangle’s event, and they can run it any way they want. But it does look like a pretty good gathering of worthies. Maybe I’ll park myself in the Plaza’s lobby and see if I can bump into some of them.

Want to join me? Here’s the agenda for next two days:

Tuesday 11/11
2:00 PM WELCOME
Joshua L. Steiner (Quadrangle)

ONE ON ONE WITH JOHN CHAMBERS (Cisco)
Moderated by Jim Citrin (Spencer Stuart)

WHO DO YOU TRUST: INFORMATION AND NEWS IN AN  OPEN WORLD
Tom Glocer (Thomson Reuters), Nancy McKinstry (Wolters Kluwer) and Sheryl Sandberg (Facebook)
Moderated by David Faber (CNBC)

ALL ABOUT WIRELESS
Jean-Bernard Lévy (Vivendi), Naguib Sawiris (Orascom Telecom) and Ben Wolff (Clearwire)
Moderated by Steven Rattner

4:15 PM BREAK

GOING IT ALONE IN AN INTERCONNECTED WORLD
Philippe Dauman (Viacom), Charlie Ergen (EchoStar) and Robert Kotick (Activision)
Moderated by Becky Quick (CNBC)

GLOBAL E-COMMERCE: $500 BILLION AND GROWING
Barry Diller (IAC) and Hiroshi Mikitani (Rakuten)
Moderated by Steve Hasker (McKinsey)

6:15 PM COCKTAIL RECEPTION
Grand Ballroom Foyer
The Plaza

Wednesday 11/12
8:30 AM WELCOME
ONE ON ONE WITH STEVE BALLMER (Microsoft)
Moderated by Ken Auletta (The New Yorker)

INNOVATION AND THE NEXT BIG IDEA
Jean-François Decaux (JC Decaux) Robert Stephens (Geek Squad founder?) and Jim Wiatt (William Morris)
Moderated by Andrew Ross Sorkin (New York Times)

A CONVERSATION WITH SAM ZELL (Equity Group, Tribune Co.)
Moderated by Joanne Lipman (Portfolio)

10:00 AM BREAK

COOP-ER-TITION: A CONVERSATION WITH PETER CHERNIN (News Corp.) AND BRIAN ROBERTS (Comcast)
Moderated by Ken Auletta

REBUILDING A BRAND FROM THE TOP DOWN
Dan Hesse (Sprint) and Robert Nardelli (Chrysler)
Moderated by Maria Bartiromo

NOON Concluding Luncheon
CAMPAIGN 2008: IN FRONT OF THE CAMERA AND BEHIND THE SCENES
Katie Couric (CBS), George Stephanopoulos (ABC) and Brian Williams (NBC)
Moderated by Matt Cooper (Portfolio)

[Image Credit: PinkMoose]