Seven-Eleven Japan: Venturing into e-Tailing

Dixon Tioh Minh Phuong

Syafiqah Bestia Tan Xavier Woo Zhen Zhen

About Seven-Eleven

• Largest convenience store chain in Japan v  8,000 stores, growing 400-500 each

year v  Store space around 1,200 square feet v  Carrying about 3,000 types of products

About Seven-Eleven • Pioneer in providing popular ready-made

meals

v  sushi/ spaghetti/ bento set

• No.1 outlet for fast-food, batteries and

ladies stockings

• No.2 outlets for magazines and paper

bags

The major strategies of Seven-Eleven Japan Co. Ltd Adapting to

Change

Information and Distribution

Systems

E-Commerce Ventures

Adapting to Changes

• Slogans: “ADAPTING TO CHANGES” v Try to meet customer’s needs and satisfaction

v  Attracted more patrons to their stores

• Results:

v  Economic downturn in 2000, Seven Eleven still survive with

highest profit.

Information and Distribution Systems •  First Information System in 1978.

• Point-of-Sale introduced in 1982 v  Sold-out merchandise tracking data v  Merchandise information package v  Business and event calendar

• Results:

v  Extremely responsive to customer’s change in taste

Information and Distribution Systems •  In 1999,they created a Fifth-General Total Information

System

v  Link all retail stores to headquarters (HQ)

v  Store computers and at HQ system can analyze POS data

simultaneously

• Results:

v Able to view sales trend -> decide on replenishment, drop of keep

product and new items.

Information and Distribution Systems • Seven-eleven need frequent deliveries to their store •  Joint delivery program

v  Product requires same temperature zone would be grouped at a SINGLE SUPPLIER DISTRIBUTION CENTRE

v Delivered in truckloads to group of seven-eleven stores in different

regions

• Results: v  daily supplies supposed to take 70 trucks reduce -> 10 trucks

E-commerce Ventures • Active investment in e-commerce joint ventures

v  E-Shopping! Books Corp, on-line bookshop joint venture between Softbank Corp. and Tohan Corp.

•  Using its chain of stores as a Distribution Centre. v  Stores as payment and delivery stations for 8 major on-line shop

operators.

Japan’s E-Commerce Situation •  Japan ranked 21st position

v  Lowest among the Group of Seven (G7) industrialised countries v  Source: The EIU ebusiness forum, "Introducing the EIU's e-

business-readiness rankings", 4 May 2000.

• High internet usage, but slow growth of B2C

v  Why so?

Factors affecting E-commerce • High connection charges

v  Charged by the minute v  Japan had the world's highest combined telecommunication and

ISP fees

•  Local culture v  Phobia of submitting credit card information over the Internet v  Mailing errors & non-fulfilment orders v  Offline shopping & konbinis

• Government intervention v  Current system was maintained at the expense of consumers

Formation of 7dream.com • Venture fully into e-commerce •  Introduce a unique e-commerce model •  Initiate a joint venture with several major Japanese companies •  Sony Corp. •  Sony Marketing (japan) Inc •  NEC Corp •  Nomura Research Institute •  Mitsui & Co. •  Japan Travel Bureau Ltd. •  Kinotrope Inc.

• 7dream.com is formed

Business • Offers services in 8 categories:

•  Travel •  Music •  Photograph •  Merchandise, gifts, mobile phones •  Ticket sales •  Books •  Car-related services •  Information services

• Utilize existing Seven-Eleven Japan delivery system

The Target Market

• From teens to adults in their thirties

• Why? •  Frequent customers of konbinis

•  Dictated the shopping trends in the country

•  Current adopter of the Internet

•  Welcome the idea of on-line shopping site

Solutions to challenges

•  Introduction of Multimedia Kiosks (MMK)

•  Full access to all 7dream.com services

•  Download games, music

•  Print digital photos

•  Apply for mobile phone lines

•  Make hotel reservations

Solutions to challenges

• Challenges to access 7dream.com

•  Lower penetration rate of personal computer

•  Expensive wired dialup

•  Unable to accommodate a personal computer at home

Solutions to challenges

Challenge

•  Consumers reluctant to reveal credit card information

Solution

•  Option to pay for purchases at a 7-Eleven store

• Payment system

• Delivery system

Challenge

•  End-fulfillment problems

Solution

•  Option to pick up purchases at a specified store

Payment and delivery scenario

Customer goes online via Internet-

enable device

Makes purchase and specifies pick up at the 7-Eleven store

nearby

Order is processed and shipped by Order

Centre via Distribution Centre to

the specified store

Order Centre notifies customer pick up

date

Customer brings payment slip to the

nearby store

Customer picks up purchased items after

payment

Challenges Faced

• Store space limitation • Manpower • Service level

• Different products sold on 7dream.com

• Customers buy items from store while picking up their orders

“In the short term, they’ll be major players because of their networks, but the Japanese will begin using electronic cash and home delivery, like Americans” - Hirokazu Ishii, analyst

Today’s Context

Source: Euromonitor International, January 2010

Today’s Context

Source: Euromonitor International, January 2010

Coping with new challenges

• Adapting to Changes •  Creating new services

Coping with new challenges

• Adapting to Changes •  Creating new services

• Platform Changes •  M-commerce •  Social Media

Thank You • Q&A