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
vTry to meet customers 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 customers 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:
vAble 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
vDelivered 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.

Japans 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 ebusiness-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
Payment system
Challenge Consumers reluctant to reveal credit card information Solution Option to pay for purchases at a 7-Eleven store

Delivery system
Challenge End-fulfillment problems Solution Option to pick up purchases at a specified store

Payment and delivery scenario

Customer goes online via Internetenable 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

Customer picks up purchased items after payment

Customer brings payment slip to the nearby store

Order Centre notifies customer pick up date

Challenges Faced
In the short term, theyll be major players because of their networks, but the Japanese will begin using electronic cash and home delivery, like Americans - Hirokazu Ishii, analyst

Store space limitation Manpower Service level

Different products sold on

7dream.com Customers buy items from store while picking up their orders

Todays Context

Source: Euromonitor International, January 2010

Todays 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