Seven-Eleven Japan

Seven-Eleven Japan

 7dreams.com

Company History

1973 November

York Seven Co., Ltd., established Licensing agreement and area service contract concluded with The Southland Corporation, USA (currently Seven-Eleven, Inc.)

1974 May

First store opened (Toyosu Store, Koto-ku, Tokyo)

1975 June

24-hour operations (Toramaru Store, Koriyama, Fukushima Prefecture) begun

1976 September

Integration of suppliers and joint delivery started

1978 January

Corporate name changed to Seven-Eleven Japan Co., Ltd.

1982 October

POS system and EOB ordering system introduced

1985 August

Introduction of interactive registers able to transmit information to and from the headquarters and stores

1987 October

Payment of Japan companies’ bills becomes possible at 7-Eleven stores

1988 November

Control system to keep cooked rice items at 20celsius in factories, delivery trucks, and display cases started

1990 September

Introduction of Fourth-Generation Total Information System

1991 May

ISDN (Integrated Services Digital Network) launched

1992 February

Store image refreshment begun

1995 June

Payment for mail-order purchases becomes possible at 7-Eleven stores

1996 March

Introduction of weather information system

1997 November

Introduction of Fifth-Generation Total Information System

1999 November

Launch of e-Shopping! Books service (currently Seven and Y Corp.) Payment service for Internet shopping introduced

2000 February

Establishment of e-commerce company, 7dream.com (service commenced in July 2000)

Coverage

Products @ physical stores

• color photocopiers services
• cooked rice items
• game software
• international phone card
• magazines and periodicals subscription service
• music CDs
• nutritional drinks
• payment services

Products @ 7-dreams.com

• Books
• Car-related items
• Gifts and mobile phones
• Information
• Merchandise
• Music
• Photographs
• Tickets
• Travel

Synergism of 7dreams and Physical Stores

• An option of paying for their on-line purchases on 7dreams.com at a 7-Eleven store
• Payment slips with bar codes to make payments. Customers without printers could just state their assigned payment reference number to the cashier at the 7-Eleven stores.
• Products to be offered were especially chosen for their ease of handling - if they were not viewable on screen or downloadable, they were small-sized.
• 7dream.com would utilize the existing logistics system that Seven-Eleven Japan employed for distribution of goods to its network of convenience stores. As the delivery system was already in place, orders on 7dream.com's site would probably only be charged a minimal cost, which would be significantly lower than the shipping and handling charges levied by other e-commerce companies
• Using the information system, Seven-Eleven Japan was able to provide its stores with useful, easy-to-use data and visual information, enabling reductions in missed sales opportunities and inventory write-offs through precise item-by-item management
• Option to delivered to the delivery address or pick up their purchase at a 7-Eleven store
• Promoting 7dreams.com by providing internet-enabled multimedia kiosks at 7-Eleven stores

	Traditional (Physical Stores)	7dreams.com
Business Content	Product range is similar to others competitors (snack, meal, etc)	New product & services that are not usually be found in other convenience stores would be provided: Travel, music, photograph, merchandise, gift and mobile phone, books, car-related items, information
Payment Method	Cash, Credit card	Electronic payment, eg. credit card, online payment, payment at the 7-Eleven store
Delivery Method (Out-bound Logistic)	Customers have to go to the physical store to buy the merchandises	Customers can either choose to pick up goods at the 7-Eleven stores in their neighborhood or directly send to their home.
In-bound Logistic	depends on demand, some district has high concentration of customers	Centralized place to receive orders
Ordering Fulfillment	Only physical stores, limited space	There are carry on their purchase via kiosks and personal computer
Inventory	holding inventory in warehouse	Products are sent directly from supplier to store and thus, no holding cost
Service Hours	Regular hours (MTR station, shopping mall)	24 hours
Target Customers	Customers live near the physical distribution	extend to an ideal target to market an online shopping site, especially young people who enjoy community life in Japan

Role of Government in Japan for Growth of e-Commerce

• Introduction of competition of telecommunication by splitting NTT into 3 companies
• Lower connection charges
• Through MITI, the Electronic Commerce Promotion Council of Japan (ECOM) provided a platform and expand e-commence in 1996
• At 1999, government deregulate the online transactions
• Actively promote e-Commence

Major Obstacles to e-Commerce in Japan

Personal experience

• They were doubtful about receiving their parcels from online store because of mailing error or non-fulfillment on the part of store.
• Japanese usually were not at home and they had to work. Thus, they couldn’t receive goods at their home which was not convenient.
• The percentage of owning a personal computer was low. According to eMarketer, the penetration rate of personal computers in Japan was only about 20 per cent as opposed to 41 per cent in the US.

Security Concern

• Japanese consumers had the phobia about submitting credit card information over the Internet.70% of Japanese disliked online purchase as they are wary of the ease with hackers hacked into server.

Local Culture

• Japan is a traditionally cash-based society. The majority of Japanese paid for cash-on-delivery or by bank transfer for their mail-order sales.
• They were used to buying offline. Customers could see and touch the products in the physical stores. Japanese were not eager to use the e-business on the internet.
• The Japanese community is already traditionally very familiar with, like spending time 7/11, so it was an excellent venue for them to browse items, purchase items through the kiosks, and pick up delivery.

Government policies

• In the 1990’s, government intervened in market to promote producer’s interest, but the law was very contraignant sometimes. For example, it was forbidden for retailers or e--retailers to sell music Cd’s because of copyright holders.
• The e-commerce could only grow up with the deregulations of telecom companies from the government.

Unfavorable Business environment

• It was also relatively expensive for internet connection charge and dial up cost since they were paid based on the amount of time spent on the Internet. Besides, there was not enough support for wireless device, so it was not convenient to use their personal computer to access internet. Japan had one of the world’s highest combined telecommunication and ISP fees which hinder the development of e-business.

Critical Success Factors of 7dreams.com

Obstacles	Revolution
Refusal in using Credit Card	Customers can pay by cash or debit cards in 7-Eleven stores
Connection charges is high	Government policy – create competition by splitting the telecom giant NTT into 3 companies
Problems of end-fulfillment	Customers can pick up their purchases at 7-Eleven stores
Convenience store is too nearby; which can be easily reach the shop and buy	7dream.com Differentiate the products which is not available at 7-Eleven physical stores
Coverage of the internet in Japan is very low, and only 20 % of the Japanese have personal computer	Introduction of Internet-enabled multimedia kiosks to access the full services of 7dreams.com
	Low operation cost by leverage of the existing distribution system
	Wider product range – complementary of 7-Eleven physical stores
	Cooperate with industry expertise

Reference

7-Eleven Background

http://www.7andi.com/dbps_data/_template_/_user_/_SITE_/localhost/_res/ir/library/ar/pdf/2012_11.pdf

7-Eleven History

http://www.sej.co.jp/company/en/history.html