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Seven-Eleven Japan: Venturing into E-Tailing

Seven-Eleven Japan: Venturing into E-Tailing. Mike O’Donnell Nick Smith. Since 2000…. 7-11, Inc. becomes subsidiary of SEJ (2/05) Holding company, Seven & i Holdings Co., Ltd., created (9/05) Electronic money system nanaco launched (4/07) Number of stores in Japan exceeds 12,000 (12/07)

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Seven-Eleven Japan: Venturing into E-Tailing

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  1. Seven-Eleven Japan:Venturing into E-Tailing Mike O’Donnell Nick Smith

  2. Since 2000… • 7-11, Inc. becomes subsidiary of SEJ (2/05) • Holding company, Seven & i Holdings Co., Ltd., created (9/05) • Electronic money system nanaco launched (4/07) • Number of stores in Japan exceeds 12,000 (12/07) • Lawson Products acquires am/pm; total stores now 10,600 (02/09) • Announce aggressive growth plans in US and China (2/09)

  3. Seven & i E-Commerce Initiatives “Seven & i Holdings caters to six of the so-called seven deadly sins…saving wrath for its competition.” • NTV partnership • Net Supermarket • Re-brand 7dream.com as Seven-Eleven Net - Free shipping, no commissions on purchases picked up in-store, delivery to store within 4 days; orders paid and picked up at store count as store sales (incentive for franchisees); alcohol, food, toys key product lines • Focus on credit card and electronic money transactions (5.51 million nanaco cards issued as of 2/08, credit card users up 5% from 2007)

  4. Problem • Will Japanese consumers adopt nanaco as a payment method? • Will 7dream.com ever become a key contributor to SEJ profitability?

  5. SWOT Analysis Strengths - Largest retail presence in Japan - Proprietary electronic money system nanaco Weaknesses - Can no longer rely on new store growth in Japan - Store space limits what products can be held Opportunities - Culture has not changed much - US, China new store growth Threats - Lawson Products expansion - Economy

  6. Annual Report Data • S&i total sales of 5.8T yen in 2008, up 7.7% from 2007 • Operating income of 281B yen flat, due to investment in nanaco • 7dream.com (& Other) contributed less than 40B yen or 0.6% of total revenue and less than 0.9% of total operating income • Same store sales decreased 2%

  7. Recommendations • Strategic -Continue focus on nanaco and credit card payment options - Consider acquisition of smaller competitors to maintain size advantage over Lawson • Investment - Based only on 7dream.com, neutral - Based on S&i as a whole, strong buy

  8. Thank you, come again!

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