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7-11 Japan: Venturing into E-Tailing

7-11 Japan: Venturing into E-Tailing. Mike O’Donnell Nick Smith. Background. Toshifumi Suzuki - SEJ franchise 1973 Most popular in Japan Sales reached a plateau Business Slogan “Adapting to Change”. Background. State of Japanese e-commerce in 2000

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7-11 Japan: Venturing into E-Tailing

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  1. 7-11 Japan:Venturing into E-Tailing Mike O’Donnell Nick Smith

  2. Background • Toshifumi Suzuki - SEJ franchise 1973 • Most popular in Japan • Sales reached a plateau • Business Slogan “Adapting to Change”

  3. Background • State of Japanese e-commerce in 2000 • All 7-11 stores linked via Total Information System • Dallas/Ft Worth pilot in US • 51% share in 5B yen (~39M USD) partnership

  4. 7dream.com Japanese English (translated)

  5. Problem • Will consumers use 7dream.com to purchase goods and services? • Will consumer wariness of online payment and home delivery continue indefinitely or transition to US model?

  6. SWOT Analysis Strengths - POS and TIS already in place - Buy-in from corporate partners - 8000 stores, rapid growth - 9 million customers Weaknesses - Sales per store stagnant - Limited store space - Japan 21st in e-commerce readiness - Top-down management style Opportunities - Deregulation - Culture (cell phone usage) - Leverage existing physical store locations/ install kiosks Threats - Lawson Products, Inc. - High ISP fees, low PC ownership - Potential culture shifts

  7. Annual Report Data ’97’98’99 Sales (in yen) 1.74T 1.85T 1.96T # of Stores 7314 7732 8153 As of January 2000 • Tobacco, alcoholic and nonalcoholic beverages make up nearly 60% of sales • Non-food items make up less than 10% of sales

  8. Recommendations • Strategic - Go ahead as scheduled but develop contingency plan if home delivery takes off - Focus on core product line (books, electronics, etc.) - Analyze customer use thoroughly (attracting new customers, home PC use vs kiosk, comparisons to US) - Heavily market to cellphone users (early adopters) • Investment - Strong Buy

  9. A Look Ahead • Website changes: 7dream.com is now 711net.jp • In 2005, 7-11, Inc. becomes subsidiary of 7-11 Japan; Company taken private • Japanese culture shifts

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