Case Study 2: Seven Eleven Japan

Company Background:

7dream.Com which was founded in 2000 and is based in Tokyo owns and operates an e-

business Web portal. The company is under Seven-Eleven Japan which is a reputable

convenience chain stores. It was the biggest B2C e-commerce website in Japan.

      
 How does 7 dream.com define and differentiates its offerings from its physical store?

    7 dream.com provides service based on technical expertise and industry knowledge.

    The major from of product and service in 7 dream is click and mortar. Customer can
     make orders in 7 dream.online and pick up from 7-eleven

    There are 8 main products and services in 7 dream.com which are travel, music, photographs,
     merchandise, gifts and mobile phones, tickets, books, car-related items and information

     7 dream.com offer several benefits to consumer via the system

     7 dream.com has low handling cost and less processing time.

     Also, the shipping and handling charged in 7 dream.com is significantly lower when comparing with other e-commerce companies.

    It is more convenient as customer cam just pick up your staff in your neighborhood after ordering online

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7-eleven Inc can gain some advantages through the model of 7 dream.com.

The shipping cost is lower because 7-eleven has already making deliveries to 7-eleven stores. That makes the additional cost minimal.

There is low or even no inventory and warehousing cost as 7 dream.com would be dealing with wholesalers directly.

       Differentiation

	Physical store	Online
Business	l More than 8000 convenience stores l Food,drinks, cosmetic, Daily necessities, Newspaper and magazines, Cigarette  l Touchable products  and easy to handle	l Offer service in 8 areas l Travel, music, photographs, merchandise, gift and mobile phone, tickets, books, car related items and information
Target market	Consumer	l Mainly young people from teens to thirties l The generation that had taken to the Internet most enthusiastically
Payment	Pay for their purchase by cash or credit card	l Pay for their online purchase at 7-eleven store l Pay utility bills
Inventory	Rental cost	l Obtain the goods directly from the warehouse of suppliers
Delivery system	Allow get real product by face to face	l   Choose to delivery to their home or other delivery address or pick up at a 7-Eleven store l   Low delivery charge for customer

What is the role of Japan Government

       1) The Japan Government can be promoter of E-commerce.

      

       It deregulated stock commissions in 1999 and enable consumers to start trading via the Internet.

       

       It also changes the buying behavior of consumers.

       

       The Government Introduced competition into the telecommunications industry by splitting Nippon Telephone & Telegraph into 3 companies which boosts the development of the telecommunications.

       

       Moreover, it develop a common platform to work for the realization and expansion of e-commerce

       

       Through MITI, the Electronic Commerce Promotion Council of Japan (ECOM) was established in January 1996

       the US government demanded that Nippon Telephone & Telegraph lower access fees by 22.5 per cent over a two-year period starting from 2002, and ultimately by more than 40 per cent.

       The Japan government insisted that the reduction be limited to 22.5 per cent over a four-year period instead 

      2) Market Coordinator is another  role of the Government

             

            The Japan Government actively intervened in markets to promote producers' interests.

             For example, it was illegal for retailers and e-tailers based in Japan to sell music CDs at a discount because of a law that protected copyright holders. 

What is the Major Obstacles to e-commerce in Japan

1) Local Culture

       Japan had traditionally been a cash-based society. Japanese people have their own payment

       habit. It is usual to see salaries paid in bank notes and about 90 per cent of all mail-order sales were paid for with cash-on-delivery or by bank transfer

2) Buying habit

              People living in Japan purchase necessities in a small amount frequently

3) Fear of information leakage

             Japanese citizens have traditional mindset that credit card information will be stolen by hackers

4) End-fulfillment of On-line Orders

             Some Japanese people may not at home during the time to receive parcels they had ordered on-line

             They doubtful about receiving their parcels from on-line stores, either due to mailing errors or non-fulfillment on  the part of the stores

             They also prefer a tangible touch and evaluate of the online products.

5) Government Regulation

             The Japanese Government had regulated companies severely in the e-commerce industry, essentially strangling the growth of online transactions. It was also difficult for the consumer to browse internet.

6) Low Penetration Rate of Personal Computers and Expensive Connection Charge

             The number of homes with personal computers in Japan was considered low.

             According to e-Marketer, the penetration rate of personal computers in Japan was only about 20 per cent as opposed to 41 per cent in the US.

             And the world's highest combined telecommunication and ISP fees

7) Limited space

             Many Japanese homes were tiny and had no space to accommodate a personal computer.

             Also, Japanese found it difficult to store an online bulk purchase.

             They usually do not have a large refrigerator or storage space.

       8) High Accessibility of Convenience Store

     It is easy for Japaneses to access to the nearby stores as there were more than 8000 convenience stores in Japan.

9) Literacy Rates

      The growth of B2C e-commerce was slow compared to other G7 countries.

      Also,low education level of Japanese may find it hard to purchase online 

What is the Internal and External success factors of 7 dream?

Internal success factor

!) Wide range of business content

Online offer service in 8 areas which are travel, music, photographs, merchandise, gift

and mobile phone, tickets, books, car related items and information

The products to be offered on 7 dream.com  would not be sold in convenience stores

because of limited space.  

2)Great distribution network

     Orders are received from the internet and most of good ordered can be taken by the customers or their friend with a receipt in a specific store.

     With the delivery system which was already in place, orders on 7 dream.com would only  be charged a minimal cost and it is lower than the shipping and handling charges by other e-commerce companies.

3)Application of information technology

      Point-of-sale (POS) systems  will regularly updated for efficiency in the store.  

      Just-in-time inventory allowing the company to have a better resource allocation and planning sell-out schedules, shelf-stocking methods, weather, and local events.

      There is highly responsive to consumers’ shifting demand.If the weather is predicted to be bad, the company will put out the umbrellas near sales counter.

      IT system centralizes the communication among all stores by delivering products that require the same temperature range together, reducing the number of daily delivery trucks from 70 to 10 in 1975.

4)Other

             Install Fifth-generation total information system

             Link all 7-eleven stores via satellite

   Transmit large volume of information and high speed

             Have superior information- processing capability

             keep inventories at efficient level 

External success factor

 1)Technology improved & new products

      There is a new trend for e-shopping. The appearance of Debit cards and—  Smart card enhance the convenience of using e-cash. 

      Also, Japanese people start to enjoy home delivery service

  2)Wireless devices development

      Internet mobile services was on the rise. it can promote e-commerce

  3)Planning to utilize other channels to promote

       E.g. Digital broadcasting ,TV and magazine