Cash-Based E-Commerce On Rise in Japan

Japan is taking business-to-consumer (B2C) e-commerce to a new level by introducing a system that allows customers to order goods online but pay cash for them in brick-and-mortar convenience stores.

The Land of the Rising Sun has long incorporated convenience stores, known as “konbini,” into its national culture. The stores sell a massive variety of items and have physical locations on almost every corner.

However, the konbini are not making the typical adjustment to e-commerce, because the Japanese have been resistant to online credit card use. According to surveys, many Japanese Web users have grown skeptical of the practice after receiving word from the U.S. of hacking incidents and stolen account numbers.

Convenience Stores as Banks

In essence, the thousands of konbini plan to transform themselves into community banks. With the Japanese financial industry in a continuing state of deregulation, the konbini will facilitate online ordering, serve as distribution and pickup centers, and accept and process payments as well.

The participating nationwide chains of konbini include Japan’s leading convenience store operator Seven-Eleven Japan Co Ltd., FamilyMart Co. and Circle K Japan Co. In addition to groceries and household goods, the chains expect to sell such items as airline tickets, CDs, downloaded music, and books.

Potential for Expansion

Currently, the konbini do not have plans to offer additional banking services. Similar shops in Britain offer savings accounts, loans and mortgages.

Still, the services that they plan to offer could save Japanese citizens time and money. Once the konbini have banking licenses, they will be electronically connected to a national system that facilitates a large volume of payments.

Other Advantages for the Consumer

In addition to the convenience in ordering, the konbini plan to offer consumers the ability to print out a bar code on their own printers, bring it into the store, scan it, and make payments.

The Seven-Eleven stores, for example, will be equipped with ATM machines from NEC, although Japanese people commonly carry cash. The machines will also accept deposits.

Debit cards, which are just catching on with the Japanese public, will also be accepted.

U.S. Retailers Watching Closely

By overcoming the two biggest hurdles of Japanese e-commerce — payment and distribution — the konbini could become an important link between the Japanese people and future expansion of online commerce.

U.S. retailers, who are still struggling to find the best way to combine online and offline commerce, will undoubtedly be watching the konbini model carefully to determine if it could come into common usage at home.