7-11 To Tackle E-Commerce, Japanese Style

Japan’s largest convenience store, Seven-Eleven Japan Co Ltd, announced Thursday that it will launch an e-commerce Web site called 7dream.com on July 1st.

The company said that 7dream.com shoppers will be able to browse through over 100,000 items, including music, flowers, and photo supplies, place their orders online, and then go to their local 24-hour 7-11 stores to pay for and collect their purchases.

At a press conference in Tokyo announcing 7dream.com’s launch, Seven-Eleven chairman Toshifumi Suzuki said, “This will be a first step toward the full-fledged start of business-to-consumer e-tailing in a uniquely Japanese style based on the extensive network of the nation’s convenience stores.”

Seven-Eleven To Install Terminals

E-commerce is exploding in Japan, according to a report by the Electronic Commerce Promotion Council of Japan (ECOM), which found that Japanese consumers spent $3.2 billion (US$) online last year, and projected that they will spend $68 billion online by 2005.

Although 27 million Japanese, or 1 in 5, have Internet connections, 7dream.com is not taking any chances. Seven-Eleven said that it will soon begin installing terminals in its convenience stores for those people who do not have Internet access at home.

Seven-Eleven plans to integrate the services of 7dream.com with its e-Shopping! Books, which is a joint venture with Internet investor Softbank. An announcement of further details of the integration are expected in a month.

Patent Application

Seven-Eleven has applied for a patent for the 7dream.com e-commerce business model, according to Suzuki.

Partners in the 7dream.com venture include electronics giants Sony and NEC, the Nomura Research Institute, and major trading house Mitsui & Co Ltd. Playing down the possibility of Softbank joining the venture, Suzuki said, “Partners of the venture will remain unchanged for the time being.”

Seven-Eleven is aiming for profits of $1.4 billion in its fiscal year 2001 to 2002 and double that the following year. Although Seven-Eleven remains profitable, convenience stores in Japan have been dwindling in the last year.

The Japan Franchise Association announced earlier this week that convenience store sales were 1.6 percent lower in May than sales from the same month last year. The association said it was the second straight monthly decrease.

E-Business in Japan

Despite Japan’s economic woes, e-commerce is growing. Speaking at an e-commerce symposium of U.S. and Japanese executives earlier this week, Teruyasu Murakami, managing director of Nomura Research Institute, said e-business in Japan had grown steadily since the mid 1990s. He added that between 500 and 800 e-businesses opened their virtual doors in Japan each month.

He also said that Japanese firms are starting to innovate and create new business models. He said a company such as 7dream.com would only be possible in Japan, where convenience stores are within walking distance from almost any location.