Company background
7-11 is the
world’s largest convenience store chain with more than 52100 stores in 16
countries. Moreover, it has diverse
business which includes 7dream.com (online store) and independent gasoline
retailers. The company’s name was changed from the southland corporation to
7-11 on April 28, 1999.
7-11 was founded in1927 in Dallas, Texas. It focuses on meeting the needs of
convenience-oriented guests by providing a broad selection of fresh,
high-quality products and services at everyday fair prices, speedy transactions
and a clean, friendly shopping environment. It also provides a lot of
specific services which include automated
money orders, automatic teller machines, phone cards and, where available, lottery
tickets.
Case focus
In the case
study, we focus on the e-business in Japan. We discussed in detail why 7-11 runs
the 7dream.com which is an online shopping platform in Japan.
The questions
we discussed are:
1.
How does 7dream.com define and differentiate its
offerings from its traditional model?
2.
What is the role of the
Japanese government in the e-commerce business ?
3.
What are the the major obstacles to
e-commerce in Japan?
4. What are the critical success factors
of the business plan of 7dream.com?
1.
7dream.com versus the physical 7-11 store: definition and differentiation in
offerings
7dream.com is
an online store (Cricks model) operation whereas traditional model of 7-11 is
physical store (Bricks model) operation. We differentiate these 2 models from Nature of
business, Target
market, Product and services, Payment method, Accessibility.
7dream.com is
an online platform combined with a multi-store. Its
target market is the younger generation. The main reason is that most of teenagers do know
how to use online platform whereas elderly do not really know how to use an online
platform. It sells diverse
products, including holidays, music, photographs, merchandise, gifts, mobile phones,
tickets, books and car-related items. After choosing the
product, customers could make an online payment via paypal or their credit card account. Moreover,
they can settle the payment in a physical 7-11 store. Since it is
an online store, the accessibility is quite high, as they only need a device which can access the internet, and broadband subscription.
In other words, customers can make a purchase anywhere at any time.
The 7-11physical store is convenience store that sells fast moving goods. Its target market relates to individuals below the age of 30 and mostly
teenagers. It is easy to identify it from their products. It sells
commodities such as snacks, drinks, packaged food, etc. The services are also
diverse and include bill payment services, Octopus charging etc. After choosing their product, they can settle the payment in the store by cash, credit card, union cards, etc. It is just likes other
shops. Since the stores coverage is quite large, customers can easily
find a 7-11 store. However, there is a
possibility that people cannot find a
store. The accessibility is comparatively lower than an online
store.
2.
The role of the Japanese
government in the e-commerce business
The Japanese government plays a major role in
the development of e-commerce. First, the government owns the major telecommunication
company. It can force to decrease the fee of broadband subscription in order to increase
the usage of internet platform. Second, it deregulates
the stock commission from online transaction. It encourages the people to do transaction through internet platform. Moreover, it promotes the ownership of PC’s and try to increase the
awareness of online transaction. On other words, the government facilitates the
E-commerce business activities. Third, the government splits the telecommunication company to Nippon telephone and telegraph, and intends to increase the competition of telecommunication
industry in order to lower the broadband subscription fee and increase the
broadband subscription rate. From above measures that
the government did, we can see that the government have paid a lot of affords
to facilitate the development of E-commerce.
3. The
major obstacles to e-commerce in Japan
There are 2 categories obstacles to
e-commerce which are cultural obstacles and environmental obstacles. In the
cultural obstacles, people are fear of submitting credit
card information. Although some people always surf the internet, they
still don’t
really believe the security of internet. Moreover, Japan is cash based
society. They prefer to pay by cash rather than by credit card, Paypal. Lastly, there
are many
uncertainties in end-fulfillment. The absence of the customers, mailing
errors, non-fulfilment will lead to low fulfillment rate. It seems
that parts of the Japanese culture are obstacles to e-commerce.
In environmental Obstacles, the broadband subscription fee is quite
expensive in japan. There are many people that still cannot afford it that make
the broadband subscription rate lower than other countries. Moreover, the
computer ownership rate is quite low. There are only 20% of population owns a
PC. It means
that there are less people really knowing about e-commerce. Lastly, there
are
strong governmental regulations in the e-commerce sector that make people
fear about it. It is because they don’t know when they will break the
regulation and committed crime.
4.
The critical success factors of the business plan of 7dream.com.
There are 3
major success factors which are internal capabilities, solution of Cultural Obstacles, governmental factors for
7dream.com.
In internal Capabilities, 7-11 has many
sophisticate IT systems which are Point-of –sale system, 5th
generation total information system, distribution system. The point of sale
system and 5th generation total information system enable the
instant sales information to be monitored, analyzed and stored automatically.
Moreover, it enables the use of par code that simplified the transaction and
information storage process. The distribution system are also increase the
flexibility of product distribution. All of these systems can lower the
operation cost and increase the efficiency. Moreover, 7-11 has many
Joint venture with industry expertise that enable it to provide a diversify
product and better service for customers, and become one of its’
competitive advantage.
In solution of Cultural Obstacles, since there
are many cultural obstacles we discuss in Q3, the company come up with many
successful solution which their competitor do not have. They have effective
marketing strategy. They provide multimedia kiosks in the store that provide a
channel for customer to purchase through the online platform. They foster
cultural acceptance of online transaction and ownership of personal
computers that helping it gains more market share in
Japan. Moreover, the universal presence of physical store is one of major
success factor. It provide a physical store to store the ordered goods to
enable the customer pick up their good in the store in order to increase the fulfillment
rate. Moreover, the customers can finish the payment of online transaction in
the store to eliminate the effect of online security problem.
In the governmental factor, due to the
government support of e-commerce, e-commerce is more normal in Japan. In other
words, the government facilitates the sales of
the online store thus benefitting 7dream.com.
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