SEVEN-ELEVEN JAPAN

Q1. Identify the major obstacles to e-commerce in Japan.

Environmental factor:

1. Internetdial-up cost is very high

Nippon Telephone & Telegraph (NTT) controlled 95 per cent of Japan’s telephone lines. Since there is lack of competition, NTT are charging a high telephone communication fee and internet fee.

2. Government intervention in markets

-For example, under what was termed as the saihan system, it was illegal for retailers and e-tailors based in Japan to sell music CDs at a discount because of a law that protected copyright holders. Also, before 1999, the Japanese Government had regulated companies heavily in the ecommerce sector, essentially strangling the growth of online transactions.

3. Personal computer is not popular in Japan

Since the penetration rate of personal computers in Japan was only about 20 per cent as opposed to 41 per cent in the US (2000), the usage of PC is low. As a result, the popularity of e-commerce is low.

Cultural problems:

1. Being reluctant to use credit card payment due to security problem

Japanese did not like online transactions since they were wary of the ease with which hackers hacked into servers to obtain credit card information and other personal data.

2. Worry about End-fulfillment of on-line orders

End-fulfillment of on-line orders was a problem for Japanese. Most of the consumers do not stay at home during the day to receive parcels which they had ordered on-line. Consumers are also doubtful about receiving their parcels from on-line stores, either due to mailing errors or non-fulfillment on the part of the stores.

3. Cash-based culture

Japan had traditionally been a cash-based society. It was not unusual to see salaries paid in bank notes. About 90 per cent of all mail-order sales were paid for with cash-on-delivery or by bank transfer, which were also the most commonly used methods of payment for on-line shopping. Cheques were not used. Credit card payment, the most common of payment in ecommerce websites elsewhere, was not very popular, accounting for just over 10 per cent. Polls indicated that 70 per cent of Japanese disliked using credit cards for online purchases,

4. A long history of mail-order and catalogue shopping

Customers could touch the products, and perhaps obtain discounts daily necessities stores, convenience stores, or konbinisas they were known in Japan, were almost everywhere.

1. Identify the major obstacles to e-commerce in Japan.

Q2. Describe the proposed 7dream.com business model.

Target customers:

Mainly young people from teens through thirties, who had taken to the Internet most enthusiastically

Product

Offer services in eight content areas: travel; music; photographs; merchandise, gifts and mobile phones; tickets; books; car-related items; and information

This diverse range of merchandise was specially aimed at the buying pattern of most Japanese consumers and to complement the range of goods offered in the 7-Eleven Stores. The products to be offered were especially chosen for their ease of handling - if they were not viewable on screen or downloadable, they were small-sized.

Price

Price is relatively low comparing to other competitors. It is because 7dream.com is obtaining the goods directly from the warehouses of its suppliers. This meant that it would not have to hold inventory and incur warehousing costs. Beside, 7dream.comis leveraging on an existing delivery system, so customer would not be charged exorbitant delivery rates

Also, here is the payment methods:

1) Payment at 7-Eleven stores

2) Payment slips with bar codes

3) Assigned payment reference number

4) Pay by credit card over the Internet

Promotion

7-11place Internet-enabled multimedia kiosks in 7-11 stores. Customers who without the access of personal computers and the Internet can visit 7dream.com easily. 7dream.com is actively investing in e-commerce joint ventures (e.g. on-line bookshop joint venture ,car broker ) use its stores as the payment and delivery stations for eight major on-line shop operators,

Place

More than 8000 convenience stores located at nearly every street corner, city or town in the country (easily access by customers).

Customers can specify the delivery location like their home address, or address that customer preferred as well as any specifi 7-11 store.

Q3. How does 7dream.com define and differentiates its offerings from its traditional model?

	Traditional 7-11 store	7Dream.com
Payment	In 7-11 stores Cash and credit card	In 7-11 stores or through internet Cash and credit card
Business Nature	Franchise	Joint Ventures with different partners (NEC, SONY)
Accessibility	Over 8000 stores	Anywhere with internet access
Distribution Channel	Utilize the existing logistics system	Utilize and further enhance the existing logistics system
End-fulfillment	Take the merchandises from store	Take the merchandises from store / Deliver to their home or address that customer preferred as well as any specific 7-11 store. delivery address
Product	·         Food, drinks, cosmetic, newspaper and magazines, cigarette, daily necessities	·         Travel, music, photographs, merchandise, gifts and mobile phones, tickets, books, car-related items, information
Promotion	Catalogue shopping	Website for PC and mobile / Internet-enabled multimedia kiosks
Target	Whole population	Mainly young people
Variety of products	Limited range	Wide range

Q4. Identify the critical success factors of the business plan of 7dream.com.

Problem: Internet dial-up cost is very high

Solution: Japanese government deregulated stock commissions in 1999. It enable consumers to start trading via the Internet. Japanese government also introduced competition into the telecommunications industry by splitting Nippon Telephone& Telegraph into3companies.

Problem:. 

Government intervention in markets

Solution: 

In the 1999, the government promoting deregulation and e-commerce, splitting the ISP monopolies up

Problem:. 

Personal computer is not popular in Japan

Solution: 

Internet-enabled multimedia kiosks enable consumers who did not wish to connect to the Internet at home, or did not have personal computers with Internet access, to access the full services of 7dream.com.

Problem:. 

Being reluctant to use credit card payment due to security problem and Cash-based culture

Solution: 

Customers pay for the purchases through their assigned payment reference number to the cashier or Payment slips with bar codes. They don’t need to use purchase or worry about the end- fufilment because they can also directly take the products from stores.

Problem:

. Worry about End-fulfillment of on-line orders

Solution:

If customers do not satisfy the merchandise, customers can return to the same store.

Problem:. 

A long history of mail-order and catalogue shopping

Solution:

The youngers in Japan enjoy stay home and do as much thing as they can, instead of go outside. 7dream provides the platform they need to buy things for daily use. Also, 7dream.com provide products which traditional stores does not provide.