Seven-Eleven Japan: Venturing into E-Tailing

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Seven-Eleven JapanVenturing into E-Tailing

• Mike ODonnell
• Nick Smith

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Since 2000

• 7-11, Inc. becomes subsidiary of SEJ (2/05)
• Holding company, Seven i Holdings Co., Ltd.,
  created (9/05)
• Electronic money system nanaco launched (4/07)
• Number of stores in Japan exceeds 12,000 (12/07)
• Lawson Products acquires am/pm total stores now
  10,600 (02/09)
• Announce aggressive growth plans in US and China
  (2/09)

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Seven i E-Commerce Initiatives

• Seven i Holdings caters to six of the
  so-called seven deadly sinssaving wrath for its
  competition.
• NTV partnership
• Net Supermarket
• Re-brand 7dream.com as Seven-Eleven Net
• - Free shipping, no commissions on purchases
  picked up in-store, delivery to store within 4
  days orders paid and picked up at store count as
  store sales (incentive for franchisees) alcohol,
  food, toys key product lines
• Focus on credit card and electronic money
  transactions (5.51 million nanaco cards issued as
  of 2/08, credit card users up 5 from 2007)

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Problem

• Will Japanese consumers adopt nanaco as a payment
  method?
• Will 7dream.com ever become a key contributor to
  SEJ profitability?

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SWOT Analysis

• Strengths
• - Largest retail presence in Japan
• - Proprietary electronic money system nanaco

• Weaknesses
• - Can no longer rely on new store growth in Japan
• - Store space limits what products can be held

• Opportunities
• - Culture has not changed much
• - US, China new store growth

• Threats
• - Lawson Products expansion
• - Economy

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Annual Report Data

• Si total sales of 5.8T yen in 2008, up 7.7 from
  2007
• Operating income of 281B yen flat, due to
  investment in nanaco
• 7dream.com ( Other) contributed less than 40B
  yen or 0.6 of total revenue and less than 0.9
  of total operating income
• Same store sales decreased 2

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Recommendations

• Strategic
• - Continue focus on nanaco and credit card
  payment options
• - Consider acquisition of smaller competitors to
  maintain size advantage over Lawson
• Investment
• - Based only on 7dream.com, neutral
• - Based on Si as a whole, strong buy

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Thank you, come again!