Harvard Case - Seven-Eleven Japan: Venturing into e-Tailing
"Seven-Eleven Japan: Venturing into e-Tailing" Harvard business case study is written by Ali F. Farhoomand, Deric Tan. It deals with the challenges in the field of Strategy. The case study is 18 page(s) long and it was first published on : Jan 1, 2000
At Fern Fort University, we recommend that Seven-Eleven Japan (SEJ) aggressively pursue its e-tailing strategy, leveraging its existing strengths and adapting to the evolving market landscape. This strategy should be implemented with a focus on innovation, competitive advantage, and customer-centricity, while addressing the challenges of digital transformation, supply chain management, and competitive forces in the Japanese market.
2. Background
The case study focuses on Seven-Eleven Japan's (SEJ) decision to enter the e-tailing market. SEJ, a dominant player in the Japanese convenience store industry, faced declining store traffic and increasing competition from online retailers. The company sought to leverage its existing infrastructure and brand recognition to capture a share of the growing online market.
The main protagonists of the case study are:
- Toru Arakawa, President and CEO of SEJ, who spearheaded the e-tailing initiative.
- SEJ's management team, tasked with developing and executing the e-tailing strategy.
- Japanese consumers, who are increasingly embracing online shopping and demanding convenience and variety.
3. Analysis of the Case Study
Strategic Analysis:
- SWOT Analysis: SEJ possesses several strengths, including a strong brand, extensive store network, and customer loyalty. However, its weaknesses include limited online experience and potential cannibalization of existing store sales. Opportunities lie in the growing e-commerce market and the potential to expand product offerings. Threats include intense competition from established e-tailers and the need to adapt to rapidly changing consumer preferences.
- Porter's Five Forces: The Japanese retail market is characterized by intense competition, high bargaining power of suppliers, and low barriers to entry. The threat of substitutes is high due to the availability of online alternatives. However, SEJ's strong brand and established customer base provide a degree of differentiation.
- Value Chain Analysis: SEJ's existing value chain can be leveraged for e-tailing, with its supply chain, logistics, and customer service infrastructure providing a strong foundation. However, the company needs to invest in technology and analytics to optimize its online operations.
Financial Analysis:
- Business Model Innovation: SEJ can explore various business models, including online ordering with in-store pickup, delivery services, and subscription models. These models can leverage existing infrastructure and optimize cost structures.
- Financial Projections: SEJ should conduct thorough financial analysis to assess the profitability of its e-tailing strategy. This analysis should consider factors such as customer acquisition costs, delivery expenses, and potential cannibalization of store sales.
Marketing Analysis:
- Market Segmentation: SEJ should target specific customer segments based on their online shopping behavior and preferences. This segmentation can help tailor product offerings, marketing campaigns, and pricing strategies.
- Brand Management: SEJ's strong brand can be leveraged to build trust and credibility in the online space. The company should maintain consistency in branding and messaging across all channels.
Operational Analysis:
- Supply Chain Management: SEJ needs to optimize its supply chain for e-tailing, ensuring efficient order fulfillment and delivery. This may involve partnering with third-party logistics providers and investing in warehouse automation.
- Technology and Analytics: SEJ should invest in technology and data analytics to improve website performance, personalize customer experiences, and gain insights into consumer behavior.
4. Recommendations
- Develop a Multi-Channel Strategy: SEJ should adopt a multi-channel approach, integrating its online and offline operations. This includes offering online ordering with in-store pickup, delivery services, and a seamless customer experience across all channels.
- Focus on Customer Experience: SEJ should prioritize customer experience by offering convenient delivery options, competitive pricing, and personalized recommendations. This includes leveraging data analytics to understand customer preferences and optimize the shopping journey.
- Leverage Existing Strengths: SEJ should leverage its existing brand, store network, and supply chain to gain a competitive advantage in the e-tailing market. This includes utilizing its existing infrastructure for online fulfillment and leveraging its strong relationships with suppliers.
- Invest in Technology and Analytics: SEJ should invest in technology and data analytics to enhance its online operations, improve customer experience, and gain valuable insights into consumer behavior. This includes investing in website optimization, mobile app development, and data analytics platforms.
- Strategic Partnerships: SEJ should explore strategic partnerships with other companies, such as delivery service providers and technology companies, to enhance its e-tailing capabilities and expand its reach.
- Continuous Innovation: SEJ should continuously innovate and adapt to the evolving e-commerce landscape. This includes exploring new business models, product offerings, and technologies to stay ahead of the competition.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: SEJ's core competencies in convenience, customer service, and supply chain management can be leveraged for e-tailing, aligning with its mission of providing convenience and value to customers.
- External Customers and Internal Clients: The recommendations consider the evolving needs of Japanese consumers, who are increasingly embracing online shopping. They also address the concerns of internal stakeholders, such as store managers and employees, by ensuring a smooth transition to a multi-channel strategy.
- Competitors: The recommendations take into account the competitive landscape, including the presence of established e-tailers and the need to differentiate SEJ's offerings.
- Attractiveness ' Quantitative Measures: While the case study does not provide specific financial data, the recommendations are based on the assumption that SEJ can achieve profitability through cost optimization, efficient operations, and leveraging its existing infrastructure.
6. Conclusion
SEJ's venture into e-tailing presents both opportunities and challenges. By embracing innovation, focusing on customer experience, and leveraging its existing strengths, SEJ can successfully navigate the evolving retail landscape and achieve sustainable growth. However, the company needs to invest in technology, optimize its operations, and adapt to the changing consumer preferences to remain competitive in the long run.
7. Discussion
Alternatives not Selected:
- Exiting the e-tailing market: This option would be a missed opportunity to capitalize on the growing online market and could lead to further decline in store traffic.
- Focusing solely on online sales: This option could lead to cannibalization of existing store sales and alienate loyal customers who prefer in-store shopping.
Risks and Key Assumptions:
- Competition: The e-tailing market is highly competitive, and SEJ needs to differentiate itself to attract and retain customers.
- Technology: Rapid technological advancements require continuous investment and adaptation to maintain a competitive edge.
- Customer Acceptance: Consumers may not readily embrace SEJ's e-tailing offerings, requiring effective marketing and customer service to build trust and loyalty.
8. Next Steps
- Develop a detailed e-tailing strategy: This strategy should include specific objectives, target markets, product offerings, pricing strategies, and marketing plans.
- Invest in technology and infrastructure: This includes upgrading website and mobile app functionalities, investing in data analytics platforms, and optimizing supply chain operations.
- Pilot launch in select markets: This allows SEJ to test its e-tailing strategy and gather valuable customer feedback before a full-scale rollout.
- Monitor performance and adapt: SEJ should continuously monitor the performance of its e-tailing operations and adapt its strategy based on market trends, customer feedback, and competitive pressures.
By taking these steps, SEJ can successfully navigate the challenges of the e-commerce market and achieve sustainable growth in the long run.
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Case Description
Not content with nine million customers per day, Toshifumi Suzuki, the chairman and CEO of Seven-Eleven Japan Co. Ltd., was looking for ways to attract more customers and more sales. Fascinated by the optimistic outlook on the growth of business-to-consumer (B2C) e-commerce in Japan, he contacted several prominent Japanese companies to explore the possibility of working together to launch the biggest B2C e-commerce web site in Japan. Suzuki knew that successfully launching and operating a B2C e-commerce business in Japan, known for its citizens' hesitancy to buy on-line, could be a big coup for him. His challenge now was to convince his would-be partners that he had a potentially successful and lucrative business model. Set in December 1999, this case is primarily about the aspiration of Suzuki to establish a business-to-consumer e-commerce venture targeted at Japanese consumers. Depicts the obstacles that he faces and the methods planned to overcome these obstacles.
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