A NEW CHANNEL FOR E-COM-merce is headed for the U.S. One of North America's most pervasive retailers, 7-Eleven Inc. (6,200 units), will be installing ATM-like machines in its stores that will be Web-linked. These personal transaction terminals will be tied into a delivery and payment system that promises to make 7-Elevens a depot for e-commerce.
A flaky idea? Well, it's working in Japan. Ito-Yokado Corp., a retail giant that owns the 7-Eleven chain in Japan plus 72% of the U.S. chain, now feels ready to export Web-updated aspects of the home operation. In Japan, where convenience stores are in nearly every urban neighborhood, they are used to pay routine bills such as those for utilities and to pick up and pay for sundry deliveries.
Beginning with 250 stores in the Dallas-Fort Worth area, this summer 7-Eleven will offer bill payment, payroll check cashing, money wiring and ticket purchasing for entertainment events and travel--all on the souped-up terminals. Next step (negotiations are under way): Get Web-order companies to send products to the 7-Eleven distribution network for pickup at a nearby store. The method cuts costs and doesn't demand that the customer be at home when the truck arrives. Just grab the package and go with a beverage.
Can minimum-wage counter-help keep all this straight? They can if their employer designs simple systems. 7-Eleven employees already fill depleted shelves by ordering from handheld terminals. "Nobody else in the U.S. has that," says James Keyes, chief operating officer of 7-Eleven U.S.
Big items will have to go elsewhere--7-Eleven stores average only 2,600 square feet, after all--and it will take at least a year to roll out this network nationwide. But for a company that has prided itself on inventory management (contracted out to an arm of Wal-Mart and others in the U.S.), this is a natural.
How can Amazon.com be selling so much and still losing money? "They have a giant warehouse so they have to pay rent, pay wages for warehouse employees and carry a huge amount of inventory at their own risk, because not every book is going to get sold," says 7-Eleven Japan Vice Chairman Masaaki Kamata. "The Internet is not a manufacturing and warehousing business but an intermediary commission business."
Japan is not the U.S., but patterns there bode well for this scheme. At Esbooks, a Japanese book Web site set up last November, 93% of people who bought books have chosen to pick them up at 7-Eleven instead of having them home-delivered.
Ito-Yokado seems to know what it's doing. U.S. 7-Eleven saw its revenues rise 13.6% to $8.35 billion in 1999, while operating earnings (net before depreciation, interest and taxes) grew 18% to $435 million. In Japan, despite a severe recession, sales grew 6.2% to $17.6 billion, while profits rose 5.7% to $590 million.
Trials over the past two years at 37 7-Eleven outlets in the Austin, Tex. area showed the 24-hour automated way of getting or sending cash was popular with both the unbanked and the simply busy. Bad news for the payday mom-and-pop outfits that have blossomed in recent years, but what about Western Union and American Express, which also are in the convenient-money business? Guess what--they've aligned with 7-Eleven's planned gambit.