The big Net play in Japan these days is convenience stores. Name your neighborhood favorite and you can rest assured it has just rolled out some new e-commerce business scheme.
Seven-Eleven Japan and seven other firms are setting up 7dream.com, where multimedia kiosks will deliver the Net along with the milk and potato chips. FamilyMart has teamed up with Circle K, Sunkus, Ministop and Three F, and 10 banks, to put ATMs in their stores.
The rationale behind the moves is straightforward: Japanese consumers don’t like to pay online, so they can order on the Net and pay at the stores. Another reason is ease of delivery: Goodies can be sent to the store and picked up whenever convenient for the consumer. The stores are hoping customers will pick up an item or two while paying, or when they pick up the orders.
All those reasons make sense and they fit Japanese consumption patterns, but I’m not convinced.
The payment phobia is uniformly trotted out, but it doesn’t bear up under scrutiny. According to MITI, the Japanese spent 140 billion yen last year on e-commerce for transactions completely consummated on the Net. If the Japanese are slow to use credit cards for online shopping, it’s because they have been slow to adopt credit cards at all. Once they get the hang of it, they have no compunction about spending. The same reluctance was visible in the States when e-commerce began there, but Americans got over it. The Japanese will sprint up the same learning curve.
Mike Allen, an analyst at ING Barings, argues that it is manufacturers, not consumers, who prefer to use convenience stores because they pay less of a commission for each purchase.
As for making purchases, there is nothing “convenient” about having to go to a conbini to make an online transaction. I know PC penetration ratios are low in Japan, but you don’t have to have a PC in every house to have Net access. Japanese consumers will use TVs (with cable modems), game sets and cell phones.
And each of those devices will be more than capable of taking care of most of the “deliveries” that will be needed. Software, games, financial services, tickets, CDs and even books will be zipped directly to the consumer’s own tool of choice, so there’s no need to go the store to pick anything up.
Sure, the conbini play is good for a year or two, maybe three, but it isn’t the be-all, end-all to e-commerce in Japan.
Quite simply, convenience stores aren’t “convenient” when it comes to the Net. This is one more example of how we have to rethink basic living patterns when pondering the way the Net will affect our lives. We can’t just slap digital communications on top of the way we currently live and proceed from there.
It’s an arduous process, but I’ve been having some fun lately, indulging in flights of fancy, riding tail winds provided by William Mitchell, dean of the school of architecture and planning at MIT. Mitchell is the author of “City of Bits” (mentioned here Oct. 25, 1995) and more recently “e-topia: Urban Life, Jim — But Not as We Know It” (MIT Press, 1999).
As an architect and urban planner, Mitchell looks at the grand design — the way the Net will alter the very patterns of everyday life. He calls it “the loosening of locational imperatives by means of electronic interconnection.” Or to put things in context here, we have to reconsider the meaning of “convenience” in the digital era.
Dropping by a store to pick up odds and ends on the way home doesn’t make a lot of sense in a fully networked environment, when your appliances can order what they need or you can order anything 24 hours a day, seven days a week with your personal information device. In fact, there is nothing really convenient about having to deal with “daily necessities” at all; we should be able to leave that to software agents and devote our energies to more productive uses of time.
Nowadays, the conbini looks attractive because it is the neighborhood nerve center, a nice central gathering point. Communities will always cluster around particular sites. In the earliest times, they were springs and wells, but technology permitted inhabitants to move further from those locations and congregate at other places for other reasons (like shopping malls).
Malls may continue to be gathering points, but their configuration will change drastically. Most store space is for inventory, which was needed in an age of mass production. But as we move to mass customization, when products are made after being ordered to a consumer’s individual needs, stores won’t have to stock many items. We’ll shop, get fitted and then have the purchase delivered to our homes at the most convenient time. Stores will become showrooms.
But the impact on lifestyles doesn’t stop there. A similar dynamic will change transportation patterns. There is no need for big malls when a showroom can fit in a smaller space, or even be shared space.
That means we won’t have to travel so far since companies won’t need vast tracts of land to sell their wares. Somewhere else, where land is cheap, warehouses will be located and inventories will be kept.
If we don’t have to travel so far, mass transportation becomes more feasible. And if most items are delivered, it is less inconvenient to not have a car.
My guess (and preference) is that bookstores will be central places — even though we’ll be able to download their contents — because the experience of browsing is more than mere shopping. The first stage of this transformation is visible in the cafe-cum-library that is Borders books, but other stores will do the same as the competition for consumers’ attention intensifies.
Mitchell speculates that we may see the rise of campus-like communities that offer many different services (sports facilities, restaurants, libraries, meeting places) in a bounded space. Now that’s
convenience. The conbini don’t stand a chance.
Brad Glosserman (firstname.lastname@example.org)