Example of BMC 7-Eleven: A Deep Dive

This example of BMC 7-Eleven will explore the company’s business model using the Business Model Canvas (BMC) framework. 7-Eleven is one of the largest convenience store chains in the world, with over 70,000 stores in more than 17 countries. The success of 7-Eleven can be attributed to its robust business model. One way to understand 7-Eleven’s business model is through an analysis using the BMC. The BMC provides an overview of how 7-Eleven creates, delivers, and captures value. Let’s explore each block of the BMC to gain a deeper understanding of 7-Eleven’s business strategy.

7-Eleven Background

7-Eleven is one of the largest convenience store chains in the world. It was founded in 1927 in Dallas, Texas, USA, originally as an ice storage company that evolved into a convenience store by providing a variety of daily necessities. The following outlines the history and background of 7-Eleven, explaining how it grew to become a key player in the global retail industry.

The Origin of 7-Eleven

7-Eleven started as Southland Ice Company, an ice company founded by Joe C. Thompson. At that time, ice was used as the primary means to keep food fresh before modern refrigerators were introduced. Thompson noticed that customers who came to buy ice also needed other items like milk, bread, and eggs. Seeing this opportunity, he decided to sell daily necessities at his store, which was then part of the Southland Ice Company.

This initiative received a positive response from customers, and by 1928, Southland Ice Company began running convenience stores with longer operating hours than usual stores, allowing customers to shop at any time. The store later became known as Tote’m Stores, referring to the practice of customers “toting” or “carrying” their purchased goods.

Name Change to 7-Eleven

In 1946, the company changed its store name to 7-Eleven. The name reflects its operating hours, from 7 a.m. to 11 p.m., which was longer than traditional retail store hours at the time. This extended operating period became a key attraction, positioning 7-Eleven as a convenience store that was always available for customers to get their daily necessities.

International Expansion

7-Eleven’s success in the United States prompted its expansion internationally. In 1969, 7-Eleven opened its first store outside the U.S. in Canada. Since then, 7-Eleven has continued to expand its operations to other countries such as Japan, Taiwan, Thailand, South Korea, and many others.

The most significant and important expansion occurred in Japan. In 1973, the first franchise store opened in Tokyo through a partnership with the Japanese company Ito-Yokado, which later became the largest shareholder in 7-Eleven worldwide. In 2005, Seven & I Holdings, the parent company of Ito-Yokado, fully acquired 7-Eleven, making it a Japanese-owned company.

Innovation and Growth

From the outset, 7-Eleven was known as a pioneer in many retail innovations. For instance, they were the first store to introduce drive-thru services and advanced point-of-sale systems, allowing stores to manage inventory more efficiently. They are also famous for iconic products like the Slurpee (a frozen drink) and Big Gulp (large-sized soda drinks).

Additionally, 7-Eleven is renowned for its franchise business model, which enabled its global expansion. This franchise system has allowed thousands of local entrepreneurs in various countries to operate 7-Eleven stores under international standards.

7-Eleven in Malaysia and Indonesia

7-Eleven has become a popular brand in Malaysia, with hundreds of outlets nationwide offering a wide range of daily necessities. In Indonesia, 7-Eleven entered the market in 2009 and was known for its unique concept that combined a convenience store with a café, providing seating areas for customers to relax. Although it initially received a positive response, 7-Eleven in Indonesia eventually closed its operations in 2017 due to fierce competition with local minimarkets such as Indomaret and Alfamart, as well as regulatory challenges.

Business Model Canvas (BMC) Analysis of 7-Eleven

Let’s go through the example of BMC 7-Eleven:

1. Customer Segments

   Customer segments refer to the groups of people targeted by a company for their products or services. 7-Eleven targets various customer segments, including:

   • Daily Consumers: People who seek daily necessities like snacks, beverages, and groceries. The stores are typically located in strategic areas such as residential neighborhoods and city centers to attract daily shoppers.
   • Emergency Shoppers: Customers who need specific items urgently, such as over-the-counter medicines or other emergency goods. 7-Eleven operates 24/7, providing convenience for customers to get what they need at any time.
   • On-the-Go Consumers: Travelers or individuals on the move who need quick access to food, drinks, or other essentials. 7-Eleven locations in gas stations and tourist hotspots make it a popular choice.

   With this example of BMC 7-Eleven,  these various segments, 7-Eleven meets a broad range of needs, from daily essentials to emergency purchases.

2. Value Propositions

   Value propositions refer to what makes a company’s product or service unique and valuable to customers. For 7-Eleven, value propositions include:

   • Convenient Access: 7-Eleven is renowned for its convenience, with easily accessible locations and 24-hour operations. This makes it easy for customers to get necessities at any time.
   • Product Variety: 7-Eleven offers a wide range of products, from snacks and beverages to groceries and over-the-counter medicines. This provides customers with ample options without needing to go to larger supermarkets.
   • Quick Customer Service: With its simple and straightforward convenience store concept, customers can purchase quickly without waiting long at the counter.

   These value propositions give 7-Eleven a competitive edge in attracting and retaining customers, especially in a highly competitive industry.

   3. Channels

      Channels refer to how a company delivers its products or services to customers. The example of BMC 7-Eleven uses several key channels:

      • Physical Stores: This is the main channel where customers can purchase products directly. The strategic location of stores in residential areas, commercial centers, and high-traffic locations is key to success.
      • Mobile App: 7-Eleven also offers a mobile app that allows customers to order products for pickup in-store or for delivery. This enhances convenience and attracts younger, tech-savvy customers.
      • Social Media Channels: 7-Eleven engages with customers via social media, promoting new products and running marketing campaigns. This helps raise brand awareness and attract more customers.

      The combination of these channels helps 7-Eleven reach a variety of customer types effectively.

   4. Customer Relationships

      Customer relationships refer to how a company interacts with its customers to build and maintain strong connections. 7-Eleven focuses on:

      • Seamless Shopping Experience: The shopping process at 7-Eleven is fast and easy, making it an ideal choice for customers who value convenience and time.
      • Loyalty Program: 7-Eleven has a loyalty program through its mobile app, offering rewards to frequent customers. This helps boost customer retention.
      • Customer Support: 7-Eleven provides customer support through various channels such as phone, email, and social media, ensuring customers can resolve any issues quickly and easily.

      These strong relationships help 7-Eleven retain its loyal customer base and attract new ones.

   5. Revenue Streams

      Revenue streams refer to how a company generates income. 7-Eleven has several main sources of revenue:

      • Retail Sales: 7-Eleven’s primary revenue comes from product sales in stores, including snacks, beverages, groceries, and other items.
      • Franchise Fees: 7-Eleven also earns income through franchise fees from store owners who want to operate under the 7-Eleven brand.
      • Additional Services: Some 7-Eleven stores offer additional services like bill payments, phone top-ups, and package delivery, which contribute to secondary revenue streams.

      The diversification of these revenue streams helps 7-Eleven reduce financial risk and increase profitability.

   6. Key Resources

      Key resources refer to the assets needed for a company to operate successfully. For 7-Eleven, the key resources include:

      • Franchise Network: One of 7-Eleven’s key resources is its extensive franchise network, which enables rapid expansion into various locations.
      • Logistics System: An efficient logistics system is crucial to ensure 7-Eleven stores are always stocked with necessary products.
      • Brand: 7-Eleven’s strong, globally recognized brand is one of its main assets, helping attract customers and maintain their trust.

      These resources ensure 7-Eleven’s daily operations run smoothly and support business growth.

   7. Key Activities

      Key activities refer to the actions a company must undertake to execute its business model. For example of BMC 7-Eleven, key activities include:

      • Store Network Management: Managing a large network of stores requires continuous monitoring of inventory, service quality, and operational efficiency.
      • Product and Service Innovation: 7-Eleven continually introduces new products and services tailored to customer needs, such as fresh foods and bill payment services.
      • Marketing and Promotions: Marketing activities are crucial for attracting customers to stores and raising awareness about new products and promotions.

      These activities are central to 7-Eleven’s ongoing success in a competitive market.

   8. Key Partnerships

      Key partnerships refer to the organizations or entities that collaborate with a company to support its operations. 7-Eleven has several key partners:

      • Product Suppliers: 7-Eleven partners with various suppliers to source the products sold in its stores, including snacks, beverages, and groceries.
      • Franchise Owners: Franchise owners are key partners who ensure the smooth operation of individual stores and uphold the brand’s standards.
      • Logistics Providers: 7-Eleven works with logistics providers to ensure fast and efficient delivery of products to its stores.

      Partnerships with these key players ensure that 7-Eleven can offer high-quality products and quick service to its customers.

   9. Cost Structure

      The cost structure refers to the major costs a company incurs to operate its business. 7-Eleven has several key cost drivers:

      • Store Operating Costs: These include store rent, utilities, and employee salaries.
      • Logistics Costs: Shipping and storing products is a significant component of 7-Eleven’s cost structure.
      • Marketing and Promotion Costs: Spending on marketing and promotions is essential to attract customers and maintain their loyalty.

      Effectively managing these costs is crucial for 7-Eleven to maintain profitability in its business operations.

Conclusion

The Business Model Canvas (BMC) for 7-Eleven illustrates how the company has been able to maintain its position as a leader in the convenience store industry. By focusing on accessibility, a diverse product range, and fast customer service, 7-Eleven has created clear value for its customers. At the same time, by effectively managing key resources and partnerships, 7-Eleven ensures that it can continue growing in a competitive market. Do you find this article example of BMC 7-Eleven useful?

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