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Japan's Lawson Eyes Web Sales

Following rival 7-Eleven's Softbank-backed foray into online book sales, Japanese convenience store chain Lawson Inc. has announced that it will work with e-commerce venture Digital Garage Inc. to develop an Internet-based extension to its successful network of in-store electronic shopping kiosks.

The planned Web site, tentatively dubbed Lawson Digital Station, will feature an Internet shopping site based upon, and closely integrated with, the existing nationwide network of over 7,000 Lawson "Loppi" touchscreen terminals.

The ultimate aim, said the partners, is to establish a comprehensive, open-standard, "Japanese style" electronic commerce infrastructure.

"A new Japanese style e-commerce business will be created by connecting Internet users to the nationwide Lawson chain and the Loppi multimedia service," said Kaoru Hayashi, president and CEO of Digital Garage.

A typical Lawson convenience store stocks about 2,800 "grocery" items.

Japan's second-largest convenience store chain saw electronic shopping kiosks as an answer to the question of how to expand the range of items that could be carried in a limited retail space and thereby generate more sales.

Lawson therefore invested more than 7 billion yen (US$57 million) to develop the Loppi network jointly with IBM Japan, and in September 1997 began installing the terminals in its stores.

Today, there are Loppi terminals in all of Lawson's more than 7,030 nationwide stores, through which shoppers can select from nearly 3,000 items, including tickets for sports events, concerts, movies, or travel; popular books, music CDs, and videos; game software; cosmetics and fashion accessories; and PCs and peripherals.

The biggest selling items are tickets (about 40 percent of Loppi sales) and game software.

Lawson said ticket sales sometimes surpass 100,000 per day. And when a popular new computer game was released last year, the Loppi system nationwide logged nearly 3,000 orders in a single minute.

After browsing through the online catalogs and reserving their desired items, shoppers take a paper receipt issued by the Loppi terminal to the store's cash register to pay for their selections.

Then, depending on the item, the purchase is either shipped to the store for pick-up within 3 to 4 days, delivered directly to the buyer's home, or, for some game software, downloaded directly through the Loppi network.

This in-store Loppi network is the platform from which Lawson and Digital Garage will launch Loppi Web, Lawson's new Internet-based electronic commerce venture that is slated to start by November.

The companies will work together to develop new content for the Loppi network and consult on structural issues related to integrating Web Loppi into the network and improving overall system speed and convenience.

Users who order items through Web Loppi will be able to visit any of Lawson's 24-hour stores to pay for and pick up their purchases.

Lawson, which took in about ¥50 billion (US$410 million) via Loppi-based sales last year, nearly 5 percent of its total revenues, said its target for the new Loppi Web component of the system is 20 billion yen (US$164 million) in sales in 2001.

The company also expects the new Internet shopping site to increase sales of its normal convenience store items through purchases by persons visiting Lawson stores to pick up their orders.

Among the partners expected to join with Lawson and Digital Garage in this venture are NTT Communications, Recruit, Japan Travel Bureau, Tokyo FM Broadcasting, and Digital Garage shareholder Toyo Information Systems, which will provide the technology for authenticating users' digital IDs.

Digital Garage, which until last month managed the Infoseek Japan Web site and is now focusing on e-commerce solutions, said it may form a joint venture with Lawson to handle the online shopping services.

Lawson, formed in 1975 as a joint venture between Japanese consumer retailing giant The Daiei, Inc. and US-based Lawson Co., is a wholly owned subsidiary of Daiei.