7-Eleven makes Net convenient

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These days, 7-Eleven Inc. might just be thanking heaven for Mike Gade. Recently hired as VP-business development, Gade, 48, is responsible for developing the e-commerce strategy for the convenience store chain, which has more than 5,700 company-owned locations in the U.S.

Gade has borrowed from his experience as an exec VP in charge of Internet strategy for Associates First Capital Corp. to push 7-Eleven into partnerships with financial services companies, Internet retailers and logistics companies.

Late this month, the company expects to announce the first in a series of marketing alliances. The alliances will begin to flesh out

7-Eleven's ambitious plan to use its stores as an Internet portal for the working class, one-stop mail depot for logistics companies and distribution point for Internet retailers.

Key to 7-Eleven's plan is the conversion of cash machines into Web browsers capable of handling financial transactions as well as Internet shopping. With these kiosks, 7-Eleven expects to reach a new demographic of Internet customers. Many of the machines will begin popping up in Texas test markets this summer, with nationwide coverage expected by 2002.

In between the wheeling and dealing, Gade has been working the graveyard shift at a store in Dallas as a way to learn the business from the ground up. Despite the moonlighting, Gade didn't sound a bit sleepy during a recent interview with BtoB, as he outlined the franchiser's emerging Internet strategy, code-named project That's short for virtual commerce.

BtoB: What is the strategy, and why does it hold promise for 7-Eleven?

Gade: starts with the ATM [automated teller machine]. Today, 7-Eleven has ATMs at its entire chain of stores. We're doing a test in Austin, in 34 stores, of proprietary technology that enhances the capabilities of a traditional ATM. It puts services such as check cashing, money orders and bill payment on that machine. Now, we're looking at putting ATM technology aside and using Windows NT technology as its baseline. That will allow us to do all types of financial services as Web-enabled services on

BtoB: How quickly will roll out?

Gade: We'll have 3,500 stores installed within 12 months, and the balance of our stores installed through 2002. This is an aggressive national rollout.

BtoB: Isn't the average 7-Eleven customer one who has been locked out of the Internet today?

Gade: Yes, that's our core customer. They are blue-collar, working-class Americans. In many cases [our clientele is] male-dominated and [comprises] people who haven't been able to invest in technologies for their homes. We're going to provide access for those customers.

BtoB: 7 -Eleven has retail Internet programs in the works. What are you doing in that area?

Gade: We're going to partner with e-tailers in categories like music, books, electronics, sporting goods, automotive parts and flowers. We're offering a best-value program. There won't be an unlimited assortment of products. We're not going to send people to a Web site and let them browse for 25 minutes. That's not our business model. We're going to partner with 10 to 15 retailers with assortments limited to no more than 20 to 25 items.

BtoB: What should a merchandiser bring to the table to interest 7-Eleven in these categories?

Gade: They'll have to buy space like they do in other retail environments. We have 1,300 customers per day walking into the average store, so we'll bring traffic.

BtoB: You're seeking Internet banking partners. The buzz is that there could be some strategic alliances announced as early as this month. What does 7-Eleven bring to its business partners in banking?

Gade: What's the No. 1 issue today for Internet banks? You can't make a deposit. You have to put the check in the mailbox. Today, ATMs do deposits for the institution that owns the machine. Inherent in our technology is depository ability. This will really enable Internet banking to a level that's never been done before.

BtoB: Are you looking at other deals with banks?

Gade: We can also do loans. Customers are driving into our locations. Why can't we build a loyalty base and partner with a financial institution using our machine to apply for an auto loan and get a preferential rate going through an electronic medium, in contrast to the personal service at a bank, which is certainly more costly?

BtoB: There's been some work on smart cards at your company. Why?

Gade: We're going to do check cashing in a way that's never been done before. You've seen check-cashing operations, where someone goes to a front counter with heavy glass in front of it and high security. That environment is unfriendly, as well as expensive. People who use those services either don't have bank accounts or their bank is inconvenient. We're going to do that transaction electronically, and tie it to a stored-value card. If they are cashing a payroll check, the customer will be able to put the money in a card that's good at any 7-Eleven store across the country, to pay bills or for Internet purchases. We're creating bank accounts for that consumer with depository ability, without the risk of large amounts of cash.

BtoB: Are there other partnerships in the works?

Gade: A partnership with a company that can service our customers in insurance is obvious.

BtoB: Are there other types of service partnerships in the works?

Gade: We're talking to potential partners in the area of e-stamps. We're also talking to lotteries.

BtoB: 7-Eleven is also said to be talking to logistics companies. Is that true?

Gade: Yes, we have a distribution strategy that's core to People think it is convenient to have items delivered to the home, but it's not. The majority of households today are two family income. Delivery is a huge issue. It takes large segments of the population out of the Internet equation because it is easier for someone to go to a mall than wait for Federal Express.

BtoB: So how can you improve that process?

Gade: We have central distribution centers that ship to our stores every single day. Our CDCs can take deliveries for an entire city. FedEx, UPS or the Postal Service can drop the products off at the CDCs, and take it to our stores. The consumer, at their convenience -- seven days a week, 24-hours a day -- can come and pick up their delivery.

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