Who will lead China’s unmanned retail sector?

While many insiders have downplayed the possibility of success for Chinese unmanned retailers, tech giants do not share the pessimism, as they have recently invested heavily in the unmanned retail sector. Are these automated convenience stores merely holding on, or are they here to stay?

During April’s 2018 China “Internet Plus” and Digital Economy Summit in Chongqing, Dongguang-based BBK Electronics Chairman Wang Tian voiced his belief that unmanned convenience stores were nothing but an ephemeral phenomenon doomed to failure.

Furthermore, Gobi Partner’s managing partner Jiang Tao also delivered negative comments on autonomous stores, arguing that the new retail mode still relies on shopping assistants to assure high-quality shopping experiences. He also noted that cutting cheap labor expenses could not significantly lower operating costs in China.

To be fair, their pessimism is not ungrounded. This past January, checkout-free convenience store Xingbianli shut down its first branch in Shanghai after only three months and was reportedly scaling back its operations in third and fourth-tier cities. Yet the company, aiming to downplay rumors of budget strains and large layoffs, claimed that it would soon open ten new stores in Shanghai.

In first-tier cities, unmanned convenience stores are taking off in CBD office towers. Starting in late 2017, these stores ushered in their first wave of market integration, as Xingbianli acquired medical new-retail 51jk.com and staff-less store operator Bianlifeng acquired its rival Lingwa.

But this year has seen a significant amount of investment in the unmanned retail sector. In January, unmanned store startup BingoBox secured USD 80 million in a Series B funding round led by Fosun Capital. In early June, Alibaba’s fintech arm Ant Financial made an undisclosed strategic investment in Xingbianli. And less than a week later, struggling Guoxiaomei received an undisclosed amount in Series C financing from Riverhill Fund that saved its business.

 

Also in June, new-retail startup Zailouxia received tens of millions of dollars in a Series A+ round co-led by IDG Capital and Sinovation Ventures. Meanwhile, it is noteworthy that just six months ago, unmanned convenience store Bianligou completed two financing rounds totaling around USD 200M. Tencent led the Series A and CDH Investments led the Series B round.

So, why are investors betting big on this industry?

It is the innovative payment mechanisms that giants are counting on. As Xingbianli President Si Jianghua said, the unmanned shelf business is one of retail, data, and human flows. For instance, by investing in and providing technological assistance to Xingbianli, Alibaba’s fintech unit Ant Financial could test its automated innovations in the new-retail sector and expand its offline profits.

As for the future, self-service retailer J24 founder Lin Jie believes that unmanned retail has a promising outlook even though some companies have made reckless investments in the sector. He argued that autonomous retail is about to empower convenience stores with technology that will revolutionize shopping. On the other hand, Si made a more specific and bold prediction: competition between unmanned convenience stores would wind up by mid-2018.

 

(Top photo from unsplash.com)

Tongxu Cai
Tongxu Cai

Tongxu writes for AllTechAsia. She has a B.A. in Foreign Affairs from University of Virginia, She has a strong academic background in politics and history, especially the Sino-U.S, relations. She co-founded the only Chinese Theatre Group in her college and have travelled to 25 countries by far.

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