China’s tech sector is intent on finding ways to do without human labour. One of the latest trends – staffless shelves – are one such solution.
Staffless shelves are a stripped-down version of the automated convenience stores that began to open last year (see WiC371). Whereas the convenience outlets require a physical housing structure, staffless shelves are simply erected into pre-existing spaces such as office lobbies. Customers choose what they want – normally packaged snacks or drinks – and pay by scanning QR codes (see WiC410). The process is cashless with payment made automatically through apps.
According to Bloomberg, $1.7 billion has been poured into the fledgling industry so far – a torrent that the media company largely attributes to a “fear of missing out”. According to iResearch, revenue from unmanned retail could reach $64 billion ($9.8 billion) by 2020.
Dozens of start-ups emerged last year in a surge similar to previous “big things” like shared bicycles (think Mobike and Ofo). During that craze the bike hiring apps burned cash in a desperate bid for expansion before the majority collapsed, leaving just two market leaders.
Likewise with staffless shelves, some companies have already withdrawn, while others have been cannibalised, leaving Mr Fresh, Xingbianli and Bianlifeng as the dominant players.
Mr Fresh is a real-world spin-off of the online grocer, Miss Fresh, and is backed by Tencent.
Xingbianli (sometimes called Ape or Gorilla Convenience) was founded by former Alibaba and Meituan executives, and earlier this month it welcomed a funding round led by Ant Financial.
Bianlifeng (which has a bee as its mascot) is more of an outsider. It hasn’t received any investment from the major tech players, but its growth strategy has been a bellwether for the industry at large.
In March it announced it was retreating from lower-tier cities, determining that the tactic of rapid expansion wasn’t paying off there. It also said it would replace its staffless shelf designs with 50,000 “smart vending machines”, which was a tweaking of its business model.
(The term “Smart vending machines” is the common translation from Chinese but “smart fridges” would be more accurate in visual terms. Typically, a customer is required to scan a QR code on the fridge door to open it, take out the item and pay for it in-app.)
The shift was aimed at tackling some of the problems endemic to staffless shelves, such as products getting damaged or stolen. Confining the goods to a fridge-space makes monitoring the stock easier too, which saves money on replenishment and spoilage.
Shortly after Bianlifeng changed tack, China Business boldly proclaimed that the age of staffless shelves was already over and that refrigerated vending machines were coming to the fore.
Bianlifeng’s competitors followed suit: Mr Fresh has since deployed them and Xingbianli is moving into the market with a new unit called Ape+ that will utilise Ant’s Sesame Credit scores.
Ant’s credit scoring system is already in use at a 24-hour, self-service cake shop in Beijing. The bakery is operated by Wedomé in partnership with Alibaba’s local e-commerce app, Koubei. Using Koubei, customers pre-order items and then collect them from designated lockers in the shop – but the service is only available to people with a Sesame rating above 500. (According to Quartz, a score of 588 is ‘middle-level credit’).
The (mostly) unmanned bakery features machines, which can only be accessed once a customer scans a QR code that links to their Sesame Credit account, says Sohu. Sensors in the fridge then detect when the customer has removed an item and immediately charge their Alipay account.
As one user notes, the system doesn’t suit people who like to check a product’s nutritional information before they buy it. But for those who know exactly what kind of cake or pastry they want, the service may have found a sweet spot in the market.
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