Amazon has promised the retailing world something amazing when it released its cashierless store last year. However, the “everything store” still has yet to make it available to the greater public, but Chinese startups aren’t sitting on their laurels. Already, a few have ready-to-go products with comparable features.
“Staffless,” or automated stores, are nothing new, but internet companies have managed to reinvigorate it with the latest technology, like bike-rental have done recently. They appeared in the earliest form of vending machines, which can be found across the globe. In Japan, where automation has been raised to almost sacred levels, there’s approximately one vending machine for every 23 people, booking annual sales that total more than $60 billion. Several reasons contributed to the huge popularity of automated stores in Japan from a lower cost of labor, expensive real estate, and more.
Why China? Why now?
Unlike its neighbor, vending machines have yet to fully blossom in China. But the factors that propelled vending machine’s huge popularity in Japan have begun to take root in China.
After decades-long economic growth fueled by the demographic dividend, China is now in a position very similar to Japan where an aging society has made labor scarcer and more costly. High population density and expensive property in urban areas also make automated sellers and stores a more favorable choice when compared with renting pricey spaces.
Apart from demographic changes, China’s newly-minted obsession with tech innovations is making it a whole lot easier for the country to adapt to “something new.” Also, the combined forces of ubiquitous mobile payment and O2O services have made the Middle Kingdom ready for tech-enabled retailing solutions.
In fact, several Chinese companies in the sector have been growing rapidly in the past few years, even before Amazon launched Amazon Go in last December. Vending machine vendors like Ubox and Gump Come are known for their pioneering O2O efforts in operating interactive vending machines, which enables customers to make purchases through their mobile app.
And of course, the automated trend not only affects grocery shopping, but also the whole “New Retail” industry which covers automated coffee machines, fresh juice machines, and even mini karaoke and mini fitness kiosks.
First major funding appeared, more to follow
As the first significant venture funding in this field, China’s automated convenience store manufacturer BingoBox announced Monday that it has received RMB 100 million ($14 million) in a Series A led by GGV Capital with participation from Qiming Venture Partners, Source Code Capital and Ventech China, our sister site TechNode Chinese is reporting.
Originated in Guangdong’s Zhongshan City, BingoBox has developed fully-automated, 24/7 convenience stores. With full integration with WeChat, users enter and exit using WeChat’s scanning feature.
Through partnership with global retailors like Auchan, BingoBox stores have over 200 types of products including daily necessities such as drinks, groceries and over-the-counter medicine. Shoppers can pay via WeChat or Alipay while remote service staff can be reached through real-time video in case of malfunctions or when other help is needed. The company is also developing its own supply chain brand called Beibianli (倍便利).
Scanning each item and paying with your phone may be less futuristic than Amazon Go, but it’s here now; it’s no exaggeration to say speed is everything in China’s highly crowded tech sector.
After launching a pilot test in Guangzhou’s Zhongshan city in August 2016, the firm rolled out in Shanghai earlier this month and plans to reach 5,000 stores by the end of this year, Chen Zilin, founder and CEO at Bingobox, told TechNode.
Data from the startup shows that the number of items at a 15 square meter BingoBox is on par with a 40 square meter convenience store, offering far lower operation costs.
Similar to bike rental service which has been troubled by bike thefts and damages, however, BingoBox’s staff-less service model may easily fall victim of the same problem. BingoBox has an RFID security system in place to ensure that everything has been paid for.
The company told local media that they have completed over 50,000 transactions without any theft or damage recorded. This could be explained by the stores’ locations in high-end areas, 24-hour video control and Chinese government’s efforts to push real-name registration for online services.
Although the sector is still gaining momentum, BingoBox is not without competitors. Chinese rival GUMP COME is expanding from vending machines to self-service convenience stores. Another automated shop, Moby Mart, has taken the concept further with a cashier-less mobile store.