Long-waited Amazon Go opened its door to the public in Seattle last week and there has been overall positive feedback. However, unmanned stores are definitely not a new concept for China’s tech-savvy consumers. Since May 2017, when Alibaba launched its first unmanned store with the focus word “new retail”, a flurry of Chinese tech companies has created their own versions of unmanned stores with Shanghai becoming an important base.
BIU (similar to 哔 bì, the sound a scanner makes), Suning’s second big data-driven unmanned store, opened its doors in Shanghai on November 6th, 2017, following the opening and trial of the first Nanjing-based store in August. Powered by facial recognition, the store held public events to both promote and test their systems.
“We tried some activities to see how well the camera recognizes people. We held a public event inviting different groups of people. The camera had to identify a lady with or without makeup, a person dressed normally and with a cosplay wig and makeup, and twin brothers and sisters. They tried it and the scanner could read them all,” William, who’s in charge of BIU’s store told TechNode.
Targeting Shanghai’s affluent and trendy consumers, BIU is one of the 4 new retail visiting spots in the region, along with 2017-opened Starbucks Roastery famous for its AR game, unmanned convenience store Bingobox, and Hema Supermarkets, which combines a supermarket, warehouse, and restaurant. Thirteen out of 20 Alibaba’s Hema stores are based in Shanghai.
Since last year, Suning has aggressively developed their unmanned store project. BIU has so far been piloted in 5 different cities across the mainland. While Suning 4-stories home appliance retailers are easily seen throughout the country, their Shanghai BIU location is their first unmanned store to rely on facial recognition.
Not enough integration
BIU is on the first floor of the 4-story Suning store in Wujiaochang (五角场), facing Fudan University, Shanghai’s top university. From the entrance, big wall posters and arrow stickers on the floor promotes its unmanned store. As I stood in front of BIU, a clerk managing the store next to BIU walked up. He helped me scan a QR code to download the Suning Finance (苏宁金融) app and register an account.
Although Alibaba is the second largest shareholder in Suning, the Suning app does not connect with Alipay. This is the hassle of Alibaba-backed startups, including Suning and Hema: Even though they’re backed by the e-commerce giant, they all have separate apps that you must download. The introduction, on the other hand, of mini programs into Tencent’s WeChat leaves out the need to download anything, reducing friction to a negligible degree. Alibaba’s arch-rival has managed to get 95% of Chinese e-commerce startups onboard.
In order to enter BIU, I had to link my face to my bank account registered in the Suning app. However, I was not able to link my account. The clerk told me that it’s because I’m a foreigner. Currently only foreigners holding China Construction bank(建设银行), Huaxia bank(华夏银行), and Ceb bank(光大银行) can register their bank account on Suning app to use facial recognition. He helped me get in by scanning his face and walked back to his shop.
Small, rotating inventory
The 120-square-meter BIU store was quite simple with five categories of products: Suning’s lion mascot products, sportswear, everyday items, and smart devices such as air purifier and phone chargers. As I wandered about the shop, a shopkeeper standing near the exit approached me to give an explanation.
“Inter Milan is invested by Suning and fans come here come here to buy the jerseys since it’s cheaper than buying online. The next most popular is the everyday items. With a discount, they are very cheap. We rotate the products every 2-3 months,” William, the shopkeeper, told me as he put his hands firmly inside a teddy bear handwarmer. Shanghai’s winter wind was slipping through the main entrance of Suning store bringing a chill into the BIU store.
Simple item tracking
Whereas Amazon Go tracks items as they are put into carts and back on shelves to calculate totals, BIU only identifies the items when the customer leaves the store.
When purchasing goods, just like Amazon Go, customers don’t have to queue for payment and can walk directly through the payment gateway. The system will automatically identify the user by facial recognition. I chose an RMB 13 eye patch, which was the most affordable product in the shop. Since I had failed to link my bank account to the Suning app, I asked William to pay for the product for me (I paid him back later through WeChat.)
As he walked towards the scanning area, the camera caught his face, found his account, confirmed the purchase with a beep (bì 哔!), and opened the exit gate. The whole process took only five seconds or less.
The two main technologies behind BIU are RFID—with chips attached to every product—and facial recognition. The RFID chip contains the product’s name, price, and unique identification number. The exit gate recognizes the item while the camera scans your face, find’s your account, and finishes the transaction. This is very different from Amazon Go where sophisticated computer vision and machine learning software that can see and identify every item in the store, without attaching a special chip to every product.
Facial recognition isn’t just for making purchases though. As William steps in front of a TV in a corner of the store, it recommends products to William based on past purchase and browsing history. Since the BIU store can only stock a limited number of products, the system allows customers to purchase, and have delivered to their home, items online where they can browse more options.
William says between 100 to 200 people visit the store each day, with approximately RMB 10,000 ($1,586) in sales per day. A diverse group of people from many different companies visit the store and ask about possible partnerships with Suning, hoping to introduce their own product in the store.
“Customers read the about BIU and come to see the store on account of our reputation. Or they come to buy the home appliance and drop in,” he says.
Tough verdict
It’s hard to decide if BIU is ultimately on the same level at Amazon Go. First, I haven’t tried Amazon Go myself. Second, they are completely different experiences focusing on different product categories. A better comparison would be Amazon Go vs Bingobox, a Chinese cashier-less convenience store. However, Bingobox is a 2013-born startup and is subject to its partnership with big retailers who provides products. In fact, two Bingobox stores in Shanghai were closed down last year as their partnership with Auchan and RT-Mart as the cooperation deal ended.
Competition in China
In the future, BIU plans to offer fast-moving consumer goods and at relatively low cost. In 2016, the retailer giant invested in online grocery delivery company Eight Days, who operates offline convenience stores on university campuses. This is different positioning, however, from Hema.
“We are not in conflict with Hema, because they focus on fresh food, while we will be focusing more on non-durable goods such as packaged foods, beverages, and toiletries,” William said. “Hema is not convenient because the user has to still queue to use self-cashier machine using facial recognition or Alipay. In BIU, it’s faster and easier because you can just walk away with the product.”
However, the challenge is consumers’ habits. William says, while young people understand this concept and model, consumers over 50 years old don’t.
In the future, BIU stores will vary depending on location. In residential areas, they will have more products for the home. In an office building, they will have a cafe and a store selling office products. BIU’s vision is to open 200 stores in China in two years. They have 4 more stores almost ready to open.
For example, for Suning’s third unmanned shop will be opening in Nanjing (in Chinese) targeting younger customers. When they walk into the store, a robot will welcome and guide them. A smart hanger will be analyzing the customer behavior of selecting the product, learn user preferences, and optimize the display of goods. For entertainment, there will be also an intelligent treadmill, XBOX somatosensory game machine, appearance testing machine, and an AR group photo machine in the store.
During the last six months of 2017, the Suning app added 389,000 new users, ranking 7th among 10 e-commerce apps in China coming one rank down from the previous year. It is unclear at this point how much its unmanned store initiatives will bring up company’s sales in 2018.