JD.com’s online-to-offline (O2O) grocery platform JD Daojia has downsized its unmanned shelf project “Go” to focus on the company’s online grocery and delivery businesses amid slowing growth in the industry.
Daojia’s “smart vending machines” were previously installed in office buildings in 10 cities across China, including Beijing, Shanghai, and Chengdu.
It’s been a tough year for companies in the unmanned shelf industry. There has been more than a handful of startups and companies that went bust or transitioned to a different business model. JD.com is, however, one of the first major players to back out of the industry.
In response to rumors that the move has resulted in layoffs, a Daojia spokesperson told TechNode that employees would be transferred to other divisions and that less manpower would be dedicated to the project.
Unmanned shelves and stores are concepts under the same umbrella of “unmanned services,” which started gaining traction in 2016, riding the wave of “new retail’ in China. The industry saw explosive growth in 2017 as investment ballooned and new players flocked to the industry.
JD Daojia started recruiting a team in Shenzhen for the unmanned shelf project last September. In July, the company announced plans to roll out its third-generation smart vending machine the “Go 3.0” in office buildings in cities including Beijing and Shanghai. It aimed to install 5000 units by the end of the year.
Compared to unmanned stores, the unmanned shelf industry has a lower entry threshold in terms of technical requirements and operational costs. According to Chinese news outlet Huxiu, there were 42 unmanned shelf companies operating last year. However, since the beginning of this year, many of these companies have struggled.
Jin Di, chief analyst at the International Data Corporation told TechNode that fixed customer flow, failing to meet consumer demands, and an inability to replenish the shelves effectively hamper operational efficiency. “To optimize this process requires time, resources, and money,” she said.
In response, companies in the industry have shifted their focus. Chengdu-based Guoxiaomei downsized and redirected its focus to the WeChat micro store business in July. In June, another unmanned shelf company Hami Technology announced that it would adjust its business model and told its internal teams to brace for hard times.