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Unmanned stores in China – the future?

by Ralph Qiu, Caracter Company China resultant

In China, unmanned stores are booming. Alibaba’s Taocafe uses camera technology, recording and recognizing shoppers’ movements individually. Bingo Box, developed by a local start-up, has deployed one such “box” near a Auchan store. Very likely to succeed only if one company can integrate retail management and technology.

Amazon launched its cashier-less store two years ago, waging another storm of technologies in the traditional retail world. Now recently, Chinese companies have further developed the “unmanned store” concept, including Alibaba and several start-ups. Although it has only been experimenting this for a few months now, we already ask ourselves: is it the future?

Alibaba’s Taocafe

First, let me show you Alibaba’s Taocafe which was launched just this July. Simply-put: You first need to open the Taobao app and scan the QR code at the entrance. Then the system will recognize you and start monitoring your movements in the store. During the process, you do not have to do anything extra but fetch your drinks and products. When checking out, you first move through a “door”, by which the system determines you are leaving and then another door and this time the system deducts the amount from your Alipay account, and announces “you have spent XX Yuan”.

The store can receive 50 shoppers at the same time and sells only drinks and a limited range of merchandise. The trick lies in the camera recording and recognizing shoppers’ movements individually.

But, I would like to challenge the Café format as it’s simple and contains only a small range of merchandise. However, it is a good start and I am certain the technology will keep improving and enable the store to accommodate more shoppers and stock more products. Then it comes to the ultimate importance – category management – which I doubt Alibaba has any experience in.

Bingo Box

And the second example of unmanned stores is Bingo Box, developed by a local start-up and has deployed one such “box” near a Auchan store. You need to register via Wechat or Alipay first so it can recognize your face and let you in. In the Bingo Box, there is no staff and you can pick up the products and do a self-checkout. All products are labeled with RFID so you do not have to scan but just pay with your phone.

Bingo Box is usually 20 square meters and allows only one shopper at a time and stocks a few hundred SKUs, mostly CPG. I have more concerns about this concept than the Taocafe. First because it’s allowing only one shopper at a time and this certainly limits the total shoppers and cash flow in a day. Secondly, although the system can track the shopper’s credits, it can do little about shoppers misplacing products. And it still needs frequent replenishment which can a challenge considering the poor supply chain management in China.

Breaking even?

Therefore, I tried to calculate, but could not find a single way to break even for Bingo Box. Maybe advertisement could be an important source of income as Bingo Boxes are supposed to be placed in high traffic street. Nonetheless, Bingo Box has received several rounds of investment and plans to place 5,000 such Boxes next year! I would think a vending machine could do the same job. Anyway, miracles could happen if you put enough money into it. And maybe new technologies could surprise us all.

Again, I would challenge Bingo Box’ knowledge in retail management. This would not be a problem at all in the short term as the company is expanding and shoppers are coming in out of curiosity. But retail is not a simple game as it seems, is it?

So back to the question, Unmanned store, is it the future? Very likely, only if one company can integrate retail management and technology. So far in China, those innovative companies, including Alibaba, are all tech geeks but know little about true retailing.

PS. Taocafe was down for a while because there was a problem with the internet connection. And remember always to charge your phone or you cannot do anything soon enough. But with the new face recognition technology, all we need to carry is ourselves!

You should also read my blog on going cashless and cardless in China:

Going cashless and cardless in China

 

 

 

 

 

 

 

 

 

 

 

 

 

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