Original Title: No Shelves: Crazy Innings and Short-Lived Air
The leader of a leading company recently spread news about the withdrawal of cabinets and layoffs, while the company denied allegations that unmanned shelves suffer from high theft rates and questioned the profitability of the model.
On January 10, 2018, Suning launched its unmanned shelf in Nanjing, allowing customers to shop using mobile code scanning and payments. Photo by Li Yuze, Xinhua News Agency.
In the second week of 2018, reports emerged that leading companies in the unmanned shelf sector were closing stores, withdrawing cabinets in multiple cities, and laying off staff. Meanwhile, Suning introduced “Suning Shop Biu,†aiming to install 50,000 units this year. Soon after, JD.com, Alibaba, Tencent, and others entered the office retail space. Earlier players like Guo Xiaomei and Xiao E Micro Shop may have had a first-mover advantage. The competition between these players has already begun, with some observers predicting it could last for another six months.
Many believe that the main motive behind the rush is to capture online traffic. However, the low entry barrier and ease of replication of unmanned shelves also pose challenges. Profitability remains questionable. Earlier ventures like snack bars were even criticized for being "eaten." Some consumers reported issues such as slow restocking and expired products on the shelves. While the demand for office snacks exists, can the unmanned shelf business model truly be sustainable? How large can this market grow? And how can fine-tuned operations overcome these challenges? These are all pressing questions.
1. Rumors of Top Players Leaving, Users Confused
Chiba Convenience stated that their replenishment mechanism aligns with daily operations, with some shelves undergoing adjustments based on data analysis.
High-speed leading unmanned goods companies seem to be facing difficulties. In January 2018, reports surfaced that the first convenience store was closed, with suspected withdrawals in multiple cities and layoffs. Later, media outlets claimed that operations would be tightened, with three or four cities affected, and companies with fewer than 50 units would be pulled out.
In response, a self-proclaimed “ranch-friendly†employee told the Beijing News that two-thirds of the staff in Beijing were laid off. He mentioned that the company’s manpower department informed employees on the evening of the 10th that due to insufficient product supply, they would start leaving on the 11th. He also noted that the inventory congestion couldn’t keep up for about half a month, with the worst situation starting a few days before New Year's Day.
Meanwhile, a reporter learned from an office consumer that Mochi had promoted low-cost products last month, but one shelf with the same product sold out quickly. Some colleagues placed orders but still couldn’t get restocked.
Chiba Convenience responded that their replenishment process follows daily operations, with some shelves adjusted based on background data analysis for modularization, including product display and merchandise structure. The Tianyaoqiao Road store is currently relocating. Later, Xiaobian Convenience issued an official statement saying that their business is operating well, and the series of measures are part of adjusting and optimizing under the “convenience and cellular†model.
While conspiracy theories remain unconfirmed, in the fierce competition, top companies generally rely on burning money to gain a foothold.
Li Lu, founding partner of Panda Capital, believes that entering the no-shelf market requires careful consideration of profit models, consumer conversion rates, and supply chains.
Consumers and businesses have mixed opinions on this business model. Some appreciate the convenience of buying snacks without going downstairs, while others complain about limited product variety, slow restocking, and even expired items. Some companies mention that only one person is involved in management, which is inadequate.
A human resources head at a Beijing enterprise recalled that “some businesses started talking about it early last year, but mainly involved vending machines that needed power. There was no cooperation because the other party didn’t settle electricity bills. It was appropriate, meaning product safety remains to be observed.†Traffic value is what many players mentioned. Some investors said, “Shelves aren’t an entrance to traffic—they’re the ultimate consumer scene.â€
Li Lu believes that traffic is important, but many overlook the more critical point: current internet products don’t lack the means to reach a wide user base, but they lack the ability to convert users at scale. SKUs that are small and overly standardized may be a bottleneck limiting the conversion of unmanned shelves. However, more companies are now making it clear that they aim for “thousands of thousands of surfaces,†either building channels or collaborating with fresh produce to optimize SKUs.
2. What Are the Short-Lived Air Outlets Between Giants and Entrepreneurs?
The unmanned shelf camp needs more points to attract investment, “burning†the future; giants are rushing into the market.
Under the trend, the influxes seemed to believe they weren’t too fast. In September 2017, Meituan and Box Horse reached a climax in the “understand†business of unmanned shelves. In November, JD.com’s smart cabinet and SF Express’ unmanned shelf project officially launched. By December, Alibaba and Tencent accelerated their entry, with Alibaba and the U.S. jointly launching the “small counter,†and Tencent leading daily fresh convenience to buy.
On the other hand, earlier players like Guo Xiaomei and Xiao Kui may have a first-mover advantage. Xiao Chi Convenient CEO Si Jianghua said that the competition in the unmanned shelf field is divided into three stages: location, operation and technology, and supply chain competition. Whoever reaches around 300,000 points first will have a significant advantage. Suning is the latest giant to enter. On January 10, 2018, it announced plans to complete 50,000 shelf installations this year. From the current perspective, it may have features in synergy with Suning stores and digital shelf technology empowerment.
The battle for points among incoming players has already turned white-hot, with chaos emerging. An unmanned shelf company employee told reporters, “Some sales are for commission, and regardless of the number of people, it’s possible to shop one family and one company. Some companies with less than 20 people shop a refrigerator and a container.†Some netizens even posted pictures of unmanned shelves randomly placed in salons and open-air venues, claiming the company is “for the sake of data.â€
Other practitioners stated they had encountered vicious competition, with opponents taking away their shelves. Since no data was updated on the payment background, replenishment by consumers wasn’t timely. This also reflected the issue of theft rate control. Additionally, based on publicly available data, the number of people entering the company through unmanned shelves dropped repeatedly, from 100 to 50 to 30, showing the operational challenges behind them.
The form of unmanned shelves targets the “lazy economy†and has certain commercial value. However, since its inception, it has faced profitability issues. Giants and capital have taken turns promoting it to a new outlet, but doubts from the outside world persist. Judging from the current situation, behind the red-hot industry and those who came before, they may be short-lived.
Si Jianghua told reporters that no-shelves are a highly concentrated industry, and the speed of the circuit is very fast. At this stage, there should be no small players wanting to re-enter the game. Entrepreneurial camps have reported news of business integration from time to time. Fresh Fruits and Hamime Technologies have reached a strategic partnership to facilitate mergers and acquisitions of 51 Snacks, Guo Xiaomei, and Tomato.
According to Li Chengdong, an e-commerce strategist, some giants may not be optimistic about this format, but they are concerned about missing a potential outlet. Giants and startups may play for six months in the track.
3. Problems of High Theft Rates and Low Expansion Efficiency Need to Be Solved
Can a commercial model of unmanned shelves be established? Some investors claim that no-shelves are profitable.
Visitors say free shops and clothes are quick, and they can achieve long-term interaction with white-collar consumers. There is no room for imagination about unmanned shelves. However, whether it can truly achieve rapid recovery and profitability is the most controversial aspect of this model. Because of the obvious high theft rate and low expansion efficiency, Zhu Xiaohu and other investors once said that no-shelves would not be profitable.
Li Chengdong analyzed with reporters that a friend who had started in this field shared several data. The average monthly sales of each unmanned shelf were around 1,500-2,000 yuan, gross profit margin 25%-30%, moral loss rate 3%-7%, logistics costs about 10%, operating costs over 5%, shelves a few hundred, not making money is basically not losing money. However, he also mentioned that many companies have a 7% loss-of-hazard ratio that is difficult to achieve, usually between 20% and 30%, combined with vicious competition and other issues, they are not optimistic about this model.
6 months, 70 shelves, highest cargo loss reached 50%. This is a set of data given when the founder Yi Tao, the founder of Dim Sum Bar, re-created the project, even though the number of employees set is more than 30. The snack shelf project was terminated in May last year. Yi Tao concluded that the scene of snack consumption in the office really existed, but the mode expansion efficiency was low, and the high loss of snack food shelves was the main reason for overwhelming them.
When asked about the problem of theft, the companies interviewed expressed that they would rely on “technical + legal†means to solve the problem and did not disclose the data on the loss rate. At present, some companies such as frogs and Guo Xiaomei have announced the introduction of a credit system. In terms of technology anti-theft, it seems that it is still in its infancy. Currently, the unmanned shelves that are already on the market are in the state of “restocking,†lacking identification technology and intelligent security. Some consumers told reporters, “I see no cameras on the shelves, but you can’t see people pretending to scan them.â€
Jingdong Home Go, Guo Xiaomei, and other companies are trying to achieve “open doors and take them†through “black technology†such as face recognition, gravity sensing, and intelligent inventory management. However, some observers believe that this is an upgraded version of the vending machine, and the operational cost problem still exists.
4. In 2018, the Industry Will Welcome Two Heavy Fires
In the second half of last year, it was red, but the real difficulty of unmanned shelves was the refined operations after large-scale operations.
According to data from the China Electronic Commerce Research Center in January, there are currently 100 million users who can target first- and second-tier cities in China. There are 100,000 to 200,000 enterprise terminal shelf capacities and 1 billion to 3 billion yuan in early market space. According to incomplete statistics, there are no fewer than 50 startup companies entering the no-shelf market.
Due to the limited space available for distribution and the limited SKU of the shelves, this market is ultimately limited. Guo Xiaomei, the founder of Guo Xiaomei, once mentioned that this is a small market. “Even if a unicorn in the first, second, and third tier cities took out all competitors, a 100% monopoly by one person is also less than 100 billion yuan. The market.†He analyzed from the first half of the entire track, the first half of the unmanned shelf would only be a multi-billion business.
According to incomplete statistics, there are currently more than 50 players in the stadium. The industry generally believes that the first half of this year will be the key year for the industry to reshuffle. Li Lu believes that the last big odds to win are the traditional players who have the advantage of the supply chain, or the entrepreneurs who can run through the supply chain as quickly as possible.
In Langran Capital’s forecast, the industry will freeze this year, capital will promote mergers and acquisitions within the industry, expand the head of the company, forming the industry’s “Mobai†and “ofoâ€; on the other hand, most of the unrepresented unmanned shelf companies can no longer obtain financing and have closed down; in addition, the unmanned shelf model will enter other scenes outside the office, and the supply chain competition between the head enterprises will begin to start, accelerating the situation with the giants' cooperation.
Based on the above-mentioned operational difficulties, some people in the industry believe that there is no good effect on the isolation of unmanned shelves, and a better way is to supplement retail sales. Wang Hongtao, deputy secretary-general of the China Chain Store Management Association, said in an interview that Japan also has the concept of unmanned retailing. For example, one office building has opened a whole family, and then there are no shelves in the office building. This will lead to replenishment and monitoring problems. A certain degree of resolution.
The unmanned shelf looks like “a shelf plus a few bags of snacks,†and anyone can enter, but the real difficulty lies in the fine-scale operations after the scale. Whether the future will be like the sharing of such a tuyere, forming a head concentration effect, other players are difficult to survive, this year may have answers.
Beijing News reporter?
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