Original Title: No Shelves: Crazy Innings and Short-Lived Air
The leader of a leading company recently spread news about withdrawing cabinets and layoffs, while the company denied that unmanned shelves are prone to high theft rates and questioned their profit model.
On January 10, 2018, Suning launched its unmanned shelf in Nanjing, allowing consumers to shop by scanning codes with their mobile phones. Photo by Li Yuze, Xinhua News Agency reporter.
In the second week of 2018, leading companies in the unmanned shelf industry reported the closure of their first convenience store, withdrawal of cabinets in multiple cities, and layoffs. Meanwhile, Suning introduced "Suning Shop Biu," aiming to set up 50,000 units this year. Soon after, JD.com, Alibaba, Tencent, Meituan, and others entered the office retail space. Other startups like Guo Xiaomei and Xiao E Micro Shop also had early advantages. The battle for market dominance has already begun, and observers believe it could last another six months.
Reducing online traffic is a common motive behind the rush. However, the low threshold and easy replication of unmanned shelves remain a major challenge. Profitability is still debated, with earlier attempts such as snack bars facing significant losses. Some users have complained about slow restocking and expired products on the shelves. While the demand for snacks in offices exists, can the unmanned shelf business model truly work? How large can this market grow? And how can efficient operations be achieved? These questions remain unanswered.
1. Rumors Spread, Users Are Confused
Chiba Convenience explained that its shelf replenishment mechanism aligns with daily operations, with some shelves being adjusted based on data analysis. However, high-speed leading companies in the unmanned goods sector seem to be facing challenges. In January 2018, reports emerged about the closure of the first convenience store, suspected withdrawals in multiple cities, and layoffs. Later, media claimed that North Korea's business would be tightened, with three or four cities possibly withdrawing. Companies with fewer than 50 locations were said to be leaving the market.
In response, a self-proclaimed "friendly" employee told the Beijing News that two-thirds of staff in Beijing were laid off. He mentioned that due to insufficient product supply, employees started leaving on January 11. He added that the situation worsened about half a month before New Year’s Day.
Meanwhile, a consumer from an office shared that Mochi offered low-cost promotions, but some shelves quickly sold out. Colleagues who ordered in advance still couldn’t get restocked items.
Chiba Convenience responded that their replenishment process follows daily operations, with some shelves being reorganized based on data analysis. The Tianyaoqiao Road store was undergoing relocation. Xiaobian Convenience later issued an official statement saying that the business was operating well, and the adjustments were part of optimizing the “convenience and cellular†model.
While the developments are still unclear, in the competitive environment, top companies often rely on heavy investment to gain an edge.
Li Lu, founding partner at Panda Capital, believes that entering the no-shelf market requires careful consideration of profit models, user conversion rates, and supply chains.
Consumers and companies have mixed opinions. 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 also mention inadequate management despite introducing only one unit.
A human resources head from a Beijing enterprise recalled that some businesses initially discussed partnerships, but most opted for vending machines instead because the other party didn’t settle electricity bills. Others expressed concerns about product safety and the value of traffic. Many investors believe that "shelves are not just an entry point for traffic—they are the ultimate consumer scene."
Li Lu emphasized that while traffic is important, many overlook the bigger issue: current internet products lack the ability to convert users on a large scale. Small and highly standardized SKUs may be a bottleneck. More companies are now focusing on "thousands of thousands of surfaces," either building channels or collaborating with fresh produce to optimize SKUs.
2. What Makes Giants and Entrepreneurs' Unmanned Shelves Short-Lived?
The startup camp needs more points to attract funding and "burn" future growth. Meanwhile, giants are rushing into the market.
Under this trend, the influx seemed to believe they weren't too fast. In September 2017, Meituan and Box Horse reached the peak of the "understand" business in unmanned shelves. By November, JD.com's smart cabinet and SF Express's unmanned shelf project were officially operational. By December, Alibaba and Tencent accelerated their entries, with Alibaba launching the "small counter" and Tencent investing in daily fresh convenience stores.
On the other hand, earlier players like Guo Xiaomei and Xiao Kui might have a first-mover advantage. Xiao Chi Convenience CEO Si Jianghua stated that the competition in the unmanned shelf field is divided into three stages: location, operation, and supply chain. Those reaching around 300,000 points will have a clear advantage. Suning, the latest giant to enter, announced plans to install 50,000 units this year. From the current perspective, it may benefit from synergy with Suning stores and digital shelf technology.
The battle for shelf points has turned intense, with chaos emerging. An employee from an unmanned shelf company told reporters that some sales teams focused on commission, regardless of the number of people. Some companies with less than 20 employees managed to place orders for entire refrigerators and containers. Netizens even posted images of unmanned shelves randomly placed in salons and open areas, claiming the company was "for the sake of data."
Other practitioners mentioned encountering vicious competition, where opponents took away their shelves. Due to no updates on payment background, restocking wasn’t timely. This also highlighted the problem of theft control. Additionally, public data showed a decline in the number of people entering companies using unmanned shelves, reflecting the difficulty in operation and management.
The form of unmanned shelves targets the "lazy economy" and holds commercial potential. However, profitability has been an issue since the start. Giants and capital have taken turns promoting it as a new outlet, but doubts remain. Judging from the current situation, behind the hot industry and those who came before, many may be short-lived.
Si Jianghua told reporters that the unmanned shelf industry is highly concentrated, with fast-paced development. At this stage, small players may not want to join again. Startups have frequently reported integration news. Fresh Fruits and Hamime Technologies have formed strategic partnerships, facilitating mergers and acquisitions of 51 Snacks, Guo Xiaomei, and Tomato.
According to e-commerce strategist Li Chengdong, some giants may not be optimistic about this format but fear missing a potential opportunity. Giants and startups may compete for six months.
3. High Theft Rates and Low Expansion Efficiency Need to Be Solved
Can a profitable business model be established for unmanned shelves? Some investors claim that no shelves are profitable.
Visitors say free shops and cloths are quick, and they can achieve long-term interaction with white-collar consumers. There is no room for imagination regarding 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 claimed that no shelves would be profitable.
Li Chengdong analyzed with reporters that a friend who had started in this field shared several data points. The average monthly sales per unmanned shelf were around 1,500–2,000 yuan, with a gross margin of 25%–30%, and a moral loss rate of 3%–7%. Logistics costs were about 10%, and operating costs over 5%. With a few hundred shelves, it was basically not losing money. However, he also noted that many companies struggled to achieve a 7% loss ratio, usually between 20% and 30%, coupled with fierce competition, making them pessimistic about this model.
6 months, 70 shelves, and the highest cargo loss reached 50%. This was data shared by Yi Tao, founder of Dim Sum Bar, when he relaunched the project, even though the number of employees was over 30. The snack shelf project was terminated in May last year. Yi Tao concluded that the office snack consumption scene existed, but the expansion efficiency of the model was low, and the high loss of snack food shelves was the main reason for their failure.
When asked about the theft issue, interviewed companies said they relied on "technical + legal" solutions and did not disclose loss rate data. Currently, some companies like Frogs and Guo Xiaomei have introduced credit systems. In terms of anti-theft technology, it still seems in its infancy. Most unmanned shelves currently on the market are in a "restocking" state, lacking identification technology and intelligent security. Some consumers told reporters, "I don’t see cameras on the shelves, but I can’t see people pretending to scan them."
Jingdong Home Go and Guo Xiaomei are trying to achieve "open doors and take them" through technologies like face recognition, gravity sensing, and intelligent inventory management. However, some observers believe this is an upgraded version of vending machines, and the operational cost problem remains.
4. In 2018, the Industry Will Face Two Major Challenges
Although the second half of last year was red-hot, the real difficulty lies in refined operations after large-scale deployment.
According to data from the China Electronic Commerce Research Center in January, there are currently around 100 million users in first- and second-tier cities in China. There are 100,000 to 200,000 enterprise terminal shelf capacities, and an early market space of 1 billion to 3 billion yuan. According to incomplete statistics, there are no fewer than 50 startup companies in the no-shelf market.
Due to limited distribution space and limited SKUs, this market is ultimately constrained. Guo Xiaomei, founder of Guo Xiaomei, once mentioned that this is a small market. "Even if a unicorn in first, second, and third-tier cities eliminated all competitors, a 100% monopoly would still be less than 100 billion yuan." He analyzed that the first half of the unmanned shelf industry would only be a multi-billion business.
According to incomplete statistics, there are currently more than 50 players in the market. The industry generally believes that the first half of this year will be a key year for reshuffling. Li Lu believes that the final big winner will be traditional players with supply chain advantages or entrepreneurs who can quickly manage the supply chain.
Langran Capital forecasts that the industry will cool down this year, with capital driving mergers and acquisitions within the industry, expanding the leading companies, forming an industry "Mobai" and "ofo." On the other hand, most unrepresented unmanned shelf companies will struggle to secure financing and may shut down. Additionally, the unmanned shelf model will expand into other scenes outside the office, and supply chain competition among leading enterprises will begin, accelerating cooperation with giants.
Based on the above operational difficulties, some industry insiders believe that the isolation of unmanned shelves isn't effective, and a better approach is to supplement retail sales. Wang Hongtao, deputy secretary-general of the China Chain Store Management Association, said that Japan also has the concept of unmanned retailing. For example, one office building opened a full family store, and there are no shelves in the building, which leads to replenishment and monitoring issues. It offers a certain level of resolution.
The unmanned shelf looks like "a shelf plus a few bags of snacks," and anyone can enter, but the real challenge lies in fine-scale operations after scaling. Whether the future will be like the sharing of a tuyere, forming a head concentration effect, and making other players hard to survive, this year may provide answers.
Beijing News Reporter
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