---
title: "Alibaba and Wahaha Enter the Fray: Is the Unmanned Convenience Store Really the Next Big Thing?"
description: "In the past half month, after two bike-sharing companies exited, shared power banks have also quieted down. Before we could lament the fading of the trend, unmanned convenience stores arrived. On June 25, beverage giant Wahaha signed a \"3 years 100,000 units, 10 years 1 million units\" Take Go unmanned store agreement with Shenlan Technology, which develops unmanned retail technology. Subsequently, dairy giant Yili also planned to promote unmanned convenience micro-stores in over 2,000 communities in cooperation with Shenlan Technology. On June 28, Sinovation Ventures announced the completion of a 30 million yuan A+ round of financing for F5 Future Store, a 24-hour unmanned convenience store built on self-developed robotic arms and backend management systems. On July 1, another unmanned convenience store company, BingoBox, announced the completion of its A round of financing, exceeding 100 million yuan. Previously, Alibaba also claimed it would launch its unmanned supermarket \"Tao Coffee\" at the second Taobao Maker Festival in early July."
author: "超市老万"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-07-06"
categories: "Retail Formats"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/wAD3APFY6pxDDl51-tnGGQ"
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citation: "超市老万. “Alibaba and Wahaha Enter the Fray: Is the Unmanned Convenience Store Really the Next Big Thing?.” New Distribution, 2017-07-06. https://xinjignxiao.com/en/articles/alibaba-and-wahaha-enter-the-fray-is-the-unmanned-convenience-store-real-12d3def7/"
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---

# Alibaba and Wahaha Enter the Fray: Is the Unmanned Convenience Store Really the Next Big Thing?

> In the past half month, after two bike-sharing companies exited, shared power banks have also quieted down. Before we could lament the fading of the trend, unmanned convenience stores arrived. On June 25, beverage giant Wahaha signed a "3 years 100,000 units, 10 years 1 million units" Take Go unmanned store agreement with Shenlan Technology, which develops unmanned retail technology. Subsequently, dairy giant Yili also planned to promote unmanned convenience micro-stores in over 2,000 communities in cooperation with Shenlan Technology. On June 28, Sinovation Ventures announced the completion of a 30 million yuan A+ round of financing for F5 Future Store, a 24-hour unmanned convenience store built on self-developed robotic arms and backend management systems. On July 1, another unmanned convenience store company, BingoBox, announced the completion of its A round of financing, exceeding 100 million yuan. Previously, Alibaba also claimed it would launch its unmanned supermarket "Tao Coffee" at the second Taobao Maker Festival in early July.

In the past half month, after two bike-sharing companies exited, shared power banks have also quieted down. Before we could lament the fading of the trend, unmanned convenience stores arrived.
On June 25, beverage giant Wahaha signed a "3 years 100,000 units, 10 years 1 million units" Take Go unmanned store agreement with Shenlan Technology, which develops unmanned retail technology. Subsequently, dairy giant Yili also planned to promote unmanned convenience micro-stores in over 2,000 communities in cooperation with Shenlan Technology.
On June 28, Sinovation Ventures announced the completion of a 30 million yuan A+ round of financing for F5 Future Store, a 24-hour unmanned convenience store built on self-developed robotic arms and backend management systems. Previously, F5 had received 2 million yuan in angel financing from Chuangda Capital and 10 million yuan in Pre-A round financing from TCL Ventures.
On July 1, another unmanned convenience store company, BingoBox, announced the completion of its A round of financing, exceeding 100 million yuan. BingoBox is positioned as the world's first truly scalable 24-hour convenience store. It started project testing in Zhongshan, Guangdong in August 2016, and landed in Shanghai in early June 2017, launching large-scale traffic testing for first-tier cities.
Previously, Alibaba also claimed it would launch its unmanned supermarket "Tao Coffee" at the second Taobao Maker Festival in early July. "Tao Coffee" will be a 200-square-meter offline physical store that combines shopping and dining, accommodating more than 50 users; the actual capacity can increase with the site area.
**Internet giants have always been trendsetters. From Amazon Go to Alibaba's Tao Coffee, unmanned convenience stores seem to have become a trend.**
In fact, in addition to internet companies, traditional retail is also paying close attention to unmanned convenience stores. Following Auchan and RT-Mart, retail giant Walmart also launched a self-service grocery kiosk in early June, and Beijing's Easy Home will open an unmanned convenience store called EAT BOX in July this year.
The influx of capital seems to indicate that unmanned convenience stores are becoming the next explosive new business format after bike-sharing. Internal analysis materials from the Self-service Vending Industry Branch of the China General Chamber of Commerce also show that 2017 will be the starting year for China's unmanned store industry.
Is the unmanned convenience store really a good business?
Unmanned convenience stores are essentially self-checkout plus unattended operation:
1. Self-checkout eliminates cashiers and digitizes the entire store. This is a key operational direction for convenience stores in the new retail era.
2. Unattended operation means cost and efficiency for store managers, humanistic care for frontline staff (no need to work night shifts), and a test of national quality and morality for buyers.
From a capital perspective, unmanned convenience stores greatly reduce labor, have many application scenarios, and strong scalability. From a consumer demand perspective, the biggest advantage of unmanned convenience stores is convenience. The habit of spending money for convenience is evident among the post-90s and post-00s generations, and increasingly among the affluent middle class of the post-70s and post-80s. From an operational perspective, although unmanned convenience stores are more efficient and have lower costs, the user experience is reduced. Staffed convenience stores impress with service, selling product value + emotional value + service value. Unattended operation means relying entirely on products and scenarios to impress consumers, especially forcing a revolution in product supply.
Technologically, although mature self-checkout systems that support cash change have long existed, a certain number of consumers still pay with cash. Moreover, the scanning speed of ordinary people cannot compare with professional cashiers. Once a queue forms, the consequences can be imagined. At the same time, the hardware and software of these self-checkout systems are not cheap.
If hardware issues can be solved technically, then human nature issues can never be completely resolved, as long as it is an unattended sales model.
Whether unmanned convenience stores become a real trend depends on consumer quality. Theft, malicious damage, and other issues are always unavoidable problems for unmanned convenience stores. In addition, unmanned convenience stores also have the potential to become street trash bins or even shelters for the homeless, which would greatly reduce capital efficiency.
Currently, domestic exploration of unmanned convenience stores is still ongoing. From a technical and consumer perspective, unmanned convenience stores are already accelerating trials; from a capital and competitive perspective, traditional convenience stores are urgently transforming, and unmanned convenience stores are brewing a trend; from an operational perspective, convenience store operations need to evolve and upgrade, and unmanned convenience stores will develop rapidly through trial and error.
Setting aside market competition factors, unmanned convenience stores, as the most developable new species in offline retail, still have a long way to go. Whether they become the next big thing will be tested by time and the market.
1. What pain points do unmanned convenience stores need to solve?
**A. Rigid rise in labor costs**
Yes, unmanned convenience stores indeed do not need permanent staff. It is said that only one or two delivery and restocking staff are needed to maintain 5-7 stores.
**B. Continuous rise in rental costs**
Yes, compared to ordinary convenience stores, they can save more than half of the rent.
**C. 24-hour convenience is a demand**
Not a reason; 24-hour convenience stores have long been widespread.
**D. Solving queues**
Not necessarily. If business is bad, there is no queue anyway; if business is good, you cannot solve it either.
2. How efficient are unmanned convenience stores?
**A. Do unmanned convenience stores save labor costs?**
How much do they save? For a mom-and-pop store with 2 people, you save 10,000; for an ordinary convenience store with 4 people, you save 20,000; for a Japanese-style convenience store with 7 people, you save 35,000.
**B. Are gross margins higher or lower in unmanned convenience stores?**
BingoBox is 20% lower than convenience stores (allegedly); Eat Box is 20% higher than convenience stores (allegedly); assuming they are the same, both are 30% (average).
**C. Is sales per square meter higher or lower in unmanned convenience stores? (Compared to staffed convenience stores)**
Hypothetical deduction:
Mom-and-pop store: 2000/day/50 sqm = 40 yuan/day/sqm
Ordinary convenience store: 5000/day/70 sqm = 71/day/sqm
Japanese-style convenience store: 8000/day/90 sqm = 89/day/sqm
Eat Box claims: 1500/day/20 sqm = 75/day/sqm
Sales per square meter is not higher.
**D. Is investment per square meter higher or lower compared to ordinary modern convenience stores?**
Hypothetical deduction:
Mom-and-pop store: 50,000/50 sqm, 1,000/sqm
Ordinary convenience store: 150,000/70 sqm, 2,143/sqm
Japanese-style convenience store: 400,000/90 sqm, 4,445/sqm
Unmanned convenience store: 200,000/20 sqm, 10,000/sqm
Investment per square meter is much higher. It is said that unmanned convenience store investors claim to recover costs in 10 months. How high must the profit be?
**E. Is management difficulty lower in unmanned convenience stores?**
I. Indeed, permanent staff are saved, and it is claimed that only one or two delivery and restocking staff are needed to maintain 5-7 stores. Let's assume it is true, but I saw that after a dozen customers picked through the BingoBox store, it was a mess. It can be said that this is even worse than vending machines. It is estimated that staff will need to be added.
II. In addition, if it is a grab-and-go technology: it requires RFID (radio frequency identification) and embedded IC tags (each adding an average cost of 0.7-1.4 RMB). Unmanned convenience stores sell low-value consumables. Isn't this a joke?
III. If only an ordinary product identification code is added, it also increases labor and label costs.
**F. Can a 20-square-meter unmanned convenience store really achieve daily sales of 1,500?**
A convenience store with an average transaction of 30 yuan is a community store. As a convenience store for immediate consumption, 20 yuan seems already good. If so, it is difficult to deduce even 1,000.
In summary:
An unmanned convenience store with an investment of 200,000 yuan and 20 square meters (not to mention the huge investment in the backend).
Quote: "Due to the significant reduction in labor and rent costs, our average daily sales only need to reach 1,500 yuan or more to achieve profitability for a single store in most areas of Beijing. Based on an average transaction of about 30 yuan, this goal is not difficult to achieve." Once scale is reached, costs can be recovered in 10 months.
Think carefully, do you think it is possible?
Note: The MOBY store designed by Wheelys that can drive autonomously is not worth mentioning: traffic police and urban management are your natural enemies.
3. All these problems can be solved by vending machines.
Reasons are as follows:
**A. More efficient**
Faster, simpler, and better protects customer privacy. Under the super cameras of unmanned stores, a closed small space seems more suitable for bank ATMs; it is oppressive! Suppose a homeless person swipes in and sleeps inside, what do you do?
**B. Easier to maintain**
There is no issue of shelves being messed up by customers; no need to organize shelves; there is only one action: "restocking."
**C. Higher sales per square meter and lower rent**
It is reported that Japan has 5 million vending machines with annual sales of over 300 billion RMB, meaning each machine occupying 1-2 square meters sells 168 yuan per day = 84 yuan/square meter/day. This is still with only a dozen SKUs, mainly beverages (each machine costs 10,000-20,000).
If we want to increase SKUs, a compound vending machine of 8 square meters can offer up to 100 effective SKUs, which is sufficient for immediate buyers. High temperature, low temperature, and normal temperature compartments can all be achieved.
**D. More theft-proof and lower investment**
**E. All the space around vending machines becomes free "in-store purchase area," invisibly expanding the rent-free area.**
**F. Payment, pickup, face scanning, hand scanning, machine scanning, and card scanning can all be achieved.**
**G. Japan's unmanned checkout is not an unmanned convenience store; it is just an unmanned checkout counter introduced in "staffed" convenience stores to reduce queues.** Chinese mobile apps can better solve this problem; only need a temporary check at the door during peak hours. The services and interaction functions that "staffed" convenience stores provide to customers can generate additional sales; this is omitted here.
**H. Unmanned convenience stores promote: "On the basis of existing locations, develop multiple profit channels such as operating income, advertising revenue, and consumer finance to achieve performance growth." Personally, I think vending machines can achieve the same.**
Indeed, unmanned convenience stores broke out in 2017. On one hand, continuously iterating IoT technology, facial recognition technology, and mobile payment technology provide technical support for unmanned convenience stores; on the other hand, rising labor costs, increased consumer demand for shopping convenience, and increasingly fierce industry competition have led the industry to test the waters. These are the realistic motivations for unmanned convenience stores.
For a new model, how should we evaluate it? When market demand is consistent, efficiency is the decisive factor.
Therefore, compared to unmanned convenience stores, I prefer the efficiency of vending machines. We need to vigorously develop and promote them (machines of 2-10 square meters, with 30-100 selected SKUs). With the application of these new technologies, vending machines can also tap into more added value.
**This article is compiled and edited by New Distribution. The main viewpoints in the article come from: veteran retail practitioner Supermarket Old Wan**
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## Citation metadata

- Publisher: New Distribution
- Author: 超市老万
- Published: 2017-07-06
- Canonical: https://xinjignxiao.com/en/articles/alibaba-and-wahaha-enter-the-fray-is-the-unmanned-convenience-store-real-12d3def7/
- Original source: https://mp.weixin.qq.com/s/wAD3APFY6pxDDl51-tnGGQ

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