These days, news that MissFresh's convenience purchase business was acquired for 30 million yuan has been spreading rapidly online. Observers are amazed that in 2017, when the unmanned retail industry was at its peak, MissFresh Convenience Purchase successfully completed two rounds of financing totaling $197 million (approximately 1.347 billion yuan). Unfortunately, despite such substantial capital infusion, it ended up being sold at a loss. At the same time, curiosity surrounds Shenzhen Daily Convenience Technology Co., Ltd., which took over the business. Established less than three months ago, it completed the acquisition despite knowing that ongoing operations would require significant maintenance costs. Why is it so optimistic about this business? In fact, unmanned retail is seen as a major new direction for convenience stores, offering advantages such as saving labor costs and penetrating all-day consumption scenarios. The industry widely believes it has development potential, but its drawbacks are also evident: poor theft prevention, severe homogenization, and poor consumer experience. Whether unmanned retail can make a splash again remains to be seen by the market. 01 Sold for 30 Million Yuan: An Uncertain Future for Convenience Purchase? Looking back, the most glorious period for MissFresh Convenience Purchase was in 2017 when it gained capital favor, completing two financing rounds totaling $197 million (approximately 1.347 billion yuan), with investors including Tencent Investment, CDH Investments, Qiming Venture Partners, and Legend Capital. Entering the market in 2017, the hottest year for unmanned retail, its success might have been due to "timing." At that time, MissFresh Convenience Purchase primarily covered office buildings and other scenarios. MissFresh hoped to use it to cover all user scenarios, creating synergy with its home delivery business.
However, things did not go as planned. In subsequent years, the business did not make significant waves. According to MissFresh's Q2 2021 financial report, other income for that quarter was 40.4 million yuan, a year-on-year increase of 23.6%, mainly driven by increased sales from its convenience purchase business. Entering 2022, the convenience purchase business began to show signs of effort. For example, in January this year, MissFresh Convenience Purchase announced the full acquisition of Beijing Zailouxia Technology Co., Ltd. That company primarily operates in residential communities, hospitals, and other densely populated areas, selling a variety of products including beverages, ready-to-eat snacks, bread, and snacks. After the acquisition, MissFresh Convenience Purchase expanded its scenarios, reaching nearly 10,000 points. But the greatest value of this move might be providing the acquirer with a large number of "extras"—MissFresh Convenience Purchase still has 14,000 devices, with about 8,000 in operation. At the 30 million yuan acquisition price, each device is valued at 2,142 yuan. Industry insiders believe that MissFresh's move "is to ease repayment pressure on suppliers and buy time for the listed company." MissFresh 'sells cheap' its convenience purchase business for 30 million yuan Regarding the acquirer's intentions, industry insiders hold two contrasting views: some believe that spending 30 million yuan to acquire this asset, even at a bargain price, means the acquirer is unlikely to waste money; it is highly possible they will hold and continue operating the asset. Others suggest that although the selling price is low, the operational risks of similar businesses are high. If performance remains poor as it was under MissFresh, finding a third party to take over later will be difficult. According to expert notes from Jiuqian Zhongtai, MissFresh Convenience Purchase currently only exists in first-tier cities, with high costs requiring local team maintenance. 02 Has a New "Timing" Arrived for Unmanned Retail? In fact, unmanned retail was once seen as a new opportunity for the future development of convenience stores. Especially in the past two years, as chain convenience store brands like Bianlifeng and Duodian have been embroiled in "store closure" controversies, unmanned retail has been widely recognized for its potential to save labor costs and penetrate all-day consumption scenarios. According to relevant news reports, since the first half of this year, Bianlifeng has temporarily closed some stores. However, recent reports indicate that many Bianlifeng stores in various cities have not reopened, with closures and removals being common. Duodian convenience stores face similar difficulties; despite backing from Wumart, they have not gained market share through geographical advantages but have significantly contracted after piloting the convenience store model. Meanwhile, many e-commerce brand co-branded convenience stores that emerged around 2018 have also dwindled. Very brief product descriptions It is reported that since last year, many convenience stores have experienced weak sales even during peak seasons. Generally, summer is the peak season for convenience stores and beverages. To adapt to this consumption rhythm, convenience stores often expand freezer areas and update beverage brands in advance. However, even in summer, peak customer flow remains during breakfast and lunch periods, clearly indicating the decline in the convenience store industry. Industry analysis suggests that without price or category advantages, the industry faces internal competition, while pressure from new consumer brands and the rise of new tea beverage brands are also significant factors accelerating the decline of chain convenience stores. The experiences of Bianlifeng and Duodian confirm that the convenience store industry is facing bottlenecks. If you are in the industry but lack unique competitive advantages, how can you stay unaffected? However, at a time when chain convenience store companies are eager to explore new survival paths, the acquisition of MissFresh Convenience Purchase has sparked speculation that "the acquirer is likely to hold and continue operating the asset," which is closely related to a new "timing" for unmanned retail. From a practical standpoint, with rising labor costs, unmanned retail is gradually becoming a future direction. The popularity of mobile payments and the development of big data, artificial intelligence, cloud computing, and other emerging technologies provide important technical support for unmanned retail. Additionally, the positive impact of the pandemic has further promoted the widespread adoption of contactless consumption. According to data, in 2021, China's unmanned retail market reached 28.27 billion yuan, a year-on-year increase of 24.6%. These factors have brought a new consensus to the unmanned retail industry: to achieve large-scale profits, many improvements are still needed, but the development prospects and potential have been verified to a certain extent. In other words, the first "timing" for unmanned retail came from capital's favor, allowing early entrants to have enough funds to experiment. The second "timing" is based on a gradually maturing market, where users have enough awareness to understand and use this operational model. Adapting to environmental changes, since 2022, we have seen new developments from various players: Feng'e Zushi, under SF Express, completed a 300 million yuan Series A financing in February; beverage companies like Nongfu Spring and Genki Forest have set equipment placement targets; and at the end of May, Youbao's prospectus further pushed the unmanned retail industry into the spotlight... The momentum for unmanned retail's "comeback" is beginning to show. 03 The Overall Positive Development Trend of the Industry Remains Unchanged Of course, the "hard flaws" of unmanned retail are also obvious, which is why some are not optimistic about the acquisition of MissFresh Convenience Purchase. From the perspective of the unmanned retail market structure, China's unmanned retail market is currently dominated by vending machines. In 2021, the market share of vending machines was 95.9%, while other unmanned retail accounted for 4.1%. Because unmanned shelves are typically deployed in non-open scenarios, serving fixed consumer groups, they can meet consumers' nearby and immediate consumption needs. However, high loss rates, severe homogenization, and poor consumer experience remain the main constraints on the development of unmanned retail. Specifically, first, theft prevention is poor. Early unmanned shelves were mostly open shelves, and a considerable number did not incorporate the latest technologies like artificial intelligence, allowing consumers to directly access and take products. In this regard, reports show that the biggest challenge MissFresh Convenience Purchase faced was loss. If customers did not close the cabinet door promptly after purchase, items could be stolen. According to Jiuqian Information, the loss rate initially reached 50%. To solve this problem, the update cycle and costs of old equipment need to be considered. Second, homogenization is severe. Because entry barriers are low, there are many market participants. In the early stages of industry development, companies often use subsidies to expand the market. As a result, price wars and blind expansion of points frequently occur. More critically, after subsidies end, the prices of products in unmanned shelves often lose competitiveness, making it difficult to retain users long-term. Using regional specialties, private-label products, and other differentiated competition might be a more effective solution. Third, consumer experience is poor. Unmanned shelf operators rely heavily on mature operational models and logistics systems. Currently, when this model is implemented, restocking, cleaning, organizing, and after-sales work still require manual labor. If any of these steps go wrong, consumers' negative impressions quickly follow, and changing their views later will require more time and cost. It is understandable that when any industry transitions from early development to maturity, it needs to achieve long-term and stable operation in capital, technology, manpower, supply chain, refined operations, and scenario value creation. Image source: iiMedia Research Although currently, many unmanned retailers, such as MissFresh Convenience Purchase, have not achieved commendable results, it is still certain that the overall positive development trend of the unmanned retail industry will not change. The only difference is who can survive until "after dawn." Source: Zinc Scale (ID: znkedu)