The once-cool unmanned retail industry is now warming up. The brand 'Cai Fangbian', which bet on the unmanned retail track, recently received 5 million yuan in angel round financing. Amid repeated pandemic outbreaks, pre-made dishes delivered via unmanned retail have become a good near-field retail business. In May, Beijing Youbo Online Technology Co., Ltd. formally submitted its IPO prospectus to the Hong Kong Stock Exchange, again aiming for the 'first vending machine stock'. Additionally, FMCG beverage companies such as Coca-Cola, Nongfu Spring, and Genki Forest have increased their bets, accelerating the deployment of smart cabinets. However, it is worth noting that after the previous round of industry reshuffling, the capital market has returned to rationality. Compared to the high market sentiment in the past, the current financing 'threshold' for enterprises has significantly increased, and bets are no longer indiscriminate. Is the unmanned retail industry experiencing a second spring or a late cold snap? Can unmanned retail companies ride the wave again? Is it a real trend or a false demand? Market analysts believe that in the second half of unmanned retail, the ordeal continues. 01 Unmanned Retail Makes a Comeback: Who Do Capital and the Market Prefer? The unmanned retail industry, which experienced a wave of capital frenzy, despite being a mess, has shown the capital market its huge development space. In just five years, the market size of unmanned retail has grown tenfold. According to data from iMedia Consulting, by 2025, the scale of unmanned retail will approach 2 trillion yuan, covering a consumer base of 250 million people.

According to statistics from the Lianshang.com Retail Research Center, in the first half of 2022, there were 469 financing events in the new consumption field, with a total financing amount of nearly 32 billion yuan, a year-on-year increase of 67.5% in financing scale, but a year-on-year decrease of 18% in total financing amount. Looking at the overall investment and financing distribution in the new consumption field in the first half of the year, a large amount of funds were invested in angel round and A round enterprises, while seed-stage startups received relatively little financing. Breaking down the data for specific tracks, online channel physical e-commerce platforms are more favored by investors, followed by offline retail platforms, then digital product e-commerce platforms and unmanned intelligent retail enterprises. Among them, the unmanned intelligent retail track received the lowest proportion of financing, only 21%, with relatively small amounts, accounting for 23%. However, under the general premise of cautious capital, 8 unmanned retail startups received a total of over 400 million yuan in financing. Among them, unmanned retail manufacturers Feng E Zu Shi and Yunluo Network received the most financing, with the former securing the industry's largest A round of 300 million yuan. It can be seen that in the eyes of investors, although the unmanned retail track has not yet exploded, it remains one of the four major offline capital-attracting tracks in new retail. Image source: Lianshang.com & Soupu.com "In the second half of the year, capital in the new consumption track will only become more rational. The sustainability of a business model depends on long-term operating indicators such as product and user operations, repurchase rates, and identifying truly valuable brands," said multiple venture capital insiders. They also noted that unmanned retail entrepreneurship seems to have a low threshold, but it is actually a business that is capital-intensive and operation-heavy. If costs cannot be amortized through scale in the short term, it will be even harder to see real profits in the future, while leading brands will show more stable growth. This is because compared to expanding points, scaled operation of points is much more difficult. New brands generally drive point expansion through traffic and marketing. After transitioning from unmanned shelves to vending machines, operational difficulty increases, requiring technology to solve supply chain and operational efficiency issues. Therefore, after the market gives high valuations, if new brands want to attract follow-up investment, they must demonstrate strong 'self-hematopoiesis' capabilities. 02 Industry Watershed Appears: 'New and Old Players' Diverge Different players in different fields have their own advantages and disadvantages in entering 'unmanned retail'. Specifically, competitors can be categorized into four types:

  1. Traditional unmanned vending machine brands like Youbo, with strong capital support, mainly rely on a partner model to find and operate points for rapid expansion, earning a percentage from sales;
  2. Logistics-based companies like Feng E Zu Shi, leveraging SF Express's existing customer resources, build a reputation through self-operated teams providing standardized services, quickly opening up the market;
  3. FMCG companies such as Genki Forest and Nongfu Spring, as cross-industry players in the beverage sector, leverage strong brand effects to directly penetrate various sales terminals;
  4. Some brands in tracks like fresh food and trendy toys, relying on technology and traffic advantages, naturally expand their business. Looking at the survival situation of unmanned retailers this year, it is like ice and fire, with gaps widening among enterprises. Looking at this 'comeback', the gameplay in the second half of unmanned retail has actually changed. Daily Youxian, once hailed as the 'first stock of fresh food e-commerce', sold its convenience store business at a low price and exited; Youbo, the largest unmanned retail operator in China, is again rushing to list, but its latest revenue data is worrying due to the pandemic, and it has not yet turned a profit; new player Genki Forest has set a goal of deploying 100,000 smart cabinets nationwide by the end of 2022, quickly deploying thousands of smart cabinets in over a dozen cities, and recently began laying out the ready-to-drink coffee market, with rapid expansion momentum; some players with years of supply chain and logistics advantages have run through their business model and begun to achieve profitability. According to industry insiders, Feng E Zu Shi expanded significantly after its February financing, with over 70,000 points, and August revenue reached 120 million yuan, a year-on-year increase of 120%, a development trend worth watching. Youbo Online's revenue and gross profit by segment (in thousand yuan) Data source: Company prospectus Youbo, Daily Youxian's convenience store, Nongfu Spring, and Genki Forest's market expansion strategies can be summarized as 'big channels, big penetration', focusing on public large-traffic and large-scale 'FMCG tactics', but they are easily trapped in the bottleneck of 'high frequency, low gross margin'. Li Minghao, a partner at Youbo Online, once said that retail business has its own gross margin ceiling. For a long time, Youbo Online has continuously expanded points to gain greater channel bargaining power and reduce procurement costs, but the price is a surge in selling expenses, which affects net profit levels. The main battlefields for unmanned retail enterprises include not only large supermarkets, subways, and other crowded public scenarios, but also various segmented scenarios such as factories, schools, offices, and hospitals. According to public data compiled by Huajing Industry Research Institute, in terms of scenario distribution, residential areas and communities account for the largest proportion of unmanned retail demand at 24%; followed by office buildings, subways, and train stations, each accounting for 21%. For these brands that advocate scale-based victory, their poor performance in segmented scenarios can be attributed to what Hejun Consulting partner and chain operations head Wen Zhihong once publicly stated: their traditional channels are one is KA (key accounts), i.e., retail supermarkets, and the other is for distributors, which are completely different from unmanned smart cabinets. In other words, although many cross-industry brands choose to participate in market competition in the form of vending machines, most are just a supplementary means to their main business. To seek new growth, it is inevitable to compete in segmented consumption scenarios. When the contact channels with consumers deepen, the brand's accumulation in user operations becomes very important. For example, Feng E Zu Shi, which has been deeply involved in the industry's segmented field for 5 years, achieved counter-trend growth during the pandemic, as there are not many enterprises in the industry that can play well in small scenarios like Feng E Zu Shi. 03 What Makes the Unmanned Model Successful? At a time when online traffic is peaking and offline channels are undergoing reshuffling, the new proposition facing enterprises has been refreshed: how to achieve precise matching of limited product categories within a limited field. In the second half of the unmanned retail industry, enterprises' ability to cultivate intensively will determine their standing. The key to growth for unmanned retail enterprises is user operation capability, which is paramount. Zhang Yi, CEO and chief analyst of iMedia Consulting, believes that in the previous round of unmanned retail boom, capital was at the forefront, with the industry following. This time, the track is booming again, but the power of capital is relatively weaker, with more driving force coming from industrial retail transformation. Unmanned retail is both a good business and a difficult one. In the front, the competition is about deep understanding and enhanced satisfaction of user needs in the new consumption era. To win in the front, it is necessary to achieve coordinated development of a complete intelligent supply chain behind the scenes, including technology systems, logistics warehouse management, intelligent product operations, and precise matching of user needs, requiring enterprises to manage the entire process data effectively, such as scenario recognition, product selection, inventory management, logistics distribution, and automatic bill reconciliation. Behind the unmanned model is the support of cost and supply chain Image source: Internet Behind the low-threshold unmanned model is the support of heavy costs and supply chains, which tests the operational capabilities of entrants. It requires not only high-efficiency front-warehouse operations but also ground business personnel to provide in-depth services to maintain customer stickiness. This is why the industry generally faces challenges such as high loss rates, high operating costs, competition from rivals, and limited SKUs affecting customer experience. This exactly corresponds to the view of Zhang Yi, CEO and chief analyst of iMedia Consulting: "The physical industry has a real need for profitability from unmanned retail, and its development pace is relatively steady. If efforts are made in refined operations and differentiated product selection, it may be possible to carve out a 'bloody path'." As overall industry costs decline, enterprise operational efficiency improves, and the maturity of old players increases, a watershed is emerging in the unmanned retail industry. The shift from 'broad' to 'deep' industry pattern means competition is moving from channel warfare to user warfare. The biggest difference from the previous round is that entrants are required to 'reduce costs and increase efficiency' to achieve intensive cultivation, with the depth of operational models covering various consumption scenarios. It is believed that with the accumulation of technological innovation, unmanned retail enterprises will become increasingly capable of transforming traditional businesses, and excellent players will emerge. Source: Zinc Scale (ID: znkedu) Author: Meng Huiyuan