History always repeats itself. When the capital winter arrived, unmanned retail quickly entered a deep freeze.

Until today, no one talks about unmanned convenience stores anymore.

This means it's time to learn the lessons from this 4 billion yuan money-burning war. 01 After Burning 4 Billion, Everyone Is Swimming Naked In July 2017, Taobao opened its first unmanned convenience store, sparking a frenzy in unmanned retail. Countless physical retailers and internet startup teams, including JD.com and Suning, rushed into this trend. Players and capital swarmed into this track like fish crossing a river. Notable names include BingoBox, F5 Future Store, Take GO, and 138 other unmanned retail companies. According to iResearch data, by the end of 2017, a total of 25,000 unmanned retail shelves had been deployed nationwide, 200 unmanned convenience stores had been set up, and the new trend of unmanned retail attracted over 4 billion yuan in investment throughout the year, surpassing shared bikes in popularity. However, the trend came and went quickly. No one expected that after the autumn wind, only a mess remained. Shanghai's first BingoBox unmanned convenience store closed as early as September 2017 due to unbearable heat. After entering 2018, it successively faced layoffs, executive departures, and missed performance targets. Another company, Linjia Convenience, which was seen as a dark horse in the unmanned convenience industry from its inception, closed over 160 stores in Beijing on July 31, 2018. The company announced that due to monthly losses of 5 million yuan, continuous losses, and lack of self-sustaining capability, it was essentially bankrupt. Many unmanned shelf brands that were once favored by capital fell like dominoes. In early 2018, "GOGO Supermarket" announced it would stop operations, becoming the first unmanned shelf company to go bankrupt nationwide. Subsequently, Xingbianli laid off 60% of its BD staff; in May, Seven Koala stopped its shelf business; in the same month, it was reported that Guomei Xiaomei's financing stalled and wages couldn't be paid; in June, Hami reportedly went bankrupt; in October, Xiaoshan Technology applied for bankruptcy liquidation... At this point, the grand unmanned retail model basically declared bankruptcy. So, who is the real killer of unmanned stores? 02 Blind and Uncontrolled Market Competition After the unmanned retail trend opened, countless companies rushed in, engaging in fierce and disorderly competition among various terminal forms such as unmanned convenience stores and unmanned shelves. To seize market share, unmanned stores aggressively expanded, and expansion required capital support, blurring the line between burning money and monetization. From communities with 5,000 residents, to 2,000, and finally to small places with 500, the standard for community size for unmanned stores kept dropping. Unmanned shelves even developed to the point where they would place shelves in any company with employees, regardless of the situation. Players fought from first-tier cities to second-tier, then to third- and fourth-tier cities, almost reaching rural areas. In their blind expansion, they made the same mistakes as shared bikes. History always repeats itself. When the capital winter arrived, unmanned retail quickly entered a deep freeze. 03 "Unmanned" Costs Are Actually Higher So far, the essence of all unmanned stores on the market is merely using AI to replace cashiers. Restocking, cleaning, and organizing still require manual labor, so they cannot truly achieve an "unmanned" level. This means that unmanned stores save at most the cost of cashiers, which happens to be the lowest part of retail costs. In first- and second-tier cities, cashier salaries range from 3,000 to 4,000 yuan. However, unmanned stores need to install and maintain smart devices, such as multiple cameras and automatic recognition systems, and use AI and big data to build a complete operating system, which is the main money burner. Moreover, the cold stores lacking human warmth lead to very low repurchase rates after customers try them out, creating a vicious cycle of low sales per square foot. Take a certain unmanned store as an example: with an average monthly revenue of 20,000 yuan, a gross margin of 25% (5,000 yuan), after deducting operating expenses, there is basically no profit margin. 04 Unshakeable Chinese Consumer Habits The reason unmanned convenience stores faded after a brief novelty is largely because they are concept stores that do not offer a better shopping experience and cannot change consumer habits. Since Taobao was founded in 2003, Chinese consumers have gradually shifted to online shopping. In 2018, annual online shopping scale approached 10 trillion yuan. With the overwhelming force of online shopping, even physical stores that offer shopping experiences are rarely visited, let alone unmanned convenience stores that emerged in a short time. In the end, it is no surprise that unmanned stores have become a technology testing ground. 05 Never Play Capital Games with the Rich As mentioned earlier, within one year, 138 unmanned retail companies jumped into the trend. Most small and medium-sized startups rushed into the market, jumped in, and finally found that Alibaba and Tencent only tested the waters and withdrew, while they were deeply stuck and unable to escape. Take Alibaba's first unmanned supermarket as an example: it was just a pop-up store that existed for four days at the Taobao Maker Festival, and then disappeared completely offline. As for Tencent's unmanned store, it either opened as an internal company store in a park or was also a pop-up store. These two giants have been very conservative in exploring unmanned stores, while many naive entrepreneurs, unaware of the truth, foolishly went all in. Unmanned stores were destined to be a long-term game between giants over technology and capital, and those dull-witted small and medium-sized entrepreneurs inevitably became sacrifices in the process of exploring business models. Source: E-commerce Headlines (ID: ecxinwen) -END-