Unmanned stores in China have made international headlines as Alibaba and other Chinese retail giants race to the corner of the unmanned market.
At TechCrunch in Shanghai this week, we had the pleasure of hearing from two industry experts about unmanned stores and what this means for the future of retail in China. Mr Haibo Chen is founder and CEO of Deepblue, who specialise in providing B2B solutions for companies looking to launch unmanned retail spaces. Also on stage was Zilin Chen, Founder and CEO of Bingobox who works in the B2C sector bringing unmanned stores to consumers.
According to Haibo Chen from Deepblue, the sudden investment and transfer to unmanned stores is not a result of breakthroughs in IOT or digital technology but is actually a direct result of increased pressure in the retail industry as labour and storefront costs go up and in-store traffic becomes harder to keep up.
Offline business is losing its appeal rapidly in China as e-commerce and mobile shopping platforms become ever more sophisticated, being able to deliver on the day. For some, unmanned stores are just one way of updating offline retail. Many shops and businesses are currently experimenting with the ways their stores work in terms of payment and access to and from the stores, options are numerous from QR codes, to digital gates, to full-service apps, smart weights and facial recognition.
Although these novel methods tend to make for good press coverage, both of the experts on stage agreed that the method used for unmanned shops is not as important as providing price value and convenience for customers, in the long term these will be the deciding factors on whether or not unmanned shops take off.
Shop owners are learning fast and Zilin Chen from Bingobox believes that within 3 years we will see one preferred method of operation taking over the market, as we have with bike sharing and other smart business models.
However, this does not mean that the industry is without obstacles. Even though the technologies required for unmanned stores are already readily available, the business development services and supply chains attached to these ventures need to undergo huge changes to adapt to the unique opportunities and challenges of unmanned stores. This will also be key to the success rate of any brand’s retail automation.
One question which has long been asked about unmanned stores is, how will they cope with faults in human behaviour? For example, customers changing their mind or misplacing items when replacing them or in more drastic cases, stealing products? Zilin Chen was asked what he believed the solution would be.
The candid answer we found was, ‘unmanned stores currently can’t address such issues in full, particularly when it comes to theft of items’. In the defense of unmanned stores, Zilin Chen also reminded us that traditional storefronts have never been able to fully guard against such behaviour anyway.
Prevention may still be an issue, but unmanned stores will have no limit of ways to deter theft. Most stores require users to scan a code either linked to an existing social media platform or to an app. In either of these cases, the channels would be connected to consumers’ bank cards, making identifying culprits relatively straightforward. For many stores high definition CCTV and facial recognition software is also part of their surveillance, making such behaviour much riskier.
Is there a place for unmanned stores in China’s retail landscape?
Unmanned stores should not simply be a more cost-effective way to operate offline retail spaces. Zilin Chen from Bingobox hopes that unmanned stores will be able to use big data to improve the shopping experience and use these unique technological advantages to put the things that consumers need closest to them.
In this respect, both panellists agreed that unmanned stores are in fact, not in competition with traditional stores, but they are an addition to the retail landscape, as you take a bike and a taxi for different reasons, consumers will have different expectations and demands from traditional retail and unmanned stores.
The challenge for brands going forward is how they will adapt their strategy to benefit from unmanned stores, not just on a cost basis but also by improving their ability to manage stock, streamline production lines and improve the consumer experience.
Zilin Chen from Bingobox remains quite optimistic about the uptake in unmanned stores, although he admits there is still a long way to go in terms of business development, the Bingobox teams internal goal is to have 5000 unmanned retail sites active within a year.