Alibaba, Chinese VCs & Chinese Startups Are Working on Amazon Go-Like Stores

We recently talked about Bingobox, the Chinese startup working on more low-tech version of an Amazon Go-like store for China. Bingobox is not the only startup in China working on this.

China Money Network:

Just two months after Amazon Go’s debut in December, there were four or five Chinese copycat companies in operation. Two have already received significant venture funding. Last week, cashier-free convenience store company Bingobox received over RMB100 million (US$14 million) in a series A financing round led by GGV Capital, with Qiming Venture Partners, Source Code Capital and Ventech China also chipping in. A week before that, a similar start-up named F5 Store completed a RMB30 million (US$4.4 million) series A+ round from Sinovation Ventures.

China Economic Review on F5 Store:

The 35-square-meter F5 shop in Guangzhou consists of two counters for food and goods, a beverage-maker and a self-cleaning dining table. Customers can order and pay for products at a special terminal or wirelessly with their smartphones. The retrieval of goods and cleaning of tables is done solely by robotic arms attached to the appliances.

Those startups are going to expand in a comparatively fast manner. China Money Network:

Bingobox has opened eight convenience stores in Guangdong province and Shanghai since last August. It plans to open 5,000 more stores within a year. F5 Store, with six stores currently, plans to open 30 to 50 shops in the next three to six months.

Linke Bingobox, F5 Store is distinctively more low tech than what Amazon showed off with Amazon Go.

China Money Network:

Lacking Amazon’s technological prowess, both Bingobox and F5 Store have devised different, lower-tech solutions to produce cashier-free stores. Bingobox requires shoppers to manually place the goods they want in a cashier area, arranging them neatly to allow a fixed machine to scan the items. This generates a check-out price sheet for consumers to pay. […]

F5 Stores operate more like high-tech vending machines. Shoppers interface with a computer screen displaying pictures of products. After making their choice, they click and pay for their goods, very much like how one would self-order at McDonald’s. A vending machine then dispense the item onto a special table. Since items sold include snacks such as instant noodles and soups, a mechanical arm periodically appears to clean the table for the next customer.

One has to view those startups as ventures into a largely untapped market compared to Western standards. A low-tech approach means you can go now in and start experimenting and get feedback.

China Money Network on the market:

China currently has less than 30,000 branded convenience stores, compared to Japan’s 150,000, indicating great growth potential in this market. So venture capital firms have been backing convenience store start-ups with fervor, with I Believe, Huimin and Qiandama all closing significant financing rounds in the past eight months.

For China, these stores are an evolution of the current state where traditional, small, local convenience stores rely more and more on WeChat for communicating with customers (discounts, arrival of ordered items).

Going a step further and building new locations with ​this networked organization model already at the core of your new model is a logical next step and promising.

This also means that the already growing commerce footprint of WeChat is only going to expand faster.

That is also why Alibaba‘s Taocafe is strategically important both as offense and defense. To enter the Taocafe, the customer needs to have the Taobao app installed. Taobao is used for processing the shopping. China Money Network:

Alibaba’s Taocafe is the closest recreation of Amazon Go. It utilizes computer vision and facial recognition to identify the products and the shopper. It does not, however, have intelligent shelf technology, which means shoppers must stand in a special exit area to let machines scan the products and their face to complete the payment process.

Ecns.cn:

The 200-square-meter store offering beverages, fast food and snacks can accommodate 50 customers at a time. To enter and make a purchase, shoppers require only a smart phone with Alibaba’s Taobao e-commerce app.

The store’s e-shopping system developer is Ant Finance, a subsidiary of Alibaba. It has assigned assistants to help customers familiarize with how Tao Cafe works.

A woman surnamed Shao said she enjoyed the experience of buying a cup of coffee in the store.

“Your profile picture is shown on the screen after you place an order. It also shows the wait time. There is no hassle of waiting for your name to be called like in ordinary cafes,” she said.

A tourist from south China’s Shenzhen said assistants told him to slowly pick up goods from the shelf so the system has time to confirm his selection.

Again, for China, this is an interesting development as it grows into a market with regionally weak store infrastructure. The competition is non-consumption in a significant enough amount of cases. Given the immense popularity of WeChat in China, Q1 2017 saw 938 million active WeChat users, the end-consumser facing infrastructure is in place as well.

For Western markets all this looks quite differently, for obvious reasons.

Make now mistake though. This is not the triumphal march of brick-and-mortar retail into China. Instead, it is online retail, and the networked economy as a whole, expanding further into “offline” territory.

Alibaba is saying something similar:

If you think the e-commerce giant plans to get a slice of the brick-and-mortar pie, then you might get it wrong: “It’s not about Alibaba wanting to open more cafes, we are not in the restaurant business… it’s about digitalising the footprints of the visitors to an offline store,” said Chris Tung, chief marketing officer of Alibaba Group.

As always, look at the core of the business models being build here. They only work with the Internet and smartphones.

The trajectory of their evolution follows that single constant.

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