Alibaba chairman Jack Ma began pushing the New Retail model last year. As a further step to expand in the “unmanned” retail business, the Chinese e-commerce titan will team up with appliance maker Midea Group to launch a million self-service convenience kiosks over the next two years, aiming to put mom-and-pop shops out of business.
The two companies on Wednesdayannounced the rollout of self-service convenience kiosks that will allow shoppers to access and pay for products using smartphones. The vending machines offer snacks, drinks, daily supplies and even fresh food.
Customers will be able to scan a QR code with their Alipay app to unlock the machine to select goods. The machine will then register what has been picked up when customers close the door, automatically charging via Alipay, the digital payment platform operated by Alibaba.
The entire process does not require the presence of a store clerk and can be completed within five seconds, said Dai Gang, founder of Xiaomaigui, the smart vending machine operator backed by Midea.
The self-service grocery machines are built with RFID technology tracking every item on the shelf to optimize inventory levels. It is capable of identifying the specified item out of 200 goods in five seconds, Dai said.
According to Yicai, Alibaba will provide support for Internet of Things (IoT) and cloud computing technology for the business, and a team from Xiaomaigui has also partnered with Alipay and Sesame Credit, the credit rating system operated by Alibaba, so that customers can overdraftpayment during their purchases.
Dai said they will start producing 5,000 machines a month from next February, Yicai reported. He expects the number will rise to as many as 20,000 in the second quarter of next year.
Ku Wei, general manager of Alibaba Cloud’s IoT division, told Yicai that the costs of the IoT technology solutions are dropping, leading to the mass production of IoT-enabled products. For instance, the production cost of an RFID tag has gone down to 3 fen from 1 yuan two years ago.
The self-service grocery machines can be stationed in various locations such as apartment buildings, streets, schools, offices, factories and gyms.
Four months after launch, the machines are now operating in several mainland cities such as Hefei, Guangzhou, Foshan, Nanjing and Zhengzhou, Yicai said. They will enter China’s first- and second-tier cities within the next 18 months, Dai added.
“We need to roll out around 1,000 units in a single city before it reaches the breakeven point,” said Dai. He believes they will become a leading name in unmanned Chinese retail within 30 months, with a target of putting in place a million machines across the country in two years.
This article appeared in the Hong Kong Economic Journal on Dec 21
Translation by Ben Ng
[Chinese version 中文版]
– Contact us at [email protected]