Contactless shopping opens new growth vistas for e-commerce firms

Contactless shopping via automated checkouts and unmanned service outlets could be the new face of retail as Chinese companies scramble for solutions to retain customers and keep the cash registers ringing, despite the novel coronavirus outbreak.

Companies have already put the contactless system to test during the epidemic period and achieved tangible results, experts said.

On April 16, the unmanned convenience store at the Leishenshan hospital, which was built in 10 days for treating COVID-19 patients, in Wuhan, Hubei province, stopped operations after being operational for 57 days, as the epidemic has been on the wane. The supermarket, set up by Wuhan Zhongbai and supported with the Dmall digital retail system, provided daily groceries during the challenging time with zero in-store staff or checkout personnel.

The sudden spread of the COVID-19 epidemic and the limited outdoor activities during the early stages of the outbreak resulted in a rising demand for contactless checkouts and unmanned serving environment.

Dmall said its digital transformation services benefited more than 100 retailers in the country since the start of the epidemic, while its contactless checkout services reduced crowds at stores and widened the distance between store staff and consumers.

Beijing Bilibee Chain Commerce Co, or Bianlifeng in Chinese, a fast-growing convenience store chain, said convenience stores at community complexes have gained more consumers since outbreak of the epidemic, as residents have limited their travel and prefer to shop from nearby locations. Based on the consumer demand gauged via data analysis, Bilibee has updated the merchandise at its outlets and started stocking more products like bread, instant noodles, purified water and eggs.

At the same time, there has also been a growing demand for unmanned or contactless checkouts at its outlets. Even before the epidemic, younger consumers used to opt for the automated checkouts, especially in the night hours. "Payments via automated checkouts now account for 90 percent of the transactions in our stores during the night," said Xue Enyuan, executive director of Bilibee.

Bilibee, however, said only very few consumers prefer an unmanned shopping environment.

"We are not planning to make unmanned formats on purpose, but to provide self-operated services and conditions, and embed that into the current convenience stores to improve customer experiences and efficiency," said Xue.

For example, the introduction of its self-run coffee machine in the store serves to offer a strong sense of participation from consumers and gives them a sense of joy by doing so. "We do have staff in the store. They will show up when required," said Xue.

The format has proved to be more risk-proof during the challenging times when many of the employees have delayed their return to work due to the epidemic prevention and control policies. "Thanks to our high level of automation, one employee can manage most of our in-store work," said Xue.

According to iiMedia, a research institution, driven by the consumption upgrade, technology update and increasing labor costs, the unmanned convenience store market is forecast to attain a market size of 3.3 billion yuan ($46.6 million) this year.

Unmanned service outlets started becoming popular in 2017 when supermarkets and convenience stores started jumping on the upgrade bandwagon. Prominent retailers like JD and Suning.com started testing unmanned stores as a complementary to the hypermarket stores, with a view of providing 24-hour services. Unmanned restaurants and gyms also started springing up at the same time, thereby making the entire retail sector more diverse, said Zhang Jing, a researcher at the China Chain Store and Franchise Association.

Most of these experiments ground to a halt due to technology bottlenecks, lack of consumer interactions and safety issues. But at the same time, the growth of unmanned retail formats saw consumers becoming more used to automated checkout services and vending machines that sell grocery, said Zhang.

As a result, key technologies were developed through the progress of the unmanned retailing, including automated checkouts and code scanning services that have been widely applied on various retail terminals, helping reduce queues at checkouts and greatly improving the shopping experience.

During the epidemic period, reducing crowds and saving labor via automatic checkouts were the major "contactless" measures adopted by retailers, said Zhang.

In addition to the application of technology at the store terminals, the key to future retail lies in the efficiency of supply chains. Automation reduces reliance on labor for activities like sorting, storage, and product receipts, and facilitates industry transformation via self-replenishment and speedy delivery, she said.

Although the technology advances in mobile payment, the application of 5G technology and artificial intelligence, offering a better playground for unmanned retailing, the priority should also be on "retail" first, and on how to provide better merchandise and services for consumers, said Zhang.