When it comes to unmanned shops, Alibaba's determined to fake it till it makes it - SupChina

When it comes to unmanned shops, Alibaba’s determined to fake it till it makes it

On June 17, Nikkei Asian Review published a story titled China’s unmanned store boom ends as quickly as it began. Examples of store closures mentioned:

  • In “Shenzhen’s electronics shop district, a Buy-Fresh Go store that had been held up by the media as a model of automated retail closed after only about a year.”
  • In Guangzhou, “i-Store, the first local unmanned convenience chain,” closed six of its nine stores.
  • In December 2018, JD.com, China’s second-largest ecommerce company, announced the suspension of its “smart shelf business — small unmanned shops the size of train station kiosks.”

Nikkei cited the difficulty of selling fresh groceries and boxed ready-to-eat food in stores without staff as one major factor in the closures. Another factor not mentioned by Nikkei is that if the shops are to be truly without staff, the customers have to be honest enough not to take stuff and make a run for it.

But the capitalist’s dream of a shop with no pesky human labor is too appealing for the likes of Alibaba to be dissuaded by petty problems such as the perishability of food and the need for customers to be trustworthy. Research firm Trivium reports that Alibaba’s “marketing machine released a video” comparing an experiment four years ago in which only 62 percent of shoppers actually paid for their goods at unmanned stores with a study run last week, involving on-demand rental kiosks, in which 95 percent of customers who rented stuff returned it. Alibaba says the difference in the results is because of Sesame Credit, its affiliate social credit system (SCS).

So are China’s social credit systems making people more honest? Perhaps not. From Trivium:

In terms of single-handedly propping up national social ethics, Ali’s self-congratulation is overblown: the two trials were too dissimilar — shopping and borrowing are not the same thing — and run on too small a scale to form the basis of any solid science, and it’s unlikely that social goodwill shot up 30-plus percentage points over the course of four years.

It’s not surprising that Alibaba is puffing up data as a public relations strategy: Fake it until you make it has long been one of the company’s ways of doing business. Nor is it far-fetched that Sesame Credit will change people’s behavior: Click through to the Trivium article to read about “The gamification of social values: Alibaba experiments with behavior modification.”

But even if this experiment is really just a promotional campaign, it is an indication that unmanned stores, whether for on-demand rentals or for grocery shopping, have a place in China’s retail future.

Jeremy Goldkorn

Jeremy Goldkorn worked in China for 20 years as an editor and entrepreneur. He is editor-in-chief of SupChina, and co-founder of the Sinica Podcast.

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