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Comfort Bee — China’s first really profitable cashier-less retailer chain?

However the final two years have seen a mass exodus from the cashier-less retailer market. In April 2020, Aishiduo (“i-store” in English), an unmanned retail retailer in Guangzhou, together with a slate of different manufacturers, abruptly closed up store. Information experiences have been grim, with story titles similar to “China’s unmanned comfort retailer growth got here and went rapidly” and “Unmanned shops, as soon as the way forward for the retail business, are actually closing down.”

“Many unmanned retail firms began out as [speculative] investments,” mentioned (in Chinese language) Zhāng Yǒngbiāo 张勇标, who researches the comfort retailer enterprise. “They didn’t think about learn how to maintain profitability and earn cash; they simply needed to make a splash after which money out.” 

The bust isn’t a surprise. The cashier-less retailer expertise doesn’t really feel like an improve to shoppers — quite the opposite, they might be inclined to spend much less within the absence of human gross sales workers. And unmanned comfort shops face the identical hurdles as any comfort retailer enterprise: Margins are tight, and stocking small retail areas appropriately is an accounting and logistics nightmare. As a result of China’s first technology of cashier-less retailer chains had but to succeed in scale, they may not compete with current manufacturers in value financial savings. 

However Comfort Bee not solely survived the growth and bust, it appears to have thrived. Based on 36Kr (in Chinese language), the corporate is already worthwhile, and its revenues are already comparable with the highest three international comfort retailer manufacturers in China: FamilyMart, Lawson, and 7-Eleven. If true, this can be a outstanding efficiency: In April this 12 months, Lawson introduced that its China enterprise was worthwhile for the primary time in 2020, 25 years after it entered China. Each FamilyMart and 7-Eleven are solely worthwhile in some areas. 

Comfort Bee’s development in operations can be dizzying: Since opening its first offline retailer in Beijing in February 2017, Comfort Bee has opened greater than 2,000 shops in 20 cities in 4 years. Japanese-owned FamilyMart, by comparability, took 16 years to open 2,500 places in China after opening its first retailer in Shanghai in 2004. 

On the finish of final 12 months, Comfort Bee’s government director, Xuē Ēnyuǎn 薛恩远, mentioned that the corporate would go into “fast growth mode” in 2021, and that the variety of Comfort Bee shops would exceed 4,000, a rise of two,400 shops, by the tip of this 12 months. By the tip of 2023, Comfort Bee plans to succeed in 10,000 shops (a median annual development of three,000), with half of them situated in China’s second- and third-tier cities. This might make it one of many prime 5 most accessible comfort shops in China.

An IPO to fund breakneck development

To fund this development, Comfort Bee has been elevating giant quantities of cash: It accomplished a financing spherical of $300 million led by Tencent in 2018. Final Might, the corporate introduced that it has already raised as much as $1.5 billion from big-name traders. However to win the comfort retailer sport, it wants much more cash. Haitao’s Jerry Wang says, “It’s a promising enterprise mannequin. However it burns cash quick. So public itemizing is a precedence.” 

Based on the 36Kr report linked above, which was revealed in June, Comfort Bee was making ready an IPO within the U.S. with plans to boost $500 million to $1 billion, to be underwritten by Morgan Stanley, Goldman Sachs, and CITIC Securities. 

However after the Didi debacle final week, these plans could also be on the again burner. Wang says a list by the tip of this 12 months is “nonetheless attainable and needed” however could happen in Hong Kong, or within the U.S. after receiving approval from regulators. Paul Triolo of Eurasia Group, who not too long ago co-authored a piece for SupChina on how the Didi affair ought to be seen as a regulatory failure moderately than as a part of a coordinated crackdown, mentioned that “firms in much less delicate sectors similar to retail shouldn’t have a lot hassle with a cybersecurity overview” earlier than an IPO, though in fact there might at all times be “different regulatory or political elements that will complicate the method.”  

But when anybody can tackle the challenges of getting funded within the present atmosphere, it’s in all probability CEO Zhuang Chenchao: When he co-founded Qunar.com in 2005, he took on Baidu, which was then an unassailable monster of an organization, and a lot of specialised incumbents, for the journey market. Baidu later largely gave up by itself journey search enterprise, and purchased a big stake in Qunar, which IPO’d on Nasdaq in 2013.  

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