Supermarkets are suffering from online retail platforms, such as Amazon and Alibaba. Convenience stores may be free from competition from the online giants. However, the situation will change.
759 store (the fastest developing retail chain stores in Hong Kong) planned to sell products in S.F. Express stores (fast-expanding express delivery service provider in China) for consignment. The first joint venture of 759 store and S.F. Express was opened in September. There will be 12 shops opening soon.
759 store is responsible for the supply of goods and renovation of the retail area. S.F. Express takes care of rent and staff, and earns money from sales revenue on a pro-rata basis. This win-win situation has caused a revolution in the convenience store industry.
7-eleven and Circle K are the main players in Hong Kong’s convenience store market. Customers have already been enjoying self-pick-up and self-drop-off delivery services in over 350 shops of Circle K and 7-eleven in Hong Kong. Why does S.F Express need to work with 759 store?
The first S.F. Express convenience store in Xiamen in China, “Heike”, was opened in June 2014. Heike is an offline to online platform store, which provides different products via posters and other channels.
Customers can place orders via QR code scanning in the store and then S.F. Express will deliver the goods to customers. Heike stores also offer air-ticket purchasing, cell phone recharging, dry cleaning and other convenient services.
However, the result might be negative because customers expect convenience stores to provide immediate services, such as selling snacks and drinks promptly, instead of delivering products to their home.
The cooperation between 759 store and S.F. Express can solve this problem. 759 store is responsible for the supply of goods. S.F. Express can focus on their strength, logistics and storage. At the same time, S.F. Express can consider developing O2O platform via online to offline when these shops are successful in Hong Kong.
S.F. Express has over 12,000 service centers in both mainland China and overseas countries or regions. If half of the numbers turn into convenience stores, it will be a convenience store revolution. You may see S.F. Express convenience stores in Singapore South Korea, Malaysia, Japan, Thailand, Vietnam, Australia, and the United States in the future.
Partnering with local suppliers or retail chains in each country or region, the shops can provide convenience store services, self-pick-up and self-drop-off delivery services and one business opportunity, which can help S.F. Express develop online retail services to compete with Alibaba.
As you can imagine, when S.F. Express has a few thousand high-traffic shops in Asia, which represents a huge pool of customers in Asia, S.F. Express can develop an online platform targeting the retail consumption of mid to low-ended customers. This can help S.F. Express build up competitive advantages. This is the weakness of Alibaba.
As this convenience store concept is still developing, a successful business model will take time to be fine-tuned. It is another good example of technology really moving quickly, having great impact on mortar and brick shops, and all being related to me and you.
***
Sunny Lam Kwok-tai
Linkedin: hk.linkedin.com/in/sunnyl13/
Address: Block 1, Beverly Garden, Tseung Kwan O, Hong Kong
Tel: (852) 9212-0199
(Short bio)
Lam Kwok Tai Sunny has been a columnist and retail professional in Asia for over 10 years. He was born and raised in Hong Kong and graduated from the MBA program at the University of Northern Iowa, U.S. He is dedicated to writing with insight into the retail industry in Asia for different columns in both print and digital media.
- Distributed via http://www.AsiaToday.com
