Alibaba has made another investment in the Chinese retail market, this time into a vending machine manufacturer.
Alibaba affiliate Ant Financial said that it had invested Rmb1.2 billion ($169 million) in Beijing-based Ubox Online.
Primavera Capital also participated in the round, contributing about Rmb400 million ($56 million) to the funding.
Proceeds will be used to expand the presence of Ubox’s vending machines together with Ant Financial’s technology. The vending machine manufacturer hopes to be a platform provider to serve the robust development of Chinese e-commerce.
Ubox sells vending machines that allow customers to pay via cash, mobile payments and even facial recognition. The company claims to have sold more than 100,000 vending machines with a presence in 300 Chinese cities.
Their vending machine is an upgrade of a previous unmanned convenience store that was popular for a time. In early 2018, many venture capital firms put their money into all kinds of unmanned convenience stores and kiosks. Most of them, however, ended up with layoffs and stagnation.
Compared to an unmanned convenience store, a vending machine seems to be a reasonable choice. Last year, average rents for stores increased by 18% year-on-year, while water and electricity bills increased by around 7%. This has given vending machines room to grow.
According to research firm Qianzhan, China had about 310,000 vending machines at the end of last year – which means there is only one vending machine for every 4,500 people. Japan, on the other hand – with a total of 5.6 million vending machines – has one for every 25 people.
Ubox Online is the biggest player in the market. It controls 40% of the vending machines in China, considerably more than its nearest rival which only has a 19% market share. The company listed on China’s NEEQ board in 2016 but delisted in March this year.
As the retail industry develops, investors are buying into the concept of “new retail”. Not only will people start to sell groceries via vending machines, but also fresh food, coffee, and lipsticks. By tying up with Ubox, Alibaba has once again fulfiled its promise of bringing “new retail” closer to Chinese consumers.