Deals | Ant Financial bets on China’s staffless snack bars; strategically invests in Xingbianli

The startup also counts Sequoia Capital, Lightspeed China Partners, China Renaissance, and Vision Plus Capital as backers.

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Deals | Ant Financial bets on China’s staffless snack bars; strategically invests in Xingbianli

Alibaba’s financial affiliate, Ant Financial, has made a strategic investment in Xingbianli (猩便利), a Chinese operator of staffless convenience stores and snack bars, Chinese biztech media and KrASIA parent company, 36Kr reported on Monday.

According to local news service Yicai, the investment is worth hundreds of millions of yuan. Existing investors, Lightspeed China Partners, Sequoia Capital, China Renaissance, and Vision Plus Capital, also participated in the round.

According to the startup, Ant Financial doesn’t hold a controlling stake in it.

Founded in June 2017, the founding team of Xingbianli had previously worked as senior executives at Alibaba, Meituan, and Lawson China. Xingbianli operates staffless convenience stores and deploys self-service snack bars.

The startup was on a rapid expansion in 2017, opening 6 stores in Shanghai that September. However, before the current round of financing, rumor had it that the startup was closing stores and retreating from third- and fourth-tier Chinese cities and had been experiencing a capital crunch since the beginning of this year. The team replied back then that it was going through a strategic restructuring, shifting to delicate operations.

Xingbianli plans to use the capital to produce and promote its new model of staffless snack container, XingPlus (猩+), which is an upgraded version of Xingbianli’s self-service snack bars and containers.

XingPlus allows shoppers to grab and go from a closed container which reduces stealing as well as improve food security. According to Xingbianli, XingPlus has been tested in several places and will be gradually deployed for commercial use.

By improving its technology, Xingbianli plans to further integrate its customer data with commodities data to improve efficiency and customer experience to gain a competitive edge.

Ant Financial is going to provide technological support in areas of biometrics and crediting systems.

 

Self-service snack bar

According to a report by consulting firm iimedia, the market for self-service snack bars in China will reach RMB 1.48 billion (around US$ 231 million) in 2018 and will surge to RMB 13.56 billion (around US$ 2.1 billion) by the end of 2020.

Before this investment, Alibaba had already entered the businesses of self-service snack bars. Alibaba’s IoT platform Aliyun Link Market and Ant Financial have been providing technological support to Xiaomaogui, an operator of selling machines incubated by Chinese electrical appliance manufacturer Midea. Alibaba’s recently acquired food delivery unit Ele.me is also operating a self-service snack bars Ele.me Now and claims to have turned an operational profit in its first city Shanghai.

Other startups in the field include Miss Fresh, Guoxiaomei, and Xiaoe Weidian.

 

Observation

According to people familiar with the matter, although smart containers like XingPlus could prevent stealing and improve customer experience, the overhead costs to produce these containers and the labor costs to attach the RFID tags to items could drive down the profit margin.

According to Xingbianli, its self-service containers are just one of its businesses and the startup will seek to turn a profit from an overall point of view.

 

Previous funding rounds

2017.09: Xingbianli raised almost RMB 100 million (around US$ 15.6 million) in an angel round from Lightspeed China Partners.

2017.11: Xingbianli raised RMB 380 million (around US$ 39.4 million) in an A1 round led by Sequoia Capital, with participation from China Renaissance, Vision Plus Capital, and other existing investors.

 

Read more: Post bike-sharing frenzy, this startup raises $10M from IDG to test fridge-sharing in China

 

Editor: Jason Zheng