Smart machines are transforming the daily lives of Shanghai people in ways unimaginable several years back.
Who would ever have guessed that Shanghai housewives would be buying fresh carrots, apples and spareribs from a vending machine?
The self-service “wet market” machine was developed by the five-year-old Shanghai E-Cooktimes Co.
The machines are 2 meters high and occupy 5-20 square meters of space. Currently 10 have been installed in Shanghai neighborhoods on a trial basis, with another 200 in the pipeline.
“Compared with the routine of shopping for fresh food in wet markets or supermarkets, we make it much easier,” said Shen Junwei, chairman of E-Cooktimes and inventor of the machine.
Indeed, wet markets were traditionally the only source of fresh fruit, vegetables and meat. Shoppers typically went to market every morning to buy ingredients for the day’s meals. Big chain supermarkets appeared on the scene, taking over some of that trade. Now a machine traveling on the coattails of the digital revolution offers a novel option.
E-Cooktimes customers place orders for fresh food on the company website 4008917517.com. They can then pick up their purchases later at the nearest machine. Alternatively, a customer can walk up to a machine, peruse the food items displayed behind glass windows and purchase selections with a membership stored-value debit card.
“It is tailored for people who always miss the opening hours of markets and those treasuring convenience,” said Shen, a Ningbo native who also owns a paint company in his hometown in Zhejiang Province.
Shen owns a patent on the vending machine. Each costs 150,000 yuan (US$24,193) to manufacture.
E-Cooktimes takes pride in its eco-credentials. It buys food from quality farmgate suppliers, and delivers the fruit, meat and vegetables to the machines in electric cars refitted to provide cool storage while en route.
One refrigerated machine can offer up to 60 food items, all packaged in small, transparent plastic boxes.
Shen spent nearly six years and more than 50 million yuan from his paint company profits to fund the research and development on his “wet market” vending machine.
He’s not the first to jump into the growing business of cyber food sales. The greatest success has come in companies offering online sales and home delivery of mainly fruit. Vegetables haven’t entered that realm much because they are cheap in traditional markets and generate the thinnest profit margins.
Keeping meat and vegetables fresh in a machine presents more problems. The vendor-fresh machines must be replenished every few hours.
Vegetables, meat and fruit sell in the vending machines for prices cheaper than in wet markets and supermarkets. Green beans cost 3 yuan for 500 grams; 10 ears of corn cost 5.50 yuan. Golden kiwifruit costs 16 yuan for two; one Thai pineapple sells for 13 yuan. Pork ribs are 15 yuan for 200 grams.
Shen said his new venture has yet to make a profit, but he hopes to improve his balance sheet once more machines are introduced.
The 40-something entrepreneur is, he said, a patient man who has thoroughly researched every detail of his business.
Last month, his machines were exhibited at the 3rd annual China (Shanghai) International Technology Fair. Feedback has been positive, Shen said. He’s hoping to find investors interested in helping him expand the business.
How do consumers feel about this new age shopping service?
“It offers food of good quality and quantity, and it makes shopping so much easier,” said a middle-aged woman surnamed Shan in an up-market residential community in the Zhabei District, where one of the machines was installed at the end of last year.
An Indian resident in the same neighborhood said the machine spared him the embarrassment of trying to communicate with Chinese vendors in local wet markets. He said he liked the transparency of prices, which eliminated the chances of getting short-changed.
“This machine is awesome because it’s bilingual,” said the young man.
Some senior citizens, who have a penchant for traditional shopping, have also been won over by the advantages of the new technology.
“The food here is a bit cheaper,” said one older woman, who said she had compared prices carefully before buying from the machine.
Government officials pushing the cause of innovation in China like the machine, too.
“It is revolutionary,” said Wu Xingbao, deputy director of the Shanghai Commission of Commerce. “The machine will help meet public demand for fresh food outside of crowded wet markets.”
According to the commission, a standard wet market in the city requires an area of at least 1,500 square meters and serves about 20,000 people.
At the moment, the number of such markets in Shanghai can meet the demand of only 15 million people in a city of 28 million. People are always complaining that wet markets are too crowded and too far from their homes.
To address those concerns, the commission has established temporary wet markets in places not close to existing ones. But those markets are not 24/7, and they often generate traffic and noise that upset local residents.
“The machine offers a better option,” Wu said.
He said the government will give full support to Shen’s project by clearing any red tape that might hinder its development. Shen should brace himself for competition but he’s not worried.
“It is a market big enough for 10 companies like us,” he said.
The concept of innovation doesn’t belong exclusively to science, Shen added. “Innovation that benefits the daily lives of Shanghai people is equally important.”
Q: Why is the food sold in your machine cheaper than that in the wet markets or supermarkets?
A: The products are offered directly from farmland to table, with E-Cooktimes being the only link. Also, the fixed location of our machines makes it easy for couriers and helps save a lot of money on delivery logistics. We need only to plan the routes smartly and hire drivers, who work as both deliverymen and machine maintainers. That is how we control costs to keep the price of our food competitive.
Q: How do you ensure food safety and freshness?
A: This business model guarantees effective quality control. People can easily track the origins of our food, and we choose only those credited suppliers with good record. To ensure freshness, we have designed an application set in the machine that will automatically stop selling out-of-date food. Foodstuffs close to expiry will be discounted. So far, our supply falls short of demand.
Q: What if food items run out of stock?
A: We have developed a system to manage every machine online, and thus we know in real-time the status of our products. We can replenish within two hours, and if we find a machine is constantly out of stock in any one area, we will set up more machines there.
Q: What if there are problems in the food?
A: There is a voice mail button on the machine that connects with our online system. People can complain by clicking that button. So far, we received only one complaint. It was from a white-collar man who said he couldn’t find the fresh food he wanted after he got off work in the middle of the night.
Q: Does your company make money?
A: Not yet. We are still at an early stage of development. We plan to install our machine into 200 local communities this year, 1,000 next year, and 3,000 in 2017.
The trials show that every machine can produce revenue of up to 2,000 yuan a day, and that is close to what a convenience store can generate. So we are confident we will make money in the near future when more machines are set up.