Author:Linyan Feng , Yuanpu Huang Jun 16, 2020 11:25 PM (GMT+8)

Beijing, 'the city without the convenience store gene,' has witnessed the birth and the success of Bianlifeng.

Image Credit: EO Company

Beijing-based cashier-free convenience store Bianlifeng is looking to raise a new round of funding. The north-China firm was touting its profitability last month.

The company has operated a figure higher than 1,500 stores in 20 Chinese cities. In its largest market, Beijing, Bianlifeng claimed that around 500 stores in the region are already turning a profit. The firm is also aiming to achieve wide profitability by the end of 2020. 

It only took three years for Bianlifeng to open such a large number of convenience stores in China – to illustrate, industry veteran 7-Eleven has only managed 2,500 in its 15-year expansion.

In the vast, lucrative, but crowded convenience store market, surviving and thriving can be challenging. 7-Eleven's operating margin dropped during FY 2017 and FY 2019, from 3.4% to 2.9%, though the number rebounded to 3% in FY 2020. 

Bianlifeng differentiates itself by using digital solutions to optimize store layout and goods choices in every single store, considering consumers' various needs in different regions. Capturing the attention of the tech-savvy young generations and retaining them, Bianlifeng is exploring ways to avoid challenges the industry faces – low margins and high working capital.   

A common piece of knowledge about how convenience stores make profits is that they rely on fresh foods that generate high Gross Margins (GMs), such as boxed lunches. Aside from that, Bianlifeng provides its own-brand packaged foods, which enjoy relatively high GMs as well. 

Bianlifeng has raised the prices for some products that consumers can easily find in supermarkets. For instance, one popular chewing gum product in Bianlifeng is selling at a CNY 0.5 higher price than other stores. 

Bianlifeng is aiming higher – it plans to open 10,000 stores and go public. On the way to that ambitious goal, the company will keep raising from mega-funds like its existing investor Hillhouse. Sending out messages about profitability to the public will accelerate its speed on the way to the next milestone.