China's online to offline (O2O) retail giant Suning has entered the auto sales market by opening its first automobile supermarket in Jiangsu Province.
The Suning.com Auto Supermarket in the provincial capital Nanjing, has brought in 3 million yuan (445,000 U.S. dollars) in car sales revenue and another 200,000 yuan in accessories since its opening on July 15.
A total of 160,000 customers had visited the site, part of the existing Xinjiekou outlet of Suning Plaza, as of Wednesday.
Consumers can also browse its products on the online shopping platform, Suning.com.
For customers who previously had to visit multiple 4S stores of different brands before choosing their ideal vehicle, the supermarket has saved them time and energy, said Gan Wen, manager of the outlet.
Twelve foreign and domestic automobile brands are currently available, including BMW, Audi, Maserati, Buick and Trumpchi. Two 4S stores, including a second-hand car dealer, are also part of the supermarket.
In addition to auto purchases via installments or full payment, customers can also choose a rent-to-own scheme, a common practice in western countries but rare in China. Under this scheme, a customer can rent a vehicle and will end up purchasing it after paying the equivalent of the purchase price. Customers can drive away in a new car three hours after placing an order, with no bank loan application needed, said Gan.
Midday Thursday, several customers visited the supermarket after shopping at Suning's home appliance department upstairs. Wang Liming came to inquire about the Audi A6L during his lunch break.
"The model sells for 430,000 yuan, a little bit higher than the carmaker's guide price, but the down payment as low as 70,000 yuan and the free insurance and plate installment services are really attractive," he said. "Price is the primary factor that I take into consideration."
The auto supermarket opened after a regulation on auto sales took effect on July 1, allowing dealers to sell cars and provide after-sales services without authorization from an auto brand.
The new regulation is expected to revitalize the auto market, as car markets and car e-commerce will be booming in the future.
"The Suning.com Auto Supermarket actually serves as a platform where 4S dealers, part stores, auto service providers and e-commerce shops are combined," said Liu Donghao, president of the digital company of Suning Commerce Group Co., Ltd.
Liu added that the O2O sales platform welcomes auto service providers and dealers to cooperate and share their resources for a win-win outcome.
Suning will open 100 auto supermarkets across China, all of which will be located on its own property, according to Liu. The stores may have different themes, such as SUVs, sports cars or auto maintenance, he said.
Suning, initially a home appliance retailer, has expanded its business to the real estate, cultural, finance and investment industries with a total of 500 million clients.
"We hope a certain ratio of our clients will be attracted to the auto market," said Liu.
While the O2O giant is ambitious about its new sector, 4S dealers doubt their market prospective.
Chen Hao, president of the 4S dealer Xiezhong Auto, said although Suning has advantages in its customer flow and possibly prices, it will take time before it can standardize its services as 4S dealers do. "Service is the key in the competition," said Chen.
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