Vending machines, discounts used to attract customers, but sales poor

Five pharmacies in Beijing started using vending machines equipped with tracking systems to sell baby formula on Saturday, but sales on the first day did not go as well as expected.

Zhang Dawei, who is in charge of business operations at Yong'antang, said the store sold just six cans of infant formula on Saturday.

"I hope we will have more kinds of infant formula so that everyone is able to get what they want in our pharmacy. If not, customers may not visit here again," said Song Yigang, an official with Jinxiang company who is in charge of branding and public relations.

Five pharmacies from four medicine chain retailers - Jinxiang, Yong'antang, Cachet and Quanxin - became the first in the country to participate in the baby formula trial system. The International Brand Management Center, an organization under the Ministry of Commerce, encouraged more pharmacies to sell milk powder.

With the exception of products for babies younger than 6 months, the infant formula sold at the five stores cost 10 percent less than the same items sold at supermarkets - a move to attract more consumers.

The products were all transported from dairy companies directly to the drugstores, and are kept in cabinets that can hold up to 30 cans each.

Using a vending machine near the cabinets, customers can lookup information on a product and pay for the item. Consumers must enter their cellphone number before paying for the item.

"With the cellphone number, we can inform the consumers directly if we find the product they purchased has quality problems instead of posting a recall announcement in newspapers or on TV," said Yang Ping, an employee at Yong'antang.

Each can of powdered milk is labeled with a code that contains information including when the item arrived and which store it was shipped to. Ubox, a company in Beijing that provided the vending machines, monitors the sales data, such as when the item was sold and where the purchase took place.

This is another edge over traditional quality management, said a staff member at Jinxiang, who gave her last name as Song.

"In traditional medicine management, we don't know exactly where it was sold because products with the same batch number go to various stores," she said.

Eleven dairy companies have joined the trial, seven of which are domestic.

"Dairy companies should first be licensed and their product quality should meet the standard. Then we chose them based on their market share," said Xu Jing, director of the International Brand Management Center.

"We will carry out flight inspections on the whole supply chain of factories, including the quality of the feed and the living environment for cows," Xu said.

A woman named Wu visited a Jinxiang chain store that has an infant formula vending machine to buy powdered milk for her grandson on Saturday, but she left empty-handed because the store didn't carry the kind of formula her grandson is fed.

Wu said she believes the quality of products in pharmacies is better, and a 10 percent discount is attractive.

"The infant formula we need is a high-end brand. We buy it mainly in franchise stores, but they are expensive, and we live far from supermarkets," she said. "I used to buy it from an online store, but the packaging was so dirty that I decided not to."

However, Wang Yuanyuan, the Beijing mother of a 1-year-old son, said she will still buy infant formula from overseas.

"My friends in America help mail it to me," she said. "Imported infant formula usually costs more than 300 yuan ($49) a can, while buying it abroad and having it mailed to China doesn't cost much more than this. Why not?" she said.

Pharmacies can sell infant formula or other kinds of powdered milk as long as they have received government approval, said a manager at Jinxiang who declined to be named.

For example, a Jinxiang store in Xidan has been selling powdered milk for more than two years. Sales have been slow, he said, because most people are used to buying the product at supermarkets.

wangqingyun@chinadaily.com.cn

(China Daily USA 10/28/2013 page5)