Alibaba on Monday unveiled three more Hema supermarkets, in Shanghai and Beijing, to complete the rollout begun in 2015, according to a press release emailed to Retail Dive. The company now runs 13 of the hybrid online/offline Hema stores.
Key features of the stores include ready-to-eat foods cooked to order; data-driven fulfillment of online delivery orders at scale (the stores serve as fulfillment hubs for local communities to provide deliveries in 30 minutes); Scannable barcodes with product information and cashless checkout with Alipay, the company said.
Sales per unit area are three to five times higher than at a traditional supermarket, according to Alibaba. The conversion rate among Hema app users making a purchase is as high as 35%, and online orders on average account for more than half of the stores’ total orders.
E-commerce in China accounts for some 15% of total retail sales. These Hema stores, despite their brick-and-mortar structures on the physical landscape, is part of what Alibaba calls its "New Retail" strategy, which entails digitizing the remaining 85%. "Hema is the most mature manifestation of that strategy to date – transforming the grocery experience as we know it," Alibaba said in a press release.
Alibaba has been incubating the Hema hybrid concept for two years and says it's more than ready for the real world. “New Retail,” according to Alibaba, leverages technology and data to merge e-commerce and brick-and-mortar to give "consumers a more-efficient and more-flexible shopping experience," according to the company's Alizila blog.
The concept recalls Amazon's checkout-free "Amazon Go" stores, with perhaps a bit less of a wow factor. The Hema stores look ordinary enough, with typical selections of packaged foods, produce, beverages and other goods. Each item has a bar code that customers can scan for information or purchase, akin to purchase options available at humdrum Stateside grocery chains. But the tech side, with its powerful capabilities for personalization, are the same: With each purchase, the conversion and preferences are logged and saved whether shopping on or offline.
While Alibaba executives crowed about the stores, as CEO Daniel Zhang and founder Jack Ma toured 10 of them Monday, Zhang said that Alibaba's intention isn't to operate a major grocery chain. As with its investments in the Intime department stores, the idea is to demonstrate the benefits of Alibaba's “New Retail” concept to customers and other retailers.
“We believe the future of New Retail will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that’s taking place,” Zhang said in on the company's blog. “Hema is a showcase of the new business opportunities that emerges from online-offline integration.”