LINKSHOP News: “HeMa Fresh Store” is a new store concept of Alibaba Group leading one of the biggest e-commerce innovations in the world in years. After 6 months of operation each HeMa store receives 4,000 online orders per day averaging 70rmb per order. The stores have broken even already. This achievement has proved the success of Omni-channel retail in China.
The first HeMa Fresh Store opened on the 15th January 2016 and it received lots of media attention immediately. The store is about 4,500㎡ and is fully dedicated to food. HeMa applies the Omni-channel model and it promises all orders within a 5 kilometer range will be delivered to the customer’s door within 30 minutes in the ranges of 5 kilo meters. Orders can be placed online or in store. Only Alipay (mobile payment system) is accepted by the cashier. The store is functioning as a show case, the warehouse and order implementation. There is also a seafood restaurant cooking the seafood purchased by consumers in stores. All these features do not only add more content to Omni-channel retail, but also bring huge impact on the current retail industry.
Potential and Expansion
The early success and potential of the HeMa model attracted an investment of US$150M in March this year. Furthermore, HeMa built up strategic a partnership with Guangming Food in April. We believe that by integrating HeMa’s data analysis with Guangming’s food supply chain, the HeMa store operations will become more profitable.
HeMa plans to open 10 stores in Shanghai by 2016.
Experiment in Fresh Food
How to deal with so many orders and deliver them within 30 minutes? This is the crucial challenge for all Omni-channel stores.
As the 1st store applies the Alipay system at the cashier, HeMa’s practices are always the center of attention in industry. A single HeMa store sells more than 3,000 items from 103 different countries. 80% is food, 20% of it is fresh food and this number will increase to 30% in the near future. Lots of food can be cooked onsite and this new approach has largely improved the buying experiences in store.
How to ensure the delivery time of the online offline orders was a big challenge to overcome. According to HeMa, there are 10 picking staff of working two finding the products in store. For delivery, HeMa uses its own delivery company together with other logistic companies. There are 200 delivery staff. But this is not all, HeMa also optimizesall its internal operational process.
One of the key parts of the optimization is the Electronic Shelf Labels (ESL), which are produced by Hanshow Technology. From 2015 HeMa has decided to apply Hanshow ESL for all its stores. The implementation of Hanshow ESL has made the price updating process rather simple because it synchronizes online offline prices in real time. The benefits of applying ESL is obvious – lower labor costs, less price errors, improved management efficiency and ease of shelf management by displaying the stock information on ESL.
In the near future, HeMa will combine PDA with Hanshow ESL to locate the target items on PDA screen, and the indicator on ESL will help staff to find the items quickly.
By having the ESL system, time is saved in delivery. Additionally, HeMa stores has an automatic conveyer belt on the backstage which collects food in thermal bags. HeMa only needs 10 minutes after the order is placed to prepare it for delivery. This is the secret of HeMa’s delivery miracle.
As the leading retailer in Omni-channel, HeMa’s success has brought influential changes to retail in China. A retail expert states: “We have reasons to believe that ESL will become a standard for Omni-channel retail due to its contribution in price updating process, stock management and other related solutions”.