New Offline Stores Opened by Alibaba in Shanghai

LINKSHOP News: “HeMa Fresh Store” is a new store concept of the Alibaba Group leading one of the biggest e-commerce innovations in the world. After 6 months of operation each HeMa store receives ~4,000 online orders per day averaging ~70rmb per order. This achievement has proved the success of Omni-channel retail.

The first HeMa Fresh Store opened in January 2016 and it received immediate media attention. The store is about 4,500㎡ and is fully dedicated to food.

By applying an Omni-channel model, HeMa promises all orders will be delivered within 30 minutes if within a 5 kilometer range from the store. Orders can be placed online or in store. Customers can only use Alipay (mobile payment system) to pay for their shopping, it is a cashless store. The store is functioning as a show case for warehouse and order implementation.

Potential and Expansion

The early success and potential of the HeMa model attracted an investment of US$150M in March this year. Furthermore, HeMa have built a strategic partnership with Guangming Food in April. By integrating HeMa’s data analysis with Guangming’s food supply chain, the HeMa store operations will become even more profitable. HeMa plans to open around 50 stores by the end of 2018.

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 to utilise the Alipay system, 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% of this is food, while 20% of it is fresh food and this number will increase to 30% in the near future. To enhance the instore experience, the concept of getting food cooked onsite has been successful and can be applied across many different food areas within the store.

Delivery

Ensuring the delivery time of the online offline orders was a big challenge to overcome. According to HeMa, there are 10 picking staff working two shifts finding the products in store. For delivery, HeMa uses its own delivery company together with other logistic companies. They have ~200 delivery staff. But this is not all, HeMa also optimizes all its internal operational processes.

One of the key parts of the optimization is the Electronic Shelf Labels (ESL), which are produced by Hanshow Technology. In 2015 HeMa decided to apply Hanshow ESLs to all of its stores. The implementation of Hanshow ESLs has made the price updating process simpler as it synchronizes online offline prices in real time. The benefits of applying ESLs is obvious - lower labor costs, less price errors, improved management efficiency and ease of shelf management by displaying the stock information on the ESLs.

In the near future, HeMa will combine PDA with Hanshow ESLs to locate the target items on the 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 have 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 a leading retailer in Omni-channel, HeMa’s success has brought influential changes to retail in China. A retail expert states:

“We have reason to believe that ESLs will become a standard for Omni-channel retailing due to its contribution in price updating process, stock management and other related solutions”.