More than 18 months after Jack Ma put his online supermarket concept into practice, Alibaba Group has offered a first glimpse of how receptive China is to the new retail model.
According to data released at the Alibaba Investors’ conference, daily sales for Hema supermarket, which combines a supermarket, fresh market and restaurant into one online store, were about 800,000 yuan (US$116,322).
Hema, which promised to deliver food to customers within five kilometers in under 30 minutes, generates over 60% of revenue from its online platform.
Since opening in January 2016, Hema has served over 10 million customers in 64 stores in 12 mainland cities. It plans to add up to 100 new stores by year-end.
Hema chief executive Hou Yi said data and technology are the driving force behind retail revolution, and that, with its model already proven, Hema will continue to expand.
Hema provided a one-stop bridge between customers and a league of off-line food and logistics providers using its cloud platform Aliyun, or Alibaba Cloud.
The Alibaba Cloud model has outperformed other business-to-consumer rivals which find themselves compared unfavourably in terms of delivery time and reliability, warehouse costs and user experience, according to analysts.
Hema has also extended its model to include seafood stores run by RT Mart, owned by a leading Taiwan supermarket in China called Sun Art Retail. Alibaba Group invested US$2.9 billion for a 36% stake in Sun Art Retail last November.
Since adopting the Hema model, the seafood stores have seen sales rise by 10%, with daily online orders in excess of 1,200, thanks to 20,000 young customers newly attracted to the platform.
Hema also learnt from Japanese supermarkets such as Sogo and Yata of the value of setting up food outlets within retail outlets. This strategy draws online customers to real shops, where they spend more money due to being better informed about the food and beverages available.
According to some media reports, in its future stores, Hema may allocate up to half of the floor area to restaurants and other retail food outlets.