Click to read the original article for details Source: Retail Circle (ID: retailsphere) Author: Zu Long Hema Neighbor is pricking the inflated bubble hidden in the vacuum zone between home delivery and in-store shopping. Core highlights: 1. Directly addressing pain points: cost, efficiency, and experience 2. Directly facing key points: growth, repurchase, and retention 3. Directly reaching touchpoints: synergy, sinking, and extension "Our goal is to solve the problems that e-commerce still hasn't solved..." "For new projects, we look at three indicators: growth rate, repurchase rate, and retention..." "This is the most important strategic project for Hema in the next ten years..." Hou Yi, President of Hema Business Group, was very familiar with Hema Neighbor and spoke enthusiastically in an interview with the media. Directly addressing pain points Cost, efficiency, experience Hema has never stopped trying new business formats, but there is no doubt that Hema Neighbor is the project with the shortest establishment time and the fastest development speed among its current new formats. In March 2021, the Hema NB (Neighbor Business) project team was formed. On April 28, the first store nationwide opened. By May 28, nearly 100 stores had opened in Shanghai and Beijing. Now, Hema Neighbor has over 400 stores nationwide, initially entering 10 cities including Shanghai, Beijing, Guangzhou, Wuhan, and Xi'an. On July 17, 2021, Hou Yi, President of Hema Business Group, sent an internal letter officially establishing the Hema NB (Neighbor Business) division to create a "inclusive version" of Hema district housing. In just over three months, Hema Neighbor has achieved rapid development and standardized replication in terms of scale and speed. Just like its first "four不像" new retail creation, Retail Circle believes that Hema Neighbor is another "four不像" community new retail model outside its parent (Hema Fresh). It is not community group buying, not a front warehouse, not a convenience store, not a courier station. It is hard to give an exact "label." The official label given by Hema is "community e-commerce." Hou Yi, President of Hema Business Group, stated that Hema Neighbor is solving problems that e-commerce has not yet solved. Specifically, first, the home delivery problem of FMCG; second, the home delivery problem of fresh produce; third, the trust problem between people. For the first two problems, whether it is traditional mainstream e-commerce like Tmall or JD.com, or the front warehouse model of new retail like Dingdong Maicai and Miss Fresh, they still face two issues: high logistics distribution costs and high costs of door-to-door delivery models. You can imagine what advantages Hema Neighbor has in this regard. For the third problem, we believe it is the core issue: current e-commerce still hasn't solved the trust problem between people. Consumers and retailers are connected through goods, and the temperature of goods and services is conveyed by couriers. But which consumers with online shopping experience remember the courier, or does the courier remember the consumer? Is there a strong trust relationship between them? One of the greatest values of Hema Neighbor is establishing trust between consumers and retailers. Therefore, from this perspective, Hema Neighbor's core lies in reducing costs, improving efficiency, and enhancing trust (experience). Directly facing key points Growth, repurchase, retention Many journalists at the scene still threw the question "Has Hema Neighbor become profitable?" to Hou Yi. Retail Circle agrees with Hou Yi's answer because we all know that for heavy-investment projects like physical retail, discussing profitability in the short term is not very meaningful. Are there reference data to measure the quality of this project? Of course, there are. The first is growth rate, the second is repurchase rate, and the third is retention. From the consumer perspective, these three indicators represent the progressive degree of consumer satisfaction with the goods and services provided by retailers. Growth rate is awareness, repurchase rate is recognition, and retention is approval. From awareness to approval is a process of upgrading the consumer experience, ultimately achieving a high level of brand recognition. If these three indicators continue to improve, they may be more valuable than a single profitability indicator. These three indicators comprehensively and multi-dimensionally represent the balance and symbiosis of people, goods, and places in a specific business ecosystem. Data shows that Hema Neighbor's two stores in Shanghai have better repurchase rates than Hema Fresh. Directly reaching touchpoints Synergy, sinking, extension The Hema NB division is the third business division of the Hema Business Group, led by Gong Ye (Manhan). Gong Ye is a founding employee of Hema, joining in the second month after Hema Fresh was established, and participated in the entire process of Hema Fresh from 0 to 1. This master's degree holder from Columbia University in the United States, majoring in supply chain, is a standard engineering-minded person. He leads a group of post-80s young Hema new-generation team in a second "entrepreneurship." It can be seen that besides "community e-commerce," the core label of Hema Neighbor is "supply chain." Hema X Membership Store is considered Hema's second growth curve, while Hema Neighbor is called Hema's third growth curve. From a business format perspective, Hema X Membership Store, Hema Fresh, and Hema Neighbor form a complementary ecosystem of large, medium, and small, becoming the three carriages driving Hema's performance growth and business upward. Hema Neighbor will prioritize opening stores in areas not covered by Hema Fresh large stores. For example, outside the ring roads in Shanghai, outside the Fifth Ring Road in Beijing, and urban suburbs have become the focus areas for Hema Neighbor's current and future site selection. From the current site selection standards of Hema Neighbor, it is not difficult to see that Hema Neighbor not only undertakes the extension capability of Hema Fresh's user reach but also makes Hema's sinking possible, making the inclusiveness of Hema district housing a reality. The time and space sense of "30-minute home delivery" and "15-minute convenience" perfectly integrate. As early as more than 10 years ago, both physical retail and internet retail shouted the slogan "connect the last mile." Now, the last mile can be said to have been connected, and it is continuously improving in shopping efficiency and consumer experience. The "vacuum zone" between home delivery and in-store shopping has given rise to the consumption scenario of self-pickup stores. The "self-pickup" service scenario has been recognized by consumers. However, due to the chaos in community group buying, the self-pickup scenario is still full of inflated bubbles. Hema achieves a new retail model with controllable services, controllable quality, and trusted scenarios through the self-operation of the three elements of "people, goods, and places." Hou Yi, President of Hema Business Group, repeatedly emphasized that Hema Neighbor is not community group buying. A business model built on burning money and subsidies has no future. What Hema wants to do is solve the problems that e-commerce and physical retail have not yet solved. Perhaps no one can fully understand Hema Neighbor, but consumers can feel it. At least, it is pricking the inflated bubble in the vacuum zone between "home delivery" and "in-store shopping." PS: From August 24 to 26, 2021, the 2021 (4th) China FMCG Conference hosted by New Distribution will be held in Shanghai. Focusing on industry trends + practical cases + growth connection as the core, 3,000 FMCG practitioners will gather at the event. 10 themed forums cover new retail O2O, community group buying, short video live e-commerce, distributor transformation, rise of new consumer brands, new wine interpretation, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc. Operators from various segments will bring the latest case interpretations. Some of the confirmed heavyweight guests so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner at Bain & Company and former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 5. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 6. Yang Hongbin, vice president of Junlebao Dairy Group; 7. Yang Shun, COO of Lipton Greater China; 8. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; 9. Li De, e-commerce general manager of Gold Hong Ye Paper Group... A grand event for FMCG practitioners, you must be there! Are you "watching" me?