---
title: "Hema's Decade: Sprint, Slowdown, Streamline, and Return"
description: "After ten years, Hema has achieved its first full-year profitability, with GMV exceeding 75 billion yuan in the fiscal year from April 2024 to March 2025. The company has shifted from rapid expansion to a focused strategy, streamlining its business to concentrate on Hema Fresh and Hema NB, while emphasizing product strength and supply chain efficiency."
author: "FBIF"
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published: "2025-08-22"
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# Hema's Decade: Sprint, Slowdown, Streamline, and Return

> After ten years, Hema has achieved its first full-year profitability, with GMV exceeding 75 billion yuan in the fiscal year from April 2024 to March 2025. The company has shifted from rapid expansion to a focused strategy, streamlining its business to concentrate on Hema Fresh and Hema NB, while emphasizing product strength and supply chain efficiency.

**Source**丨FBIF Food & Beverage Innovation
After ten years, Hema has achieved its first full-year profitability. At Hema's 10th anniversary open day on August 7, Hema CEO Yan Xiaolei, making her first public appearance, mentioned this. She added details: "In the past fiscal year, Hema was profitable every month." Alibaba's FY2025 annual report also shows that from April 2024 to March 2025, Hema's GMV exceeded 75 billion yuan, marking the first time it turned positive on an adjusted EBITA basis for the full year. Image source: Hema official website
Behind the profitability, Hema is "changing." Strategy is changing—from four years of experimenting with eight new business formats and "running at full speed" to slowing down and focusing on contraction. Not long ago, Hema X Membership Store, once seen as a second growth curve, announced it would fully close on August 31, 2025, with business formats focusing back on Hema Fresh and Hema NB. Products are changing—from increasing private brands and strengthening quality perception to moving further upstream, "squeezing out" discount prices through direct sourcing and supply chain integration, and enhancing price competitiveness. The organizational structure is also changing—in March 2024, Hema founder Hou Yi retired, and in August 2025, the last co-founder left, marking the complete exit of the founding team. Looking back at Hema's decade, it has sprinted, braked, streamlined, and now "focus" has become the keyword. From expansion to focus is actually a strategic choice made at different development stages. At its inception, Hema was an active explorer of new retail formats. Now, survival and thriving have become the goals at this stage, and Hema has changed its previous high-profile approach to streamline its battle lines for profitability. Standing at this node and looking back, we can see more clearly what changes Hema has undergone, why it changed, and how it changed.

**2016-2019: Sprint**
In July 2017, Ma Yun visited Hema's first store—"Hema Fresh" Shanghai Jinqiao store. He stopped at the seafood stall and grabbed a lively king crab with his bare hands. This moment was captured and went viral on the internet, bringing the unfamiliar name Hema Fresh into the public eye. Image source: Tmall
At that time, the "Hema Fresh" Shanghai Jinqiao store had been open for a year and a half, and was described by some media as "neither fish nor fowl": it looked like a supermarket but had a dining area; it sold fresh vegetables and meat like a wet market, but also high-end fresh products like Boston lobster; it operated physical stores but also did e-commerce, with hidden warehousing and logistics functions, overhead hanging chain systems to improve picking efficiency, and pioneered "3km within 30 minutes delivery" service. On the day of Ma Yun's visit, Tmall's official Weibo posted a promotional message, calling Hema "a new retail product that redefines supermarkets." At the Yunqi Conference in October 2016, Ma Yun first proposed the "Five New Strategies," one of which was "New Retail," stating, "Online, offline, and logistics must be combined to give birth to true new retail." Meanwhile, Hema built its private brands and deepened its supply chain. The "Daily Fresh" series launched in August 2017 was Hema's first successful private brand trial, covering more than ten categories including vegetables, milk, soy milk, meat, poultry, and eggs. In August 2018, Hema held its first supplier conference, announcing it would establish a "new zero-supply relationship," build a supply model centered on direct factory supply, and launch more Hema-exclusive customized products. In 2019, Hema incubated the first batch of national "Hema brands" such as Niulandi. Image source: Hema
Hema also became a new retail model for later entrants. In 2017, internet giants and retailers launched their own new retail stores, including Meituan's "Zhangyu Fresh" (later upgraded to "Xiaoxiang Fresh"), JD's "7FRESH", RT-Mart's "Feiniu Youxian", Yonghui's "Super Species", and Better Life's "Fresh Food Evolution". Similar to Hema Fresh, these stores were mostly online-offline integrated fresh supermarkets, offering dining areas and delivery services, using large seafood to attract customers. As industry players increased, Hema Fresh stores also grew rapidly. In September 2017, ten Hema Fresh stores opened simultaneously in five cities: Shanghai, Beijing, Shenzhen, Hangzhou, and Guiyang. In 2018, Hema Fresh entered what Hou Yi called the "run at full speed" stage—according to Zhaomen Canyan data, Hema Fresh opened 88 stores in 2018 and added 77 more in 2019. Image source: Hema
Maintaining rapid expansion required more than just opening more Hema Fresh stores. At that time, in Hou Yi's view, the biggest problem with Hema Fresh was that it was "too slow," needing to wait for suitable locations, and "covering a city fully takes too long." To cover areas that Hema Fresh couldn't reach and find store formats suitable for different cities and demographics, Hema began experimenting with more diverse formats. In 2016, Hema created a new retail sample with "Hema Fresh," and from 2017, Hema followed hot retail trends to launch new formats. In Hou Yi's own words, "Hema's biggest capability now is continuous iteration; we can see what peers are doing, and if they do well, we can learn from them." From 2016 to 2019, Hema tried eight new formats, with five in 2019 alone. This shows Hema's rapid response to "trends"—in 2017, convenience store capital investment was hot, and "Bianlifeng" expanded rapidly, so Hema opened a new convenience store "Hema F2" in December of that year. In 2019, fresh e-commerce platforms like Miss Fresh and Dingdong Maicai were in a front-warehouse melee, so Hema also launched its front-warehouse business "Hema Xiaozhan". However, most of these new formats ceased operations or made no progress within one to two years. Innovation requires investment. In March 2019, at the Lianshang.com conference, Hou Yi said Hema was still in a loss-making state, but "financially, it will gradually become healthy within one to two years." He also mentioned that Alibaba internally would not describe Hema as "loss-making" but as "investment," because its positioning was "explorer of new retail." Hema, exploring new formats, was like doodling on white paper; even Hou Yi hadn't envisioned what Hema should look like: "We don't pre-plan what state Hema will be in the future; we do it and change it, if it doesn't work, we change it, and then see. I never said my words would last a lifetime." But expansion was not unlimited. 2019, the year Hema frantically expanded store numbers and formats, was also the year Alibaba's attitude toward Hema changed. According to "LatePost" reports, because of heavy offline investment, at the beginning of 2019, Hema was given a profitability target by the group. In December of the same year, Hou Yi no longer reported directly to Alibaba's CEO but to the president of the B2B business group, meaning Hema was "demoted" from an independent segment to a sub-business under a business group. During expansion, trial and error and pitfalls are inevitable; the key is to figure out one thing: what to persist in, what to abandon, and ultimately what to become? The "run at full speed" Hema needed to give a clearer answer.

**2020-2021: From Offense to Defense**
In 2020, the "sprinting" Hema began to slow down. In March 2020, at a media briefing, Hou Yi revealed that more than 70 Hema Xiaozhan stores would gradually exit the market and be upgraded to the Hema mini format. He explained that the exit of Hema Xiaozhan was due to drawbacks in the front-warehouse model regarding traffic acquisition and loss control. He also said that Hema Fresh and Hema mini were each expected to add 100 new stores that year. Image source: Xiaohongshu @Ledie
In July of the same year, Hema announced via official WeChat that the breakfast new format Pick'n Go had been successfully incubated and officially upgraded to Hema Xiaoma. At the same time, Hema said Hema Xiaoma would open 60-80 stores by the end of 2020, covering all Shanghai metro lines and core office buildings and business districts at a growth rate of 6-10 stores per month. This Hema Xiaoma was different from the "Hema Xiaoma" established in 2018 in cooperation with RT-Mart. The latter focused on fresh product retail, similar to a community supermarket, while the upgraded Pick'n Go Hema Xiaoma was more like a fast-food collection store. Image source: Xiaohongshu @远方 不一样的烟火
But whether it was Hema Fresh, Hema mini, or the two Hema Xiaomas, none developed as originally expected in 2020. According to Zhaomen Canyan, in 2020, Hema Fresh added only 54 new stores in a year. According to Winshang.com statistics, in 2020, Hema mini added only 14 new stores. Additionally, Jiemian News reported in January 2021 that the number of Hema Xiaoma stores in Shanghai was only 9, far from its previous plan. In the same month, the "Hema Xiaoma" in cooperation with RT-Mart was fully acquired by RT-Mart, leaving the Hema system. In 2020, Hema X Membership Store launched, introducing the private brand "Hema MAX" to strengthen its private brand lineup. At the same time, Hema began to "look upward," promoting "vertical supply chain" construction, deeply developing "Hema Village" direct sourcing, improving product quality and supply efficiency from the source, and gradually expanding its supply chain perspective to the global market. Image source: Weibo @Hema
At this stage, Hema placed more emphasis on differentiation at the product level, using "unique products" and quality control to build brand perception. Entering 2021, Hema's "focus" trend became more obvious. That year, although Hema launched two new formats, "Hema Neighborhood" and "Hema Outlets," the trial cycle for new formats slowed down, changing from monthly to yearly. Image source: FBIF
Hema Neighborhood was particularly notable. After opening its first store in April 2021, Hema Neighborhood had opened 400 stores in 10 cities by July of that year. At that time, Hou Yi called it "the most important business for Hema in the next ten years." According to "LatePost" reports, in July 2021, Hema Neighborhood had a budget of nearly 1 billion yuan and set a goal of opening 5,000 stores by the end of the year, but actually opened only about 2,000 stores, less than half the target. In early 2022, Hema Neighborhood repeatedly reported exits from Beijing, Wuhan, Xi'an, and Chengdu. In October 2022, the neighborhood business was only retained in Shanghai. Behind this were changes in the external environment and Hema's positioning within Alibaba. From 2021, profitability became an unavoidable keyword for Hema. In June 2021, Alibaba Group launched an "operating responsibility system," requiring business segments including Hema to be responsible for their own profits and losses. At that time, Alibaba's own strategy shifted from "offense" to "defense," gradually withdrawing its "blood transfusion" support for Hema. Around 2021, internet giants slowed down, trying to seek growth opportunities in lower-tier markets, and Alibaba was no exception. In 2021, Alibaba delivered its "worst financial report ever," the Q3 FY2021 results (natural year September to December 2021), which was traditionally the peak season for e-commerce, but Alibaba's operating profit narrowed sharply by 86%. Although Alibaba's revenue for the quarter was 200.69 billion yuan, up 29% year-on-year, compared to the 37% growth in Q3 FY2020, revenue growth slowed significantly, and the sharp profit decline reflected the increasing cost of maintaining growth. At this point, Hema transformed from a business group within Alibaba to an independent company, and the pressure of self-financing forced Hema to seek self-sustaining cash flow. Hou Yi described this change as "running from the inner ring to the first ring." [15] At the same time, words often used by practitioners like scale, speed, and expansion also changed to efficiency, cost, and health, and Hema could not stay out of it. 2021 was called the watershed for fresh e-commerce. That year, Dingdong Maicai and Miss Fresh went public one after another, and the industry once entered a capital highlight moment. But the good times didn't last; the persistently loss-making business model quickly exposed problems. Miss Fresh began its first round of layoffs in September 2020, and in October, founder Xu Zheng internally proposed the slogan "earn one yuan" to cut expenses; Dingdong Maicai also shifted from "subsidies for users" to prioritizing "efficiency and profit," streamlining its battle lines and shrinking inefficient regions. From then on, Hema began to "tighten its belt." The Hema Outlets format, at its launch, was positioned as a discount store, aiming to take over near-expiry, short-shelf-life, and easily damaged goods from Hema Fresh stores, reducing losses through discount sales. This was also seen as an attempt to move closer to profit margins and sales per square meter. In early 2022, Hou Yi also mentioned this in a letter to employees, clearly stating that Hema should move from "single-store profitability" to "overall profitability."

**2022 to Present: Streamlining, Integration, and Return**
If after 2020, Hema experienced contraction and integration after brief format trials, then from 2022, focus became the norm. At this stage, Hema no longer frequently tested new formats, nor did it paint a blueprint for multi-scenario retail, but returned to two pragmatic questions: which models can work? Which formats can make money? After 2022, Hema almost stopped launching new retail formats. The only "exception" was the launch of Hema Premier, also known as Hema Black Label Store, with its first store in Shanghai Cloud Nine City Life Center, targeting high-end premium supermarkets. To date, Hema Premier has only opened this one store, with no further updates disclosed. Image source: Hema official website
At this stage, Hema began to sort out the formats it had previously tested. On one hand, formats that hadn't worked out were "streamlined," such as Hema Xiaozhan, Hema Jishi, Hema Li, and Hema mini, which either gradually disappeared from the market, left Hema, or significantly reduced stores. In March 2022, Hema mini's first store closed, and only 22 Hema mini stores remained in operation. On the other hand, some formats were integrated and upgraded. In September 2022, the Hema Outlets format was upgraded, opening its first hard discount store in Shanghai. Previously, Hema Outlets was more like "soft discount," mainly selling surplus and near-expiry products from Hema Fresh standard stores. The upgraded Outlets store would independently purchase fresh products, and in addition to near-expiry and low-priced products from cross-regional procurement, it would increase the proportion of private label products. In 2022, while the Hema Neighborhood format was "shrinking," it also underwent a period of reform. In October of that year, Hema Neighborhood changed its leader, with Hu Dalei leaving and Shou Yongqiang taking over. An insider interviewed by "LatePost" commented that Hu Dalei was aggressive and suitable for exploring new businesses, while Shou Yongqiang was steady and suitable for execution. At the same time, Hema Neighborhood compressed its SKU from 20,000-30,000 to about 2,000; increased private label products in selection, emphasizing cost-effectiveness; and canceled free delivery services to save costs. In early 2023, Hema merged Hema Neighborhood and Hema Outlets into the "Hema NB Business Unit," directly managed by Hou Yi, with a clearer positioning, transitioning from soft discount (near-expiry products) to hard discount + community stores, focusing on low-price, high-frequency, essential goods. Image source: Dianping
Additionally, Hema X Membership Store, once seen as a second growth curve and with Hou Yi's ambition to open 100 stores, peaked at only 10 stores. Since 2023, Hema X Membership Store began to "waver" on the core "membership" aspect, with membership benefits suspended and then restored. At the end of 2023, Hema temporarily suspended membership renewals, saying that due to business adjustments, it did not support opening or renewing Hema X memberships. At that time, Hema responded to media that the ultimate goal of de-membership was to ensure "dual-line price reductions" at Hema Fresh stores, "allowing everyone to purchase higher cost-performance products without a ticket." The fate of Hema X Membership Store was already foreseeable at this stage. Initially, Hou Yi benchmarked Hema X Membership Store against Costco and Sam's Club, with its membership system also relying on global supply chain resources to provide members with "exclusive products" (Hema MAX) and "higher cost-performance" benefits, forming differentiated appeal. As Hema membership benefits underwent multiple changes, "Hema MAX" series products were also listed on Hema Cloud Super. When these "exclusive" products could also be purchased in other Hema formats, and membership benefits were tied to other formats, "membership" lost its uniqueness, and consumers' sense of value in paying "membership fees" weakened. Image source: Hema official website
In March 2024, Hou Yi left, and Hema's former CFO Yan Xiaolei took over as CEO, immediately launching bold reforms. Although Hema restarted its membership system in April 2024 shortly after Yan Xiaolei took office, the strategic focus had clearly shifted to two core businesses: Hema Fresh large stores and NB community discount stores. In December 2024, Yan Xiaolei sent an internal letter reiterating the focus on Hema Fresh and Hema NB, saying the former is responsible for rapidly replicating mature models, while the latter deepens community-based services, forming complementary advantages. At this stage, changes at the product level also reveal Hema's ultimate direction. In 2022, at Hema's supplier conference, Hou Yi proposed, "Hema should not only go upward and downward, but also go outward, building a product system that can serve 1 billion consumers in the next 10 years." Shortly after, price wars broke out one after another, and Hema proposed "product quality upward, prices downward," launching the "Move Mountain Price" strategy to reduce single-item prices. During this period, Hema continuously strengthened its "discount" label, complementing the NB format's positioning as a "hard discount store." The answers to the two questions mentioned earlier ultimately focused on two directions: Hema Fresh and Hema NB. After the bold "focus," Hema quickly entered a "profit period." According to Hema, in March 2024, Hema achieved profitability for the first time in the off-season. Additionally, in the 2025 New Year letter, it was revealed that Hema achieved overall profitability for nine consecutive months and customer numbers grew by over 50%. Hema's "focus" pace also stayed in sync with Alibaba. In fact, since Q3 FY2021, contraction and focus have become core keywords for Alibaba in recent years. In 2023, Alibaba completed the "1+6+N" strategic organizational reform, further determining six core businesses, with Hema and its new retail placed under "N." Shortly after, in January 2025, Alibaba sold all equity in Intime Department Store and RT-Mart parent Gaoxin Retail under the "N" structure, further focusing its investment landscape on e-commerce, cross-border e-commerce, and AI around the core "6" segments.

**Hema's Decade of "Addition and Subtraction"**
In 2025, Hema continues to talk about focus. At the 10th anniversary open day, Yan Xiaolei said that since last year, Hema has proactively made format adjustments to focus on its main business, but cumulative store closures did not exceed 2% of total stores. In her view, 2% is still a healthy ratio in the overall retail environment and does not affect the main business. At the same time, Hema continues to increase investment in focused formats. At the open day, Yan Xiaolei announced Hema Fresh's latest store opening plan, expecting to open nearly 100 stores in the new fiscal year (April 2025 to March 2026), entering more than 50 new cities, bringing Hema Fresh store count to over 500. Image source: Hema official website
Between the decrease and increase, Hema is actually finding a development path suitable for the present. In the past decade, Hema has almost fully gone through these two stages—first, riding the wave of consumption upgrade with high-profile advancement, laying out diverse formats and constantly exploring; then, under growth pressure and profitability requirements, contracting its battle lines and returning to core capabilities. The switch between focus and expansion is not a retreat but an active adjustment to cyclical changes. Similar to Hema, other companies are also practicing this, and from their paths, some common ideas can be seen.

**1. Chase trends directly**
Hema seized the new retail wave of "online-offline integration," first creating the "Hema Fresh" sample, allowing innovations like large seafood, dining areas, and 30-minute delivery to be learned by later entrants. At the same time, Hema also drew inspiration from industry and peer trends to launch new formats. Hou Yi said: "In retail, it's about copying and learning from each other; why not learn from others' good practices?" [8] For example, in 2021, community group buying and near-expiry discount stores were everywhere, and Hema responded with "Hema Neighborhood" and "Hema Outlets." In 2022, Hema Outlets became the fastest-growing business among all Hema businesses. Image source: Xiaohongshu @TG泰格
Seizing the trend means being able to quickly enter during the window of demand explosion and establish market share before competition intensifies. Genki Forest's sparkling water seized the "sugar control" trend, and its electrolyte water, Chinese-style health drinks, and ice tea also ride the health trend, meeting the needs of different segments.

**2. "Cast the net" with a goal**
Diversified format layout does not necessarily bring success; more important is to act within one's capabilities and explore feasible format directions. Around 2019, Hema made many attempts, building a layered business system based on different consumption levels, scales, and business district characteristics—for example, Hema Fresh stationed in "city core business districts," Hema Cai Shi serving "urban communities and suburbs," "Hema mini" located in "suburbs, towns, and counties," Hema F2 covering "office business districts," and Hema Xiaozhan responsible for "network coverage and supplementation within urban areas." Image source: Xiaohongshu @G大调
In fact, Hou Yi also had reservations about some of these formats, such as the front-warehouse business. In his view, front-warehouse is a transitional form, not the endgame; if it's purely a front-warehouse model, traffic costs, loss, and logistics costs are all high. Nevertheless, Hema still had to race to occupy territory because front-warehouse investment costs are low and can achieve rapid city coverage. This idea of format diversification also applies to the food and beverage industry. For example, Pepsi entered the Japanese market more than 30 years later than Coca-Cola, starting at a disadvantage. In addition to adjusting product strategy, Pepsi also realized that relying solely on the beverage market was not enough, so it expanded into the snack track, acquiring local brands to better reach Japanese consumers' daily lives.

**3. Proactively divest "non-core" and "non-synergistic" businesses**
In the second half, for Hema, closing Hema X Membership Store means decisively divesting those asset-heavy, difficult-to-replicate, and supply-chain-different formats, that is, cutting off parts that no longer fit the current strategic rhythm. Meituan founder Wang Xing once said in the early days of the company, "Everything actually has no simple boundaries, so I don't think I should set limits for myself." However, after rapid expansion of business segments, Meituan gradually cut e-commerce shopping, power banks, public cloud, and other businesses, ultimately focusing on its life services platform. Focus is often not a simple reduction of resources, but concentrating limited organizational capabilities, brand perception, and resources onto business lines with long-term value and relevance. Hema's choice is precisely to recover resources previously scattered across multiple formats and concentrate them on the two core formats, Hema Fresh and Hema NB, to strengthen differentiated advantages and achieve scale and efficiency on the main track.

**4. Return to the main business**
Focus is not about "seeking stability," but returning to the true starting point of a company's capabilities. Since 2022, Hou Yi repeatedly emphasized the importance of "product strength" at Hema's supply chain conferences. Yan Xiaolei continued this approach after taking over. At a recent Hema 10th anniversary event, Yan Xiaolei emphasized that Hema's core moat is "product strength." In her view, fresh and unique products and the continuous ability to create "hit products" are the prerequisites for users to continue exploring Hema and be willing to convert. Image source: Hema official website
Hema talks about focus as "returning to product strength," focusing on making products the core competitiveness through supply chain innovation and product portfolio restructuring. Haier's leader Zhou Yunjie once said in a media interview that for Haier, focus is "returning to users," which is the continuous construction of service systems, product experience, and user value. To this end, Zhou Yunjie proposed "new marketing transformation" within Haier, focusing on zero-distance interaction with users and improving marketing efficiency.

**5. Subtract in strategy, add in products**
Hema's strategic path is gradually tightening, but on the product side, it continues to increase. In terms of products, it keeps adding by strengthening product strength, such as increasing private brand layout, expanding direct sourcing scope, optimizing origin traceability systems, and introducing more differentiated products that fit target customer groups. In addition, Hema also bets on the "hard discount" model through supply chain integration, forming price competitiveness while emphasizing quality standards, thus establishing coverage across different price bands and consumption scenarios. Although Hema narrows its battle lines in formats, the richness of products and continuous supply chain investment lay the groundwork for Hema Fresh's profitability; after streamlining formats, Hema actually highlights its own competitiveness. From Costco's global expansion, we can also see "one increase and one decrease." Costco always maintains the extreme simplicity of its store model and membership system, but continuously expands the categories and penetration of its Kirkland private brand; subtracting in strategy and adding in products not only enhances the competitive density of a single format but also increases user stickiness.

**6. New roles bring new opportunities**
Looking back over the past decade, Hema's importance in this round of retail transformation is self-evident. In the process of testing new formats, Hema provided the industry with diverse retail templates and new possibilities; in continuously increasing private brands, going upstream, through direct sourcing, establishing quality control standards, and joint R&D, it not only improved supply chain efficiency but also provided a platform for small and medium brands to incubate and test new products. When a "catfish" appears in the industry, it actually makes the market ecosystem more active. Image source: Hema official website
There are many such cases in other countries. For example, Japan's convenience store giant 7-Eleven's private products not only improved gross margins but also, through cooperation with small and medium food manufacturers, gave birth to a batch of hit products that fit market trends; Walmart in the United States, relying on private brands like "Great Value," promoted supply chain integration and allowed more small brands to enter the national market. In the context of fierce competition and consumption structure differentiation, the role of retailers is being reshaped—both as channel providers, supply chain integrators, and brand incubation platforms. This not only brings new growth opportunities for the industry but also builds difficult-to-replicate differentiation barriers for companies themselves.

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- Author: FBIF
- Published: 2025-08-22
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