---
title: "Hema Wrestles with Sam's Club with One Hand, Adjusts Prices with the Other"
description: "Hema's 'Move the Mountain Price' and 'Cutting Price', Meituan's 'Tug-of-War Price'... Although Hema officially explains these as references to the fable of the Foolish Old Man and determination, netizens see it as Hema sparking a price war with Meituan, Sam's Club, and Dingdong Maicai. For competitors and industry insiders, Hema's move is significant because it marks the first time the company, previously a symbol of consumption upgrade, is focusing on price. In traditional perception, consumers lucky enough to live in Hema's delivery areas have always been price-insensitive but quality-sensitive."
author: "赵蓓"
publisher: "New Distribution"
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published: "2023-09-04"
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# Hema Wrestles with Sam's Club with One Hand, Adjusts Prices with the Other

> Hema's 'Move the Mountain Price' and 'Cutting Price', Meituan's 'Tug-of-War Price'... Although Hema officially explains these as references to the fable of the Foolish Old Man and determination, netizens see it as Hema sparking a price war with Meituan, Sam's Club, and Dingdong Maicai. For competitors and industry insiders, Hema's move is significant because it marks the first time the company, previously a symbol of consumption upgrade, is focusing on price. In traditional perception, consumers lucky enough to live in Hema's delivery areas have always been price-insensitive but quality-sensitive.

Hema's "Move the Mountain Price" and "Cutting Price", Meituan's "Tug-of-War Price"...
Although Hema officially explains these as references to the fable of the Foolish Old Man and determination, netizens see it as Hema sparking a price war with Meituan, Sam's Club, and Dingdong Maicai.
For competitors and industry insiders, Hema's move has a different significance. Because Hema, previously a typical representative of consumption upgrade, has started to focus on price, something unprecedented since its founding. In "traditional perception", consumers lucky enough to live in Hema's delivery areas have always been price-insensitive but quality-sensitive.
To adapt to the environment and market, Hema is undergoing a self-adjustment.
On May 18, Alibaba Group announced its fourth-quarter (natural year 2023 Q1) and full-year results for fiscal year 2023. The financial report announced Hema's IPO plan.
How to improve overall profitability, lower the threshold for opening new stores, and expand revenue scale before going public—these are three tasks Hema must seriously address.
**Hema Starts Playing with Consumption Downgrade** Hema and Sam's Club are engaged in a "Mountain-Club Battle", a fierce price war. Hema's "Move the Mountain Price" seems to directly target its opponent, with netizens believing it is aimed at Sam's Club.
But Hema responded that "Move the Mountain Price" means the spirit of the Foolish Old Man who moved mountains. Its in-store posters under "Move the Mountain Price" state "More, Fresher, More Affordable" and "Committed to bringing the world's best and most cost-effective products to Hema users".
The durian cake priced at 128 yuan was brought down by Hema, and through a back-and-forth of tentative price cuts, it finally dropped below 100 yuan.
The price reductions for "Move the Mountain Price" vary by region. On August 21, Hema updated items marked with "Move the Mountain Price". In Jiangsu, a 700g fruit cereal of a certain brand was originally 60.9 yuan, but the "Move the Mountain Price" cut it by 10.1 yuan, while the same product at Sam's Club, two packs of 500g, cost 87.1 yuan, making Hema's price more favorable.
The competition, initially sparked by Sam's Club's popular durian mille crepe cake, gradually expanded into a category war, from fruits to meat, poultry, eggs, and dairy, from dairy and bakery to alcoholic beverages and drinks. Many products online and offline were tagged with "Move the Mountain Price".
This category war also expanded into a regional war.
**Initially launched in Beijing and Shanghai, the price war spread to 13 cities including Hangzhou, Guangzhou, Shenzhen, Foshan, Nanjing, Chengdu, Chongqing, Nanchang, Changsha, Wuhan, Suzhou, Nantong, and Wuxi, becoming a multi-region "campaign".**
This price war also benefited consumers. When Hema lowered prices, Sam's Club often responded. Although the two engaged in a simple price war with reductions of one cent or one yuan, consumers were still excitedly acting as price recorders, watching for the best time to buy.
However, Hema's price war was only in X Membership Stores. Except for some popular items, the price changes for other "Move the Mountain Price" products were not significant, and consumers' perception of price cuts was weak. In areas like Zhengzhou, where there is no Sam's Club, consumers did not enjoy the benefits of price cuts.
While Hema and Sam's Club were fighting fiercely, RT-Mart, watching from the sidelines, was unique in hanging eye-catching posters in its stores with the words "No Price War".
Regardless of how much Hema's "Move the Mountain Price" helped product sales, it certainly generated buzz. The decrease in Hema's product prices is not only reflected in the "Move the Mountain Price" event. From Hema's continuous launch of cost-effective private label products, it can be seen that Hema is no longer aloof.
**How to Reduce Prices Without Sacrificing Quality?** How can price cuts ensure quality is not lost? After all, once the brand is compromised, Hema's core competitiveness disappears.
**Through visits to Hema stores, consumers can easily notice that from food to non-food, the proportion of Hema's private label products is gradually increasing. Hema Intelligence Bureau compiles a monthly list of new products, which often includes Hema's private label products. According to official Hema data: "As of the end of 2022, sales of private label products, including fresh food, standard products, and prepared dishes, accounted for over 30%."**
In Hema's offline stores, private label products are placed in prominent positions on shelves. On snack shelves, a row of Hema private label beverages is often displayed for consumers to pair with their purchases. These private label products also show labels like "Hema Original" or "Hema Organic", indicating Hema's emphasis on private label products.
Hema's private label products are more affordable than similar products. A 2L bottle of oolong tea from Hema's private label is often promoted at less than 10 yuan in many regions, which netizens call a cheaper alternative to Suntory and Oriental Leaf. During the "Hema Day" event, it offered a promotion of 199 yuan minus 60 yuan, with most participating products being Hema's private label, offering significant discounts.
The increase in private label product categories effectively enhances Hema's brand power while also raising the bar for product quality.
Only by ensuring high quality of private label products can Hema win word-of-mouth and retain customers.
Hema officially told Lujiu Business Review, "The products participating in the 'Move the Mountain Price' are long-time bestsellers or products widely loved by consumers in Hema and the market. Hema's quality is as good as ever, and we will strive to ensure stable supply during peak consumption periods."
In transforming its strategy, Hema clearly has its own response: building its own supply chain to compress distribution costs. 185 Hema villages are spread across the country, including 41 organic Hema villages. Last June, the first offshore Hema village was also established in Zhuanghe, helping Hema control product quality from the source.
Hema's supply chain head Yu Kaifeng once said in related reports, "The offshore Hema village has established 18 sales warehouses nationwide, which are close to Hema stores. These 'freshness transfer stations' have various cold storage and refrigeration equipment." They can also do secondary sorting and processing, removing seafood in poor condition, and then the 18 sales warehouses distribute to nearby Hema stores. Hema villages have also built a complete "sea, land, and air" supply chain.
On July 10, Hema's Shanghai supply chain operation center was officially put into operation. Multiple supply chain centers Hema has laid out nationwide have been put into operation one after another, all measures to improve efficiency and ensure freshness at the source.
"As the cornerstone of Hema's new retail supply chain upgrade, this center will be data-driven, pushing Hema's warehouse operations management into full automation. It will also build a Hema-featured central kitchen, greatly improving Hema's supply chain efficiency, reducing operating costs, and helping enhance the commercialization capabilities of various agricultural products," said Hao Jingbin, Hema's supply chain project head.
Hema has restructured the three core elements of commercial retail: "people, goods, and places".
Hema has established Hema X Membership Stores and X Membership system to provide better services. At the same time, there are also Hema Outlets and standard Hema Fresh stores.
Hema has created its own outlet stores, bringing some near-expiry products to dedicated stores for promotion and sales, capturing the lower-tier market. This strategy has been well-received. Each new Hema Outlet store attracts high attention, and after 8 p.m., the outlets become "paradise for the poor". However, there are not many outlet stores nationwide, with 68 Hema Outlets in 14 cities.
Why is Hema reducing prices?
**Who is the Real "Enemy"?** Since its founding, Hema has faced many "enemies" online like Meituan and Dingdong Maicai, and offline like Sam's Club and Costco. Who is Hema's most direct "enemy"?
Online, Meituan, which "strayed" into the battle, also joined the fray, launching the "Tug-of-War Price". Many products under Meituan's Xiangdachu brand were tagged with "Tug-of-War Price".
In response to Dingdong Maicai, Hema also launched a punny "Cutting Price" in Shanghai, meaning to cut prices decisively.
Offline, recently, some Hema stores directly posted posters: X Membership Stores always adhere to providing high cost-performance products. "If the same product is cheaper at Sam's Club or Costco, which are paid membership stores in the same city, we will refund the difference within 7 days with valid proof."
This time, Hema launched the "Move the Mountain Price", targeting Sam's Club. As fellow warehouse membership supermarkets, Sam's Club can be considered Hema's formidable rival.
**Third-party platform Yuehu iBrand data once indicated that the overlap rate between Sam's Club and Hema reached 43.1%, meaning over 40% of Sam's Club users have installed the Hema app. Competing for users might be the most direct purpose of Hema's "Move the Mountain Price".**
Earlier, according to media reports, in February this year, Walmart China CEO Zhu Xiaojing said in an internal speech that Sam's Club's only competitor might be Hema, because Hema has "a very prominent advantage in the food supply chain".
Hema CEO Hou Yi also said in July that this is a competition between Hema's entire business and the membership store models of Sam's Club and Costco. "We are targeting the same customer group—consumers above the middle class. These people either buy at Hema or at Sam's Club. That is the challenge we face today."
Recently, Hema users in Shanghai and Beijing have received survey questionnaires via SMS. For feedback on the "Move the Mountain Price", questions directly ask, "After learning about/trying 'Move the Mountain Price' products, how willing are you to renew your Sam's Club membership?"
However, the questionnaire also mentions competitors like Ele.me, Dingdong Maicai, and Costco, with different targets depending on the region.
But in reality, Hema's "Move the Mountain Price" has its meaning. Hema officially told Lujiu Business Review, "This 'Move the Mountain Price' is not a price war with crazy subsidies, but a re-sorting and exploration of the supply chain value for typical products, using competition to force self-innovation." Breaking through itself might be Hema's best choice at present.
**The Battle for Profitability Before IPO** Hema has been loss-making for seven consecutive years, and its main business, Hema Fresh, has just achieved profitability for two quarters. However, relying solely on Hema Fresh's profitability is insufficient to support Hema Outlets and Hema X Membership Stores.
Hema Fresh and Hema X Membership Stores are highly dependent on commercial districts. They can only "thrive" in core business districts of first-tier cities. But if they go to lower-tier cities or choose slightly worse locations, business will be significantly affected. For Hema, a few high-quality stores cannot drive the majority of loss-making stores.
If the product structure is not adjusted, the requirements for store location selection become particularly high. The number of locations that can meet Hema's previous single-store profitability is limited and cannot meet its need for large-scale expansion. Therefore, the only way is to reduce prices to increase the survival rate of the model.
On May 18, Alibaba Group announced its fourth-quarter (natural year 2023 Q1) and full-year results for fiscal year 2023. The financial report announced Hema's IPO plan. For Hema to go public, it needs to solve the profitability problem.
**Returning to cost-effectiveness is not just Hema's choice. JD.com and Taobao are also returning to cost-effectiveness. The rapid rise of Pinduoduo and Douyin, as well as the aggressive expansion of discount supermarkets, all indicate this trend.**
However, this does not mean Hema will rely solely on a simple "price war" in the long term. A Hema that lowers prices might cause consumers who once pursued quality to question it, and those attracted by low prices may not easily become loyal Hema users.
"With the extreme abundance of supply, there is no longer a platform that can provide one-stop shopping. To make consumers choose you, you can only rely on innovation in hit products and extreme cost-effectiveness achieved through supply chain reform," Hema officially told Lujiu Business Review.
Indeed, for products that are similar between Hema and Sam's Club, there are often many price comparison posts on social platforms. If you simply judge by price, the customers you gain will only be temporary.
In Hou Yi's view, under the background of sluggish consumption, discounting in the retail industry is a way to win in competition. Discounting is not about making things cheap, nor is it simply low prices, but rather "differentiated product competition, vertical supply chains, and operational costs". "Discount stores are not a business format, but a business model."
How to balance quality and cost-effectiveness is Hema's challenge. What Hema needs to achieve is "quality-price ratio". Before going public, this is a business model Hema must solve.


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