"Today is the last day of the handover procedures, let's take a photo to commemorate..." This post, pinned as the only one on Hou Yi's Moments, announced that this veteran retailer had completed a milestone in exploring the prospects of China's new retail with Hema as a model. Nine days after Alibaba Group CEO Wu Yongming issued an internal letter officially announcing that Hema founder Hou Yi would step down as CEO, Lao Cai (Hou Yi's nickname) briefly shared his recent activities, along with photos of himself in front of Hema's Shanghai headquarters building and his office. Image source: Screenshot from Hou Yi's Moments Beside the bookshelf carrying Hema's accumulated honors, Lao Cai posed for a photo with the calligraphy work "Deliciousness is the Way," reflecting another side of him, which is also Hema's original intention of being born for "freshness" and continuously meeting consumers' expectations for good food. Wu Yongming highly praised Hou Yi in the letter: "As the founder of Hema, Lao Cai, with his rich industry experience and love for retail, has led Hema to grow into a company trusted by consumers and a pioneer leading industry development." Founded in 2015, Hema has explored from 0 to 1 and from 1 to X over nine years, and Hou Yi has verified the possibilities of new retail development from multiple dimensions. Consumption upgrade, multi-format innovation, discount operations... In the eyes of many industry insiders, Lao Cai is an innovator who loves to stir things up and doesn't play by the rules, but in the eyes of consumers, Hema under Hou Yi's helm has genuinely created new retail experiences for them. From ancient times to the present, the "first person" has always been one who breaks before establishing, bearing the heavy responsibility of breaking old models and opening new paths. Hou Yi led Hema through countless hidden rivers for both teammates and opponents. Now, after many twists and turns, his departure signals a new chapter in the story of the internet and new retail, but Hou Yi, a warrior at heart, will not leave his sea of stars because of a "retirement" from a battle. The innovator's dilemma may still exist, but only by breaking through the hard cocoon can one welcome the beautiful new world of transformation. A Hands-On "Disruptor" Entrepreneurial veteran, industry catfish—these are the consistent evaluations of Hou Yi by the industry. In everyone's eyes, he is both a capable minister of JD Logistics and the helmsman of Alibaba's Hema. Riding the retail wave for over thirty years, Hou Yi has spanned two internet giants. In the 1960s, Hou Yi was born into an intellectual family in Changning, Shanghai. In an era of simple thoughts, urban development often affected personal destiny, and Hou Yi caught the preparatory period of reform and opening up. In 1972, the "Jinshan Project" broke ground, and Hou Yi's parents, as the first batch of intellectuals, came to Jinshan Petrochemical, supporting the beach construction with tens of thousands of migrant workers. At that time, Hou Yi was exactly ten years old and was among the first batch of sixth graders at Petrochemical Primary School. When they first arrived in Jinshan, the primary school was not yet completed, and the preparatory command post was also converted from a pigsty. After school, picking up bricks to build a gymnasium became Hou Yi's greatest pleasure. He lived at the temporary beach work site for four years, witnessing his parents' generation build high-rise buildings from flat ground, from digging sea ponds and building sea dikes to establishing a highly comprehensive petrochemical production base. After graduating from university, Hou Yi, with a computer science background, returned to the petrochemical plant and worked as a software engineer in the polyester factory, thus holding an "iron rice bowl." In the 1990s, the "sea-diving tide" was all the rage. In those lively and restless years, whoever took the lead might be the first to taste the crab. In 1992, Hou Yi, despite family objections, resolutely dove into the sea, targeting the "profiteer" business. Selling clothes became the beginning of Hou Yi's retail career. Profiteering relies on information asymmetry, and because of its high timeliness and turnover rate, it tests one's ability to seize opportunities. Hou Yi later recalled that he often took a shuttle bus at 5 a.m. to go to Hangzhou for goods and returned to Shihua's Maozhong Square at 3 a.m., and after several round trips, the hardship was no less than beach construction. Although the profiteer business was hard, it gave the solo Hou Yi a taste of sweetness, and his steps grew bigger. From clothing stores to the home appliance industry, to the first real estate agency in Shihua, the first self-service hotpot restaurant in Shihua... With consecutive entrepreneurial ventures and frequent good news, the "ever-victorious general" Hou Yi could always seize fleeting business opportunities, build advantages, and grow stronger. However, Hou Yi, who already had a world of his own, was not satisfied with the status quo. In 1999, Hou Yi smelled a new development opportunity. At that time, convenience stores became a trend in the retail industry, and their development attracted many supermarkets and hypermarkets to invest. Hou Yi saw the opportunity and decisively joined Kedi Convenience Store. Image source: Internet The differentiated model of "IT + retail" at Kedi Convenience Store quickly became popular, and Hou Yi thus entered the new field of supply chain and logistics management. Who would have thought that this would last for ten years? Over the decade, Hou Yi led his team to optimize several key logistics indicators, adopt a unified information management system for all aspects of goods circulation, and significantly improve operational efficiency, achieving the expansion of Kedi Convenience Store from 20 to 2,000 stores. Hou Yi quickly rose to the company's management level, completing a leap in his career. Hou Yi, who dealt with logistics, generously shared his retail experience and wrote articles such as "Kedi's Normal Temperature Logistics Construction" and "Kedi's Cold Chain Logistics Management" during his tenure, becoming the "first person in logistics." After Kedi was acquired, Hou Yi was eager to try again, and his entrepreneurial passion surged once more. In 2009, Hou Yi teamed up with Liu Qiangdong, becoming a strong general during JD's growth period. Hou Yi, with an internet professional background and retail strategic thinking, took office and led the planning of JD's full logistics warehousing and distribution system, personally building JD's rapid delivery system. Subsequently, Hou Yi transferred to the position of president of JD's O2O department, managing the "JD Daojia" life services business. Hou Yi discovered that pure offline retail could not solve inventory and experience problems, and the integrated heavy model combining the internet with offline retail was the optimal retail solution. Therefore, Hou Yi submitted Hema's initial experimental plan to Liu Qiangdong, which comprehensively considered investment scale, return cycle, and JD's development strategy, but Liu Qiangdong showed little interest, only letting Hou Yi conduct experiments in the region before losing interest, and the project fizzled out. With his ideas hitting a wall and his plan being cold-shouldered, the constrained Hou Yi began to think of leaving. In 2015, at the age of 51, Hou Yi voluntarily resigned from JD, embarking on his own "Don Quixote"-style charge. Returning to Shanghai, Hou Yi met former Alibaba Group CEO Zhang Yong, and in just five minutes, in a small café, they formed the idealistic prototype of new retail. What Hou Yi wanted to do was to create an offline store integrating fresh food, supermarket, dining, and logistics. This set tested the entire enterprise's organizational and collaborative capabilities. No one in China had done it, and no one dared to do it. With Zhang Yong on the inside and Hou Yi on the outside, under their strong alliance, Hema became the first clarion call of Alibaba's new retail strategy. Image source: Hema official website Hou Yi was convinced that Hema's survival key lay in consumer positioning, and its competitiveness lay in quality and experience. In nine months, logistics expert Hou Yi led a team of three people to build systems and business models, delve into building an integrated online-offline system, and pioneer the "order with your phone, delivered in 30 minutes" Hema district standard service and the "hanging chain" system. With the three axes of intelligent systems, automated equipment, and big data algorithms, Hema achieved cost reduction and efficiency improvement in ordering, picking, and delivery. The new move of store-warehouse integration and online conversion was Hou Yi's first offensive against the new procurement and sales system. In January 2016, Hema's first store, featuring the "store-warehouse integration" new retail model, landed in Shanghai. The sudden emergence of Hema took the lead in initiating supply-side reform for consumption upgrade, bringing quality and experience from behind the scenes to the forefront for the first time, directly confronting the rising online e-commerce. Image source: Screenshot from Hou Yi's Moments The confidence in the Hema model stems from the vertical depth of supply chain system construction. For this reason, Hou Yi, in his fifties, still rushed to the front lines of fresh food sources, personally inspecting and purchasing. Being down-to-earth and approachable is the consistent impression the Hema team has of Hou Yi. After ensuring strong product selection, the next step was to focus on in-store experience. Tasting food with employees, hiring chefs at high salaries to design dishes... Lao Cai did not change his insistence on "deliciousness is the way." In his eyes, Hema was a new species that differed from traditional internet-famous attributes and stood firm in the retail market with deep internal strength. In March 2016, Hema received $150 million in investment from Alibaba. With Zhang Yong's backing, Hou Yi led Hema to advance with high profile. By the end of the year, Hema achieved a turnover of 250 million yuan, and the following year, the number of stores expanded to 18. In the same year, Ma Yun made a high-profile appearance at Hema, and the group photo with the king crab officially pushed Hema into the spotlight. Image source: Internet In the following seven years, Hou Yi led Hema to frequently launch new offensives. With continuous actions, Hema became the "successful spokesperson" for Alibaba's new retail. The Hema team, running at breakneck speed, had only one goal: to reshape the retail industry with digitalization. A Difficult but Correct "Climber" Retail is difficult, and fresh food is even harder. What Hema did was dare to chew on hard bones and create new retail with disruptive value. This was the tacit understanding Hou Yi reached with his "Bole" (patron) Zhang Yong from the beginning. Since Hema's establishment, Hou Yi has explored more than ten formats, such as retail store "Hema F2," community supermarket "Hema MINI," shopping center "Hema Li," front warehouse "Hema Xiaozhan," community vegetable market "Hema Caishi," smart meal pickup cabinet "Hema Pick'n go," membership store "Hema X Membership Store," community group buying "Hema Linli," discount store "Hema Aolai," and premium supermarket "Hema Premier." The ten formats Hema tried Image source: LatePost If it doesn't work, stop; if it doesn't work, change. Decisive Hou Yi turned Hema into a dream factory for realizing his retail grand plan. In 2018, Hou Yi proposed the "new zero-supply relationship," intending to work with suppliers to eliminate intermediate links—no longer charging suppliers traditional retail channel fees such as entry fees, promotion fees, and new product fees, and building a core moat around the "buyer system" to enhance product strength. Hou Yi's move was a disruptive change to the traditional "payment period + channel fee" procurement model. Suppliers who bore risks were dismissed, and retailers who understood the market took the number one position. With the position change, internal interests were also cut, and this would directly hit the pain point of the entire fresh food e-commerce: how to find a format that balances cost and quality, then rapidly expand, lower supply chain costs, and achieve the "multiplier effect" of supply chain value? It is undeniable that the era of zero-supply games, where traditional retailers relied on terminal advantages and used control over distribution channels to control suppliers and increase profits through high-frequency and multi-name channel fees, is slowly coming to an end. Hema's exploration of "new zero-supply" allowed product strength and channel strength to form a synergy, using better products and services to become the retail channel closest to consumers' stomachs and hearts, creating a win-win situation for retailers, suppliers, and consumers. Even with Ma Yun's endorsement and Alibaba's money, Hema still paid a heavy price for its innovative path, accompanied by rising investment costs, business adjustments and contractions, and divergence from the company's core business. In the six years since its establishment, the biggest issue troubling Hou Yi was Hema's profitability and loss dilemma, which was also the root of its being mocked as "a rich man's money-burning game." Image source: Internet The young Hema would eventually have to face the storm alone. Going upward was Hou Yi's initial development positioning for Hema. As Hou Yi said, Hema Fresh targeted the middle class in first- and second-tier cities, providing them with high-quality, ultra-cost-effective goods and services. In the era of consumption upgrade, "spending money for experience" was considered to have broad prospects, and internet companies like JD and Alibaba also bet on it, unaware that they were being undercut by the "cut a knife" strategy outside the Fifth Ring Road, handing over a huge market encompassing the general public to competitors. The "rational" trend of pursuing high-quality development and consumption stratification left 200 million middle-class consumers passively in a special period of consumption shift, and Hema had to seek a quick turn. In 2023, Hou Yi launched Hema's hard discount model, seeking "downward" growth. Launching the "Move Mountain Price," cutting half of the SKUs, vigorously developing private brands, reducing store prices by an average of 20%, and guiding users offline through "de-KA-ization" and de-membership systems. Image source: Internet Behind the grand gestures and big moves was the sign of Hema's high quality and excellent price, and the expression of Hou Yi's firm determination to integrate zero-supply relationships. Hou Yi stated, "The discount transformation is not a simple price war. Hema not only wants to lower product prices but also optimize the supply chain, reduce waste, improve efficiency, while maintaining the uniqueness and high quality of products." The Move Mountain Price and comprehensive discounting were new thoughts brought by Hou Yi after nine years of experience and weighing profitability—abandoning the product strength he was proud of, making price the selling point, drastically simplifying SKUs while exploring ultra-cost-effectiveness. Image source: Internet But problems followed one after another. First, Hema did not cultivate a "low price" mindset. Hema had not stepped out of the shadow of international giants like Japan's Don Quijote stores, Sam's Club, and Costco, and old users did not buy into Hema's loss of product strength. Second, while drastically simplifying SKUs, Hema also hurt its own main artery. If the foundation is not solid, the ground shakes, and suppliers whose survival space is extremely compressed will also stage a scene of loyal ministers stabbing in the back. Third, the persistently high supply chain and delivery costs also left Hema stretched thin. Going downward was the other end of Hou Yi's thinking and also the focus of Hema's layout following the trend. This discount war, with bayonets drawn, would either achieve success or end in failure. Image source: Internet With the further expansion of the target consumer group, Hema strives to make high-quality, low-priced goods more accessible, which not only helps improve consumers' shopping experience but also helps promote the competitive landscape of the entire retail industry. But for Hou Yi, choosing to go downward and move toward multi-format was already a deviation from idealism and a manifestation of the urgent need to prove value. Facing the new market environment, Alibaba had to make a major strategic shift. Alibaba also indirectly admitted that new retail was a bitter fruit from the start, and no matter how strong Hou Yi was, he ultimately couldn't taste the sweetness. The format changes were new stories Hou Yi continuously prepared in response to Alibaba's urgent needs for new retail. Without Alibaba, Hema, still in its infancy, would have no milk to drink, and the idealism of subverting traditional retail would be out of the question. Image source: Hou Yi's Moments "When all formats are exiting, we see opportunities; when everyone is fearful, we should be greedier and open more stores." Going against the current and finding a way out of desperation is Hou Yi's consistent style. "The de-KA model is a life-or-death issue for me; there is no retreat. Of course, the industry is shaken, and many people block us. Let them block." Last October, at Hema's New Zero-Supply Conference, Hou Yi overruled objections and once again expressed his determination for discount transformation. Hou Yi, a warrior at heart, would not leave the battlefield because of a battle. Actively seeking change and cutting inward, Hou Yi walked a path of attack different from traditional supermarkets, which also drove the industry to think and change actively. It is foreseeable that more and more offline supermarkets will also try discount transformation. Returning in force, he is still the overlord of Jiangdong. Shaking off the mud and jumping out of the mud, Hema is also striving for rebirth. "Over the past few years, we tried different formats, failed repeatedly, iterated and optimized continuously. Fortunately, we finally found the discount supermarket model of Hema Aolai, which can go downward. This year, we will open stores on a large scale, expanding to prefecture-level and county-level cities in Jiangsu, Zhejiang, and Beijing." Hou Yi revealed that through continuous iteration and optimization, Hema has rediscovered a new replicable development path. From format innovation to forced profitability through discounting, Alibaba made Hou Yi, and Hou Yi also paid for Alibaba's strategic shift with his last entrepreneurial venture. A "Trailblazer" Who Retires with Honor Hou Yi is definitely one of the figures that cannot be bypassed in the retail industry. Retiring with honor is very applicable to Hou Yi. Before Hou Yi, traditional stores and supply chains remained at a relatively primitive stage, and consumer experience was nearly at a bottleneck. Facing the uncontrollable factors of the pandemic, a "wave of store closures" was brewing. Image source: Internet Hou Yi brought new ideas and transformation ideas to traditional stores. Before Hema, no domestic or foreign supermarket enterprise had attempted a tailored "people, goods, and place" format for China's retail industry. Hema's full-dimensional format exploration was undoubtedly the industry's tracker, pulling with great effort and ultimately benefiting generations. New digitalization was also brought into the retail industry by Hou Yi. Omnichannel traffic, membership systems, and community operations—even now, whether traditional supermarkets or internet companies, they all understand the business wisdom, and Hou Yi deserves great credit. Image source: Internet In addition, technology-driven smart stores were first tried by Hou Yi's Hema, such as self-checkout and RF guns, and were quickly followed by leading companies like Wumart and Yonghui. In terms of user experience, Hou Yi's "store-warehouse integration" was groundbreaking, with technologies and facilities such as automatic hanging chains, self-built cold chain logistics, buyer systems, full product tracking, automated delivery scheduling and optimization, and consumer demand forecasting, achieving "online-offline integration" and "30-minute fresh delivery." Image source: Internet It can be said that Hou Yi, at the age of fifty, took the field and, relying on the gradually grown Hema, almost reshaped China's current retail market, deserving the title of "godfather" in China's retail industry. Whether traditional retail or new retail, there is more and more to do, and the format models to explore are also increasing, as Hou Yi publicly stated: "All our innovations require long-term investment. Hema wants to win not only at the hypermarket level but also to build core competitiveness in all systems to make itself stronger." Image source: Brand In the era of stock, the fearless glory of entrepreneurs is hidden, and Hou Yi is the bravest entrepreneur. Hema's past glorious years have now come to an end. Hema's future chapter will be written with steady strokes. As Wu Yongming evaluated "Lao Cai" Hou Yi in the internal letter, Hou Yi is a pioneer worthy of leading industry development. Conclusion Nine years ago, a fifty-year-old young man was full of vigor. Nine years later, a man over sixty retired with honor. Time and fate, not bowing to time and not accepting fate, warriors always have the courage to hit the wall without turning back. Half a lifetime telling stories about retail, half a lifetime practicing the idealism of the retail industry in person. This is the upward path, difficult but resolute and correct. In the retail industry with endless format changes, Hou Yi, who said "I will go," is a special footnote. A hero in his twilight years, with unyielding ambition, his never-stopping heart is the best interpretation of the entrepreneurial spirit. PS: Click Read Original to view more highlights of the 9th China FMCG Innovation Conference and the 2nd China FMCG Hard Discount Conference & the 2nd China FMCG Distributor Conference...__