---
title: "Ma Yun's Hidden Move: Hema Fresh to Reshape Retail Ecosystem, Follow Now or Be Left Behind"
description: "Hema Fresh, invested by Alibaba, has seen online orders surpass offline ones, with 4,000 daily online orders and an average order value of 70 yuan. The author argues that if this model is replicable, it will reshape the retail ecosystem, threatening traditional supermarkets, and urges retailers to follow suit quickly."
author: "紫藤院张陈勇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-06-22"
language: "en"
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# Ma Yun's Hidden Move: Hema Fresh to Reshape Retail Ecosystem, Follow Now or Be Left Behind

> Hema Fresh, invested by Alibaba, has seen online orders surpass offline ones, with 4,000 daily online orders and an average order value of 70 yuan. The author argues that if this model is replicable, it will reshape the retail ecosystem, threatening traditional supermarkets, and urges retailers to follow suit quickly.

I have always been paying close attention to Hema Fresh. The first store of Hema Fresh, invested by Alibaba, covers 4,000 square meters and mainly deals in fresh products, operating both offline and online. Online, the APP allows orders to be delivered within 30 minutes at the fastest. The difference between Hema Fresh and JD Daojia is that JD Daojia sources goods from partner supermarkets, while Hema Fresh's stores are self-operated, with its products, stores, and systems all designed and built to support rapid delivery.

A few days ago, I chatted with Mr. Hou, the founder of Hema Fresh. He told me that Hema Fresh's online orders have already surpassed offline orders. Currently, online orders are 4,000 per day, with an average order value of 70 yuan, and this is still growing.

Hearing this data, I was taken aback. After careful thought, I concluded that if the data is real and the model is replicable, Hema Fresh will definitely reshape the retail ecosystem. Hypermarkets will collapse, consumer shopping habits will change, and the internet will truly invade the FMCG market. If retailers do not start following this model now, most of them will be eliminated. Why do I say this? Let me analyze.

Why Hema Fresh Will Reshape the Retail Ecosystem

With 4,000 online orders per day, an average order value of 70 yuan, and a gross margin of 25% (mainly self-operated fresh products), that means daily online sales of 280,000 yuan and gross profit of 70,000 yuan. What does this data mean?

An ordinary 4,000-square-meter boutique supermarket, operating only offline, typically needs daily sales of 150,000-200,000 yuan to break even, with a gross margin of 17%-26% and an average order value of 60-100 yuan. That means a boutique supermarket's daily gross profit is 30,000-40,000 yuan. Hema Fresh adds online business, increasing daily gross profit by 70,000 yuan, which is a 280% increase in gross profit. Even after deducting the picking and delivery costs of 28,000 yuan (4000*7), the gross profit can still increase by 168%.

A 168% increase in gross profit means this industry will undergo earth-shaking changes. New O2O supermarkets like Hema Fresh will be able to afford higher rents, open stores quickly, and redefine site selection logic. This will definitely snatch business from traditional supermarkets. In a seesaw battle, traditional supermarkets will suffer a major blow.

Moreover, Hema Fresh mainly deals in fresh products but also sells FMCG supermarket goods. Customers purchase frequently. If an average household uses the APP twice a week, then Hema Fresh currently has 14,000 loyal customer households. These households are truly using the Hema Fresh APP frequently.

Liu Qiangdong said he wants to make "JD Daojia" a high-frequency APP, just like "WeChat" is to Tencent. Because JD.com users use the platform only once a month on average, which is not secure, and consumers have not formed strong habits. But JD Daojia has not been successful (see Zhang Chenyong's previous article "Liu Qiangdong's Big Bet on JD Daojia"). Why don't we buy MP3 players and ordinary digital cameras? Because high-frequency mobile phones have replaced them. Similarly, once Hema Fresh replicates and opens stores quickly, gaining more high-frequency customers, the Hema APP will become a traffic entry point. As long as Hema Fresh launches a half-day delivery zone and an open platform zone, it can gradually migrate consumers and eat into JD.com's market. The logic of high-frequency eating low-frequency is natural and effective.

JD.com's main customers are currently in first- and second-tier markets. It uses self-operated half-day delivery as a traffic entry point to attract customers, then launches an open platform to profit. JD.com's open platform sales have exceeded 100 billion yuan, with net profits in the billions. The path JD.com has taken may be replicated by Hema Fresh, but the tool to attract traffic has changed from self-operated half-day delivery to store-based delivery within 30 minutes.

Feasibility Analysis

Initially, I didn't believe Hema Fresh's data because I have run an online supermarket myself and know how difficult it is to grow orders. I once spent hundreds of thousands in promotion fees and only got 200 orders per day, which dropped to 20 orders per day after 10 days. I also know that many partner supermarkets on JD Daojia only get about a hundred orders a day. How could Hema Fresh achieve 4,000 online orders per store?

After careful analysis, I think the key issue is retention rate. The model of cooperating with hypermarkets (JD Daojia, Duodian) has too low a retention rate, while Hema Fresh can convert most customers into online users.

Someone conducted a survey on JD Daojia (source: JD Daojia O2O Experience Report), and the results showed a delay rate of 33.9%, wrong or missing items after ordering 8%, and product quality issues 5% (fresh products with poor appearance). There were also missed orders, incorrect order status, and poor delivery service.

Imagine that nearly half of the orders have various problems. How can you retain customers? These problems are hard to avoid because cooperating with hypermarkets is not self-operated, and product control is weak. Compared with Hema Fresh, there are several specific issues:

1. Hema Fresh products are processed with delivery in mind, mostly sold by portion, while hypermarket products are mostly sold in bulk, not suitable for delivery, leading to poor experience.
2. Hema Fresh has a relatively complete product range, while JD Daojia cooperates with hypermarkets but systems are not integrated, making product synchronization difficult.
3. Hema Fresh founder Hou Yi was previously responsible for JD warehouse and logistics planning. Hema Fresh's system has already considered picking and handover, while hypermarket systems lack bin location management and picking route optimization, resulting in low picking efficiency, easy mix-ups of models and flavors, and complex outbound handover processes.
4. In terms of delivery, Hema Fresh ships all from the store, with order consolidation and route planning done before dispatch, making timeliness easy to guarantee. JD Daojia uses crowdsourced logistics, which takes time for pickup, and route planning and order consolidation are more complex.
5. The delivery cost per order is 6 yuan. JD needs to subsidize it, while Hema Fresh's average order value of 70 yuan and 25% gross margin can fully bear the delivery cost, making the model more sustainable.
6. Because it is its own store, promotion is easier, such as marking APP-exclusive prices on price tags, and customers trust it more.
7. Since JD Daojia is a cooperative model, merchants may give poor-looking products to JD Daojia customers, while Hema Fresh's self-operated model can require pickers to prioritize high-quality products.

A supermarket with offline sales of 200,000 yuan per day and an average order value of 70 yuan means 2,857 orders per day, with about 3,500 customer visits. That's about 40,000 people per month (not counting repeats) visiting the store. For many consumers, going to a large supermarket is far away, parking and queuing are inconvenient. Is shopping at a hypermarket really fun? Watching TV is more fun than going to the supermarket. So consumers have enough reason to convert to APP users. Ordering via the APP, with the same quality and price, delivered within 30 minutes, saving time and effort, how could that not be attractive? So after months of accumulation, it is possible to cultivate 15,000 loyal APP customers, and 4,000 online orders per day is achievable.

What Should Be Done

If the above logic holds, traditional retailers should pay attention to the Hema Fresh model. Retail transformation is both a challenge and an opportunity. This new type of O2O store will not open too quickly, and there will be regional dominant players in the future. Whoever follows up first will have a greater chance of becoming the market leader, after all, building such a store system that supports rapid delivery will take more than a year. The key to whether this transformation will come is whether Hema Fresh can truly achieve thousands of orders per day. It is not difficult to verify Hema Fresh's operating data; just ask a Hema Fresh delivery person to find out the real order volume.

It has been proven that online platforms for categories like 3C and clothing are competitive, as they can better meet consumers' long-tail shopping needs and low-frequency single-item needs. But FMCG and fresh products have always been areas that traditional B2C or C2C cannot shake. In the past two years, platforms like JD Daojia, Duodian, and Shanguangou have tried to operate FMCG with nearby delivery, but due to experience and cost issues, they have not gained market recognition.

I have been focusing on how to use the internet to operate FMCG products. In previous articles, I proposed multiple model ideas, such as fragmented shopping, points integration, parcel stations, stock-up shopping, high-frequency APPs, and new-format supermarkets. Among them, the article "Supermarket Express O2O: A Dead End Breakthrough, New-Format Supermarkets May Be the Way Out" is similar to the Hema Fresh model, also rebuilding supermarkets from products, systems, and processes, and also proposing that this new type of supermarket should strengthen one-stop family shopping and launch special discount functions. I (Zhang Chenyong) believe that the Hema Fresh model will bring a huge impact, and we will soon see the results. Readers are welcome to add my WeChat to discuss and exchange ideas, and let's play with retail O2O together.

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