When talking about the Hema retail store, a Dutch person will typically associate the store with very traditional shopping experience, maybe a bit old-fashioned but reliable for quality. For a typical Chinese resident, however, these values will most likely not pop to mind when hearing the words “Hema retail store”.
Traditional Business-to-Consumer (B2C) eCommerce has seen very high growth in the last decade. With China leading the revolution, the largest market for retail now has an online retail transaction value of approximately 1.5 trillion USD, almost three times the size of the US (Bu et al., 2019). With the lines between online and offline shopping starting to blur for Chinese consumers, retailers started to look if they can accommodate for this by integrating both channels, instead of seeing them as separate (Light & Birthwhistle, 2015). The Online-to-Offline (O2O) retail concept was born, integrating the online and offline shopping experience, leading to the next revolution in the retail world.
Alibaba’s Hema Xiansheng, or Hema Fresh, is spearheading this concept with their “new retail” grocery stores in large cities in China. When shopping at a Hema supermarket, you might notice some rattling metal, this is because you, the consumer, is not the only one shopping. Hema employees are running around the store picking orders from their online platform. When ready, they hang their bags on conveyor belt, hanging from the ceiling, transporting the bags to the exit of the store. From there, people living within 3 kilometers from the store, will receive their order maximum 30 minutes following their time of order (Okame, 2017).
The promising concept has already found its way to various other markets. Within the Netherlands, for instance, Coolblue which used to be an online-only retailer now operates more than 5 Brick-and-Mortar outlets. Coolblue uses the stores as a means of advising customers, which is more difficult with an online only strategy. This is a crucial aspect of O2O; the strategy does not only facilitate additional sales, it also creates new avenues through which one can engage with their customer (BIGcommerce, 2020).
Sources
Bu, L., Wang, J., Wang, K.W. & Zipser, D. (2019). China digital consumer trends 2019.
BIGcommerce (2020). What is O2O (Online-to-Offline) Commerce. BIGcommerce. Retrieved 8 October 2020 at https://www.bigcommerce.com/ecommerce-answers/o2o-commerce/.
McKinsey & Company. Retrieved 6 October 2020 at https://www.mckinsey.com/~/media/mckinsey/featured%20insights/china/china%20digital%20consumer%20trends%20in%202019/china-digital-consumer-trends-in-2019.ashx.
Light, C. & Birthwhistle, T. (2015). Delivering O2O. How Chinese retailers can respond to the blurring of online and offline. PwC Digital Consulting. Retrieved 6 October 2020 at https://www.pwccn.com/en/consulting/consulting-delivering-o2o-jun2015.pdf.
Okame, K. (2017). China’s revolutionary O2O supermarket chain. Nikkei Asia. Retrieved 6 October 2020 at https://asia.nikkei.com/Business/China-s-revolutionary-O2O-supermarket-chain.
Dear Gerbrand,
Nice pun hahah!
I happen to have written my bachelor thesis on the grocery e-commerce in Hong Kong. We found that most grocery companies are omni-channel, with traditional brick-and-motor companies seeking to expand their online segment while Internet-based ones looking to set up more physical locations. These observations might also hold true to some degree in the Netherlands.
Perhaps there’s a limitation to which some processes could be digitalized. Or maybe inertia is stopping customers from fully accepting new techs. Either way I imagine the retail sector would stay at this “in between” stage for the near future.
Best,
Lufeng