Alibaba plans massive expansion for Hema supermarkets

Alibaba Group plans to open 2000 branches of its Hema supermarket, which aims to merge online and offline shopping, in China over next three to five years.

It opened its first Hema last year and will end with year with 22 stores. Its latest outlets are in Beijing, Guiyang, Hangzhou, Shanghai and Shenzhen, and this month it opened its second store in Ningbo to be followed by one in Suzhou next week.

Hema stores are part of Alibaba’s “new retail” strategy that enables customers to shop, order groceries for home delivery and eat in-store. Purchases can be made through the Hema mobile app, which is linked to Alipay.

The stores focus on a wide assortment of food, and the brand places an emphasis on fresh – and live – seafood. Moreover, the business model combines supermarket, restaurant and e-commerce, complete with mobile app. This means customers can buy items in the supermarket for the restaurant staff to cook for them.

At the moment, about half of sales at Hema stores take place online. The company claims that customers within a 3km radius of a store can have their shopping delivered within 30 minutes.

Alibaba CEO Daniel Zhang says Hema draws on data and smart logistics technology to seamlessly integrate online/offline systems.

“Hema’s goal is to broaden the new retail model by working with retail partners like Sanjiang Shopping Club and Xingli Department Store,” says Hema CEO Hou Yi. “As our model becomes more established, it can be shared with other traditional retailers to help them transform in the digital age.”