TapTechNews August 22nd news, Hema Fresh was reported yesterday to be re-piloting the front warehouse model that was abandoned four years ago in Shanghai, with the person in charge being Sun Shuo (alias: Danquan).
According to the report of Zhongzheng Taurus today, a person related to Hema responded, "The news is true. But it's not about creating a new model or a new business format. In cities where Hema stores are already very dense, there are still some areas that the fresh stores temporarily can't cover. To further enhance the user experience, Hema will pilot the use of front warehouses to densify the service radius and provide the fastest 30-minute delivery service for residents within 3 kilometers around."
TapTechNews note: The front warehouse refers to a model that is different from the traditional warehouse that is far from the final consumer group, a model of establishing a warehouse near the community. This model can greatly improve the timeliness while ensuring the freshness of fresh products, and at the same time can save operating costs compared to offline stores. With the front warehouse model, Hema can provide a 3-kilometer 30-minute delivery service, thereby serving areas that the Hema Fresh big store can't cover.
In contrast, there is the rear warehouse. The rear warehouse refers to storing products in a place far from the production base. The rear warehouse is mainly used to centrally manage product inventory, save costs and improve the profit margin.
At present, the main players in the immediate retail industry are mainly Sam's Club and Meituan. Among them, Sam's Club has about 400 front warehouses in China and contributed more than 40 billion yuan in transaction volume in 2023; Meituan's total transaction volume in immediate retail in 2023 is in the magnitude of 200 billion yuan, and the flash purchase business currently has about 9000 lightning warehouses; and the main players in the fresh food e-commerce include Hema, Dingdong Groceries, Pupu Supermarket and the small elephant supermarket under Meituan, among which the small elephant supermarket has opened more than 680 front warehouses.
Hema's last attempt at the front warehouse model was four years ago. In 2019, more than 70 Hema Stations were opened. At that time, the founder Hou Yi concluded: The front warehouse is a ToVC (for investors) false proposition and cannot make a profit.
Therefore, at the end of 2019, Hema transformed the front warehouse into a community supermarket Hema MINI. The inventory that couldn't be sold online in the front warehouse can be sold at a discount in the offline store, and the store can also bring traffic to the online with a lower cost. But after four years, the current market competition environment and Hema have both undergone tremendous changes.
Internal sources pointed out that Hema just saw Sam's achievements and thought that the front warehouse still has opportunities. Compared to four years ago, Hema's current online order prediction ability and inventory management ability have both been greatly improved.