Hema Re-Pilots Front Warehouse Model in Shanghai, Challenges and Opportunities
TapTechNews August 21st news, LatePost reported that Hema is re-piloting the front warehouse model that was abandoned four years ago in Shanghai, and the person in charge is Sun Shuo (nickname: Danquan).
TapTechNews note: The front warehouse refers to a model that builds warehouses near the community, which is different from the traditional warehouse model that is far from the final consumer group. This model can greatly improve 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 delivery service within 3 kilometers in 30 minutes, thereby serving areas that Hema Fresh large stores cannot cover.
Corresponding to it is the back warehouse. The back warehouse refers to storing products in a place far from the production base. The back warehouse is mainly used to centrally manage product inventory, save costs and increase the profit margin.
At present, the main players in the instant retail industry are mainly Sam's Club and Meituan. Among them, Sam's Club has about 400 front warehouses in China, and contributed a transaction volume of over 40 billion yuan in 2023; Meituan's total transaction volume in instant retail in 2023 is in the order 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, it opened more than 70 Hema Mini stations. At that time, the founder Hou Yi came to the conclusion: 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 could not be sold online in the front warehouse can be sold at a discount in offline stores, and the store can also bring traffic to the online at a lower cost. But after four years, both the current market competition environment and Hema have undergone tremendous changes.
Internal sources pointed out that Hema just saw Sam's achievements and thought there was still a chance for the front warehouse. Compared to four years ago, Hema now has greater improvement in online order prediction ability and inventory management ability.