Hema NB means Neighbor Business. Hema internally defines it as a "people's livelihood project", that is, through Hema Neighborhoods, it can meet the one-stop consumption needs of more consumers for three meals a day. Hema has never stopped trying new business formats, but there is no doubt that Hema Neighborhood is the project with the shortest establishment time and the fastest development among the new business formats it has tried so far. In March 2021, the internal codename "NB Project" was launched. In more than three months, since the opening of the first store in the country on April 28, Hema Neighborhood has exceeded 400 stores nationwide, and the first batch has entered 10 cities including Shanghai, Beijing, Guangzhou, Wuhan, and Xi'an.

Hierarchical exploration of Hema’s overall business formats

Since the birth of Hema, Hema has launched 9 business formats. Including Hema Station, Hema mini, Hema Market, Hema F2, Hexiaoma, Hema X member store, etc. Some are still expanding, some have been terminated, and new ones are still being explored.

For different regions and different customer groups, it is necessary to explore more business formats to serve the needs of more consumption scenarios. So far, Hema has covered almost all community business formats. In the Hema system, the layout of "Hema Market" - "Hema Fresh" - "Hema Neighborhood" completely covers several different living circles in outer suburbs, business districts and community stores.

The hierarchical structure of the overall business structure is the most obvious feature of Hema at the moment.

Hierarchy of store size. At present, in addition to standard stores, Hema also has Hema F2, Hema Market, Hema mini, Hema station and Hema neighborhood pickup points of different sizes.

It can be seen that Hema has different store settings for different regions and environments, allowing the "Hema Network" to be rolled out more carefully and extensively. For example, opening standard stores in core business districts, opening Hema mini and Hema stations in suburban areas, and opening neighborhood pickup points around communities are all gradually improving Hema's overall network.

Hierarchy of goods. Because fresh food is a market that includes many categories, and different consumers have different standards for fresh food, so you can see high-end ingredients worth hundreds of yuan in Hema, as well as discounts and promotions for everyday onions, ginger, garlic, and boxes of fresh food. Ma is using different levels of ingredients to satisfy different levels of consumers.

User hierarchy. The size of the store and the different levels of goods are actually reflected at the consumer level in the end. Consumers with different needs and spending power constitute the diversity of the consumer market, and Hema is also doing this through its own scale and stratification of goods. The stratification of consumers makes Hema’s users more diverse and extensive.

The stratification of stores, products, and consumers also completes the stratification of Hema itself, allowing Hema to be more detailed and targeted. operating platform and consumer groups. At the same time, Hema after stratification can also gain more comprehensive brand influence, including high-end and mid-to-low-end images, and consolidate its own advantages.

While Hema is expanding its membership stores to tens of thousands of square meters, it is also providing terminal supplies in communities that are rapidly expanding into tens of square meters of communities. The reasons behind this are: on the one hand, the Hema brand cannot complete penetration into the lower-tier market and cannot reduce operating costs through economies of scale; on the other hand, high costs are spread equally among the products, and Hema fresh food items are generally higher. It is difficult to cater to public consumption preferences.

Hema Neighborhood can fill the purchasing gap in non-core areas and at the end of communities that are difficult for large fresh food stores to cover. The store layout is prioritized in the "outer ring" areas of first- and second-tier cities. In these areas, Hema Fresh stores are naturally difficult to cover, and the surrounding households purchase supplies and general supporting services are not complete.

Forced to go online in response to community group buying competition?

The focus of fresh food e-commerce is on "freshness". The ultimate goal of consumer consumption experience also lies in the evaluation of the freshness of the products, which is also a critical factor for the platform. A test of supply chain capabilities.

Every new business innovation of Hema after Hema Xiansheng has a very typical characteristic of overflow of supply chain capabilities. It is precisely because of this that Hema Neighborhood can quickly spread open.

Based on Hema’s mature supply chain, logistics system and front-end traffic, it is also the inherent advantage of Hema Neighborhood.

Analysis from three angles may provide a glimpse into the positioning of Hema Neighborhood.

People. Hema Neighborhood focuses on mass consumption and serves the common people three meals a day as its main goal. Therefore, its customer positioning is not as "high-end" as Hema Xiansheng. However, according to Hema's unified requirements for quality and service, Hema Neighborhood will not be like some communities. Group buying platforms pursue “low quality and low price” like this. Hema Neighborhood will be mainly deployed in first- and second-tier cities, focusing on users who have higher requirements for service and product quality and are relatively less price sensitive.

Goods. Hema Neighborhood provides more than 20,000 daily high-consumption commodities, including fresh, refrigerated, frozen, room temperature, and standard products. These commodities come from the Hema supply chain system, and some of them overlap with Hema Fresh. What is different from Hema is that since Hema Neighborhood is targeting people's livelihood consumption, Hema Neighborhood's best-selling products such as large seafood, imported goods and some high-end brands will not be Hema Neighborhood's main products.

Field. Hema Neighborhood chooses the self-operated store model. According to people familiar with the matter, Hema Neighborhood covers an area of ??about 100 square meters, which is equivalent to the area of ??a convenience store. It is equipped with iron shelves for displaying normal-temperature goods, freezers for storing low-temperature goods, and fresh food. Keep a pond. Due to the "pre-sale + self-pickup" model, products generally will not stay in the store for more than 24 hours. Consumers place orders through mobile phones and can pick them up after 8 a.m. the next day. This makes Hema Neighborhood have a very high commodity turnover rate, and although the area is small, the commodity storage capacity is strong.

The pre-sale model is relatively stable for the supply chain. There is no order uncertainty in the front-end warehouse model, which in turn leads to loss uncertainty, which is also beneficial. Ensure product quality.

However, the disadvantage of the self-pickup model is that it sacrifices immediacy, which also requires more design in attracting consumers.

For Hema Neighborhood, which currently adopts a self-operated model, with the increase in location density and investment, how to amortize the costs of maintenance, operation, property, etc. This will be the problem you will encounter next. After all, many players have tried the pre-sale + self-pickup model before, but most of them failed on the eve of running out of the profit model.

Hema neighborhood location self-pickup store

In terms of location and logistics, Hema neighborhood is more like a road Meiyijia, a convenience store that can be seen everywhere, has narrowed its coverage target to 3,000 nearby households. In the future, it may rely on the franchise model to rapidly expand to county-level cities and towns; from the perspective of logistics, supply chain and product research and development systems, it is still It is based on the continuation and improvement of JD.com's logistics system; the operation model of online ordering and pick-up the next day can also be seen in the shadow of front-end warehouses and community group buying.

So what is the model of Hema Neighborhood?

It is not a community group purchase, nor a convenience store, but a self-pickup store, which eliminates the front warehouse in the distribution process.

01 Cut off the front warehouse in the distribution process

Hema Neighborhood hopes to solve the problem of distribution through the self-pickup model The problem of efficiency shortcomings.

Hema Neighborhood’s self-pickup model has to be reminiscent of Dailuobo, which also has a “pre-sale + self-pickup” model. Fresh food players are faced with stubborn problems such as thin profits, high consumption, and expensive logistics. Dailuobo previously chose to burn money to expand rapidly, but it failed to succeed. Because there is no loyalty on the supply side or the user side for fresh food consumption, once subsidies are stopped, the order volume drops sharply, and the fulfillment costs caused by insufficient order volume rise significantly.

If Hema takes the "money-burning" route of building Hema Neighborhoods like community group buying, the money it will burn will definitely be higher than the money Alibaba will burn overall doing Hema. More.

The self-pickup model of Hema Neighborhoods can greatly improve the density problem that cannot be solved by the Hema Fresh Store model. Hou Yi has mentioned in public more than once the heavy investment in Hema Xiansheng stores. The investment cost of a single store is tens of millions of yuan. The cost of a front warehouse is only a few hundred thousand yuan. Take the front warehouse of Dingdong Grocery as an example. Its area is about 300 square meters. Its larger area may be just right with the box. The "premium" paid by Ma neighbors for the location is offset.

As the fastest-expanding member of all Hema businesses, Hema Neighborhood has proven the feasibility of rapid replication and has stronger commodity power. But like all offline retail stores, it needs to follow the rules of "location, location, location".

Hema Neighborhood Shanghai Baoshan District Zhennan Road Store is one step away from Shanghai Outer Ring Road. This self-pickup point is located in what Shanghai natives call a "large rural area". It is outside the walls of a resettlement community and farmers' self-built houses, and it happens to be on a dead end road. Its neighbors are a Yangzhou skewer, a cigarette shop, and a car repair shop. But it has no better choice for the time being: there are no shops available for rent and transfer on the main roads with denser crowds of people, and a large number of shops are surrounded by blue fences due to violations.

A more effective way to attract new customers is to "go out" - store clerks adopt a two-shift system, with the morning shift from 7 a.m. to 4 p.m., the mid-day shift from 11 a.m. to 8 p.m., and the middle shift During the overlapping time, the store clerks will go out to promote the products with leaflets, Hema fans, and non-woven shopping bags. Inspired by coupons and discounted eggs, many residents mobilized their families to download the Hema app, and some even went to branches to open Alipay accounts.

However, payment barriers and location are only considered temporary or regional difficulties. Hou Yi said that the repurchase rate of Hema Neighborhood’s two stores in Chongming is higher than that of Hema Fresh. “Maybe the business in the suburbs is underdeveloped.”

But the essence of this model is still community retail, and it will take a very long time to consolidate the model, system, and user experience. It is also difficult to expand rapidly across regions and requires the construction of back-end processing capabilities.

02 Not yet independent

From the entrance point of view, Hema Neighborhood is not independent. It is a community within the scope of the self-pickup store. After users click to enter the Hema APP, they can quickly find the entrance to Hema NB on the homepage.

From the perspective of traffic, Hema Neighborhood’s current order source mainly relies on the Hema App. Judging from the current store openings, Hema Neighborhood selects locations according to the standards of self-pickup points. It does not have high requirements for store locations and the house numbers are not eye-catching. This means that the Hema Neighborhood Store itself has a limited role in attracting new customers, and the store still relies on traffic on the App in a short period of time. The average number of monthly active users of Hema APP has remained at over 15 million in recent quarters. This is a high flow outlet.

From the perspective of commodities and supply chains, competition in the fresh food industry in first- and second-tier cities is fierce, but Hema Neighborhoods currently can only open in the first-tier stores where Hema stores already exist. , expansion of second-tier cities. Hema Neighborhood relies on the supply chain advantages that Hema has established over the past few years to directly reach the industrial end. Therefore, in the next few years, it will be impossible to sink into the third- and fourth-tier cities or county and town markets on its own.

It can be seen that Hema Neighborhood cannot walk independently at this stage and can only be used as a supplement to the area where Hema Store is located.

Its current sustainability and replicability are a preliminary step in the overall layout of Hema.

But in any case, Hema Neighborhood is an attempt by Hema to do family consumption business in first- and second-tier cities, using the same fulfillment order as community group buying. Regardless of whether it can finally be run through, it is still an exploration of centralized purchasing for household consumption.

Conclusion

However, Hema Fresh can only enter the community fresh food track at this time, and it can only go to the warehouse. The complementary role of the integrated model. During the epidemic, with the large-scale subsidies from Meituan and Pinduoduo, the community group buying track gradually became clear. Whether it was first- and second-tier cities or third- and fourth-tier lower-tier markets, they were all hunted by giants at the same time, leaving a limited market for Hema. .

The current target market of Hema Neighborhood is first- and second-tier cities. Whether it will sink in the future will depend on the development of the business and the capabilities of the supply chain.

As Hou Yi said before, "What you see today is definitely not the final model of (community group buying) in the future. Many people have occupied some kind of transaction in community group buying Form, in fact, these are not worth mentioning. ”