Hema is having a hard time.
On March 18, Alibaba issued an announcement announcing the "honorable retirement" of Hou Yi, the founder of Freshippo, and that the position of CEO will be taken over by CFO Yan Xiaolei in the future.
As soon as this news came out, one stone stirred up a thousand waves, which instantly aroused speculation from all sides.
Combined with the recent events such as the closure of Hema stores, salary cuts, and the conversion of regular workers to temporary workers, coupled with the recent news that Hema was exposed to selling fake goods, people can't help but worry: Is Hema dying?
Thinking back then, the Hema was a dark horse as fast as the wind.
In 2016, Hema Xiansheng's first store was located in Jinqiao, Shanghai, with a total turnover of 250 million yuan that year, and the turnover per 3.3 square meters of stores was 3.7 times that of traditional supermarkets.
A year and a half later, when the Hema Shanghai Jinqiao store became profitable, Ma Yun took Daniel Zhang and a group of executives to inspect the store, and he personally caught a giant crab from the pool to celebrate the success of Hema, and everyone applauded and applauded, and the scene was filled with a cheerful atmosphere.
Hou Yi was overjoyed by the momentary victory, and he was determined to build a huge empire to prove the sights of his old club, JD.com, and repay the kindness of his new boss, Ali.
The reality is that this momentum has injected the driving force into the subsequent vigorous development of Hema, and it has also laid a hidden danger for the current strong crossbow to be unsustainable.
Hema is young and vigorous, and his actions are extremely high-profile, and letting the situation develop to this point can be regarded as "seeking benevolence".
Lei Jun has a famous saying: Standing at the mouth of a typhoon, pigs can fly into the sky.
In 2015, with the rapid development of the Internet economy and the new retail model, many companies found that a huge outlet had taken shape.
At that time, traditional supermarkets represented by Yonghui and Wumart were intensively developing their own shopping apps, and launched a new e-commerce model of online purchase and offline instant delivery.
This model was named "new retail" by Jack Ma.
Backed by new retail, several traditional supermarkets washed the dust and took off on the spot, so chic.
The business world has always been a hunting ground dominated by greed, and at this time, Ali is eating rice from his own Taobao and looking at the new retail "big fish" in the Internet economy cauldron, and his eyes are full of hunger and thirst.
Soon, Ali found Hou Yi, who had resigned from JD.com, and invited him to form a new team.
The two sides met late, hit it off, and quickly released a blueprint for the layout of the new retail track, and then concentrated their efforts and prepared to do a big job.
Thus, Hema was born.
This project was highly valued by Ali, and even appeared in a desperate posture, Hou Yi did not live up to Bole's expectations, and handed over a beautiful answer sheet at the beginning of the business, which was praised by the new boss.
In the next few years, Hema will always be the pearl of Alibaba's palm, and it has received long-term financial support and decision-making tilt. It is reported that since its establishment, Hema has received an investment of more than 10 billion yuan.
In 2017, the one-year-old Hema became the most high-profile Internet celebrity company in the industry, and retail giants such as Walmart and Carrefour sent observation groups to visit the headquarters of Hema to study, and some consumers even drove to Hema in neighboring provinces to shop.
At this time, Hema was radiant, and the only flaw was that the store expansion was slow. And this problem has a lot to do with the fast sales method of Freshippo.
After the opening of Hema in Wuhan, Hou Yi fell in love with a local specialty of fresh food called "lotus root", and immediately decided to purchase it in bulk to ensure that the people of Shanghai can taste the lotus root belt within the 72-hour shelf life.
Hema rushed to work day and night, purchased and airlifted on the same day, and let the products enter the store and put them on the shelves the next day, and finally guaranteed a 24-hour sales period.
The speed of Hema is as fast as lightning, which shocked peers and consumers, and this case became a golden sign that Hema repeatedly played when it was engaged in propaganda later.
However, in order to ensure the efficiency of distribution and fulfill the promise of three-kilometer-and-a-half-hour delivery, Hema stores need to be strictly distributed, and the number can only be more than less, so there is a demand for rapid expansion of stores.
However, high efficiency requires high logistics costs to cover the bottom, and high costs need high customer unit prices to support, in this era of pursuit of cost performance, customers increasingly do not want to bear high premiums and high freight, so the extra costs can only be digested by Hema itself.
After a long time, the "digestive system" of Hema began to be overwhelmed, and customers in first-tier cities have abundant purchasing power and naturally do not mind high prices, but other lower-tier cities are different, and careful budgeting is the habit of most ordinary people.
There are only a handful of first-tier cities in the country, and lower-tier cities and even rural areas are the country's most extensive markets.
In order to get out of the predicament, Hou Yi decided to march downward.
In fact, after completing the layout of second- and third-tier cities, Hema found that something was wrong.
The majority of consumers are willing to empty their pockets to buy a house worth millions, but refuse to spend hundreds of dollars to buy high-quality fresh food.
The reason is very simple, buying a house is just a need, an investment, and buying vegetables is just to satisfy the appetite, and it will be eaten after eating, and it will no longer generate value.
In addition, the slowdown in economic growth and the enhancement of the people's awareness of saving have also made more and more people shift from the pursuit of exquisite and high-end to the pursuit of the ultimate cost performance.
In the past, it was more expensive than whom, but now it is much more saved.
In fact, the fast speed of opening a store does not mean that the cost of opening a store is not high, and Hema is accustomed to opening a store of 3000 to 5000 square meters in the core business district of a first-tier city, after matching the direct flash delivery model, the cost of opening a store alone is as high as more than 30 million.
A combination of factors has unsurprisingly thwarted the expansion plans of Hema in lower-tier cities, with plans to open 13 fresh supermarkets in Guiyang and 50 in Chengdu. As of last year, there were only 29 supermarkets in the two places combined.
Such a mediocre performance made Hou Yi taste the long-lost frustration. In 2019, Hema closed its store for the first time, and Hou Yi received the most disappointing award at the group meeting at the beginning of the year.
Hou Yi, who was criticized, was not to be outdone, he publicly said that he wanted to sink the market and open Hema stores in the countryside.
It's just that in terms of work style, Hou Yi maintained a radical posture as always, carried out the execution to the end, and threatened to open a store as long as it was opened, whether it could be opened or not, change it if there was a problem at the moment, and run forward if there was no problem.
In 2019, Hema launched 4 stores: F2 convenience store, Hema vegetable market, Hema mini and Hema station.
They have one thing in common, that is, they save floor space and expenses, for example, Hema mini covers an area of 500 to 1000 square meters, and the cost is only about 2 million.
In addition, new stores can be quickly replicated, and it doesn't matter if one store is not enough or closed, the next new store will be opened soon.
After 2020, Hema has changed its marketing model and developed new store types, which makes people feel that Hema has spent all its energy on invention and creation.
However, after three years of tossing, the feedback from the market to Hema is not ideal. Among the stores launched in 2019, only the Hema mini is still alive, and as for the 2020 model, its benefits are even more miserable.
What's even more interesting is that none of the new store types developed by Hema can be strong in the market for a long time, either closing stores or shrinking business, in short, it is difficult to make a profit.
In fact, discerning people know at a glance that Hema has patronized new concepts and shouted slogans over the years, and as for providing customers with better services and products, it has become the second, which can be said to be taking care of one and losing the other, putting the cart before the horse.
Hema keeps sticking labels on itself and gold on his face, and it's hard not to feel that it's to set up a budget and burn money to create dreams.
As a result of this, Hema is seriously "fat", looking broad-shouldered, round-waisted, and well-developed limbs, but in fact it can't stand steadily, let alone race.
If you insist on rushing forward, the result will inevitably be that you will lose your breath and finally faint to the ground.
In the final analysis, such a situation is inseparable from Hou Yi.
Hou Yi just rolled up his sleeves and worked hard, swaying with enthusiasm, creative, skillful, executed, and background, but he was not seeking truth from facts.
He put Hema in a very awkward position, that is, is the service that the company has tried its best to create is what consumers really want?
One of the roots of Hema's defeat lies in this.
In the spring of 2023, Ali will carry out a business sector reform, give wings to Hema and "fly solo".
In the second half of the year, the core leadership of Alibaba's board of directors was replaced, and the new boss gently drew a red line on the business table, separating the core business and non-core business segments, and Hema was impressively listed in the non-core sector.
For the core business, the group will continue to vigorously support. For non-core businesses, wait and see what happens, let the team take care of their own profits and losses, prove their viability and value, and then evaluate the collaboration between the business and other businesses, and finally finalize life and death.
Soon after, Hema plans to go public were put on hold.
In this situation, I can't help but think of a scene in the TV series "Mansion Gate", the second grandmother felt that her son Bai Jingqi was not successful, so she swept him out of the house, and said: "From now on, if you don't mix up your personal appearance, you will enter this house." ”
In the first quarter of this year, Ali released its financial report, and the words "new retail" were completely missing. Chairman Joe Tsai said that Alibaba spent $1.7 billion in September to clean up its non-core assets, and the next step will be to further clear the physical retail business on its balance sheet.
There are all kinds of signs that Hema, which was characterized by the old mother as an unfinished thing, really has to be self-reliant.
And Hou Yi is worthy of his identity as a high-end commercial player, making full use of Ali's "laissez-faire" and continuing to carry out a series of reforms, in order to achieve the soaring of Hema to 90,000 miles.
But the question is still the same, what is the value of Hema and other business links, where is the irreplaceability of Hema for consumers, and what is the significance of Hema to Alibaba?
Ali spent a lot of money to raise this son, and in the end it was a problem to even support himself, let alone fulfill his filial piety to his old mother.
In fact, it seems that Hema has no way to create unique value, on the one hand, the leaders cannot be down-to-earth, and on the other hand, the track picked by Hema looks like a flower, but in fact it is a thorny road.
Since 2017, Ali pulled up the banner of new retail, new retail has been soaring and falling, year by year, many retailers who are interested in participating in the reform have lost a handful of snot and tears.
Among the contestants, only Hema is still galloping forward, vowing to outperform the market decline and occupy the top position.
In fact, it is even more difficult to lay a piece of land in the fresh retail industry, because the door of this industry is almost open, there is no complicated underlying logic, and all forces with capital can come in and intervene.
Secondly, there are too many variables in the fresh track, and the evolution is too fast, there is Yonghui dry vegetable market in the front, and there is a pre-warehouse that the community group buys and the Hema is proud of, and there are waves of unevenness, so that people can never see the situation of unification.
If you want to survive on this track, you have to adapt to all changes and rack your brains to create new tricks, so from this point of view, Hema loves to toss and turn.
As for the continuous reduction of costs in order to get close to users, it is the law of survival and drinking to quench thirst, which is the fate that Hema cannot avoid.
When it can't parry, it has to try its best to survive, coupled with Hou Yi's personality of not admitting defeat, Hema is running farther and farther on the track to the gutter.
In the end, even Hou Yi, the head, was updated.
Nowadays, new retail has long been in decline, and the fresh food industry is showing a cold scene. Dingdong has an income of 24 billion yuan, and its market value is only 4 billion, and it is only one step away from delisting, while Yonghui counts 90 billion banknotes, and its market value is only 28 billion.
The situation of Hema is quite optimistic, with a valuation of 42 billion, but the front-end position model has become a sunset red in the eyes of investors and can no longer attract capital to enter the market.
There's a joke that goes something like this:
"What does Hema rely on to make money?" "Just run fast after going public." ”
When Hema was born and shined, it faced a long-term trouble, that is, the conflict between price, scale and cost.
Hema has been working hard for many years to find a balance that allows it to expand rapidly while continuously reducing costs.
As it turns out, this is a beautiful myth, consumers are seeing through the essence of all the fancy means, returning to the original intention of bargaining in the vegetable market, and will no longer pay for the dream of Hema anymore.
As a result, there are repeated horizontal jumps and swaying of Hema to slap a swollen face and become fat in order to fight for a breath.
It is really hard-working, and it was born at the right time, but the fresh retail industry is too difficult to be a person, and in the face of the fierce competition in the market, even if it is backed by the giant beast of Ali, Hema can only stand up and be beaten.
-END-
Resources:
Brocade Research Institute "Hema Fresh: The Dream of Being a Subject Writer and Lyricist in Dachang"
Yicai "Suddenly, the founder was "retired", what is the fate of Hema?
Enkawa Research Institute "The Problem of Hema Horses"
Earpiece Tech: Can the "New Retail" Story of Hema Continue?"
Pai Finance "Fresco Fresh, Where is the Way?"
Author: White Peach Oolong Tea