Hema is losing its middle class
Author/ IT Times reporter Mao Yu
Editor/ Sun Yan
On April 24, Hema X members made a comeback, announcing the resumption and renewal of X Gold and X Diamond memberships, as well as a comprehensive optimization and upgrade of the original membership rights.
Beijing, Changsha and Nanjing, which previously raised the free shipping standard to 99 yuan, are now back to 49 yuan, while more than 20 cities, including Shenzhen and Guangzhou, have adjusted the free shipping threshold from 39 yuan to 49 yuan. Since then, in the online and offline integrated stores such as Hema Fresh Stores and Hema Mini Stores in the above-mentioned cities, customers can enjoy free shipping service for a single order of 49 yuan or more, and if they are not satisfied, they will need to pay 6 yuan for each order.
"If you renew your membership in an offline store, you can enjoy free shipping once a day, and at the same time, you can get a free dish every day when you come to buy groceries offline. On April 24, a clerk at a Hema fresh store in Shanghai told the "IT Times" reporter that members with an annual fee of 258 yuan can choose any day from Monday to Thursday as a membership day, and members with an annual fee of 658 yuan are members of the day every day. The clerk picked up a fruit that was being promoted and said: "This product is now promoted at 6% off, if you choose to apply for a card now and choose today as a member day, you can get another 88% off on the basis of 6% off." ”
On the day of the resumption of X membership, a number of Hema Fresh and Hema mini stores in Shanghai's inner ring did not usher in the expected high customer flow. On weekday mornings, most of the elderly consumers are on site to pick up fresh vegetables and seafood. The clerk actively promoted the membership card, but few users chose to renew the membership on the spot.
The Hema membership system returns
It is difficult to win back old members
"I haven't used Hema for three months. Xiao Du (pseudonym), a post-90s consumer, told the "IT Times" reporter that he was a loyal user of Hema before, because Sam's single product is large, and Hema is its preferred online fresh store, "I used to buy it about 3~5 times a week, and since the offline exclusive price, I did feel like I was stabbed in the back, and I gradually stayed away from Hema." ”
Since Hema canceled the X membership, Xiao Du decisively chose Meituan's Little Elephant Preferred and Dingdong Grocery because the rules and operations of these two platforms are more concise and clear.
5 minutes to buy groceries and 10 minutes to study the rules, this is the voice of the "little Dus" who have used Hema in the past six months. "The marketing game is too complicated", "the membership benefits after repeated adjustments are not as good as before, and Hema is becoming more and more perfunctory"...... The complaints did not diminish after Hema resumed the X membership system.
Since 2019, domestic fresh e-commerce has begun to accumulate strength, especially led by Freshippo, and launched a highly competitive paid membership service, with the annual membership fee priced at 218 yuan, which is lower than some competitors of the same type, which makes Hema the main competitor of domestic membership-based supermarkets.
The stacking of benefits such as unconditional free shipping, free fresh vegetables, stacking discounts, and exclusive discounts for members has attracted nearly 3 million paid members in just three years, accounting for 5% of all registered members. What is particularly remarkable is that the membership fee alone has generated more than 500 million yuan in annual revenue for Freshippo.
Four years later, Hema returned with an X Gold membership of 258 yuan/year and an X Diamond membership of 658 yuan/year. Open the Hema App, and the introduction pages of the two types of members are full of words such as "Member Day", "88% off" and "free food", but it is difficult to win back the hearts of members. As a comparison, the annual fee for Sam's ordinary members is 260 yuan, and the annual fee for excellent members is 485 yuan.
"658 yuan is actually only 88% off every day, how can I have time to run to the store every day. Ms. Qin, a consumer who has been an X member for 1 year, said that diamond members can only choose one day for membership online, and if you want to enjoy 88% off every day, you need to go to the offline store, and not all offline products participate in 88% off, "I also went to the store on the 24th and asked once, and the clerk said that about 9% of the goods can enjoy the membership price." Now there is a mandatory option for 1 yuan environmentally friendly plastic bag online, which cannot be canceled or deducted with coupons. Ms. Qin sighed that the new membership system was not very satisfying for her and her family and friends.
On a social platform, the official account of Hema is full of comments of "no more renewal", some "former members" are "stumped" by the above-mentioned packaging fee, and some consumers think that the quality control of Hema is much worse than before, and there is no desire to renew.
Price reductions and cancellations
What step did Hou Yi take wrong?
In the middle of last year, Hema postponed its listing plan, and it was reported that the main reason was that the valuation given by potential investors was lower than Hema expected. Subsequently, Hema started the relayout of online and offline business. In October of the same year, Hema officially launched the discount reform, first lowering the price of more than 5,000 products in Hema Fresh offline stores, generally by 20%, and setting up "offline exclusive prices" in stores. Some of the "exclusive prices" are even lower than the 88% discount price of the member price, which has attracted the dissatisfaction of X members.
Hou Yi, the CEO at the time, explained at the Hema New Retail Conference in November last year: "The operating costs of physical stores are relatively fixed, but the online traffic costs and logistics costs increase linearly in the same proportion. At that time, Hou Yi believed that the key battlefield of the new retail battle was the physical store, and if the physical store could ensure the low price advantage, consumers would naturally choose to return to the physical store to consume. In December of the same year, Hema confirmed the cancellation of the handling and renewal of X members, triggering a large number of X members to "leave".
After less than half a year, Hema quietly removed the "offline exclusive price" label from the physical store, returned to the online and offline price system, and resumed the X membership system. The industry generally believes that this series of adjustments is a moderate pullback to the previous aggressive strategy, and once again adopts a dual-track approach of online and offline.
Previously, Hema had different prices online and offline
Hema, which has lost nearly half a year of membership fee revenue, is not doing as well as before. Hema was originally in the market, but within half a year, there were frequent news of store closures and rectifications. The momentum of "Yishan Price" is no longer there, and it has begun to vigorously promote its own brand, and packaging printed with the "Hema MAX" logo can be seen everywhere online and offline.
However, in the process of increasing the proportion of self-operated goods, Hema has also encountered challenges. In the second half of last year, Hema significantly streamlined SKUs, and more than half of its 5,000 SKUs were cut, resulting in some brands being forcibly removed from the shelves. In addition, Freshippo's price reduction behavior of suppliers has also aroused disgust from some suppliers, and Wang Xiaolu announced on December 27 last year that he would suspend the cooperative relationship with Hema in order to protect his own price system. The significant reduction of SKUs has affected the richness of Freshippo's original products, and a large number of self-operated products have been added, resulting in a steady stream of negative consumer evaluations, mainly reflected in the decline in quality control, the reduction of product types, and the lack of new product taste innovation as the original cooperative brands.
Reducing prices and canceling memberships were all made before Hou Yi retired. In March this year, Hou Yi suddenly announced his retirement and replaced the former chief financial officer Yan Xiaolei as the CEO of Freshippo, a personnel change that even surprised Hema internal employees. In the following month, Hema overturned the above decisions one by one, which made consumers and industry insiders cry out incomprehensible: "Does it mean that Hou Yi made a mistake?"
Hema overthrows Hema
What else can be done?
Seeking stability is a path for Hema to change the chaos. Some industry insiders believe that although Hema is actively recovering core users, the frequency and magnitude of its strategic adjustments in the past year are jaw-dropping, and consumers are more eager for stable and high-quality product quality and consistent service levels, rather than frequent and impermanent strategic shifts.
A series of confusing operations have obviously caused the market to lose confidence and consumers to lose patience, and it is not easy for former members to regain their "preference" for Freshippo, which may be irreversible only by the return of rights or appropriate promotions.
In the newly revised X membership system, Gold members will be able to get a 1% discount on purchases made at X Club stores, while Diamond members will enjoy a 2% rebate benefit. According to the Hema clerk, this rebate mechanism is equivalent to the exclusive consumption rebate of X member stores, and can only be used in X member stores. At the same time, Gold and Diamond members (principal card holders) can also enjoy additional benefits such as birthday gifts provided by the X member store. Can a small amount of new rights and interests bring a new wave of traffic impact?
Each of Freshippo's initiatives tries to find the best business model and ways to improve user stickiness, but the actual results cannot be evaluated, and we can only wait for time to precipitate and follow-up real feedback from users. However, quality assurance and price control should be the most important cornerstones in the development of Hema at all times, taking into account not only operating costs, but also consumer reputation and price affordability.
Hema is overthrowing Hema
Typesetting / Ji Jiaying
Photo/ Hema IT Times
Source/"IT Times" official account vittimes
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