Alibaba's Jack Ma and Daniel Zhang at Hema Supermarket.
Alibaba is giving us a glimpse into the future of retail with its Hema supermarkets.
First launched in 2015, Hema supermarkets are based on Alibaba's "New Retail" model in which technology and data are used to merge online and offline shopping, providing consumers a more flexible and efficient shopping experience. There are currently 13 Hema supermarkets, with 10 in Shanghai, two in Beijing and one in Ningbo.
Even though the stores look like any other neighbourhood supermarkets, they are fully mobile-powered. This means that customers need to first download the mobile app, create an account and link their Taobao or Alipay account. Customers can then use the mobile app to shop from their homes or offices and get their purchases delivered to them in 30 minutes.
Alibaba Group CEO Daniel Zhang shared that Hema is able to deliver goods in a short period of time as it "leverages data and smart logistics technology to seamlessly integrate online-offline systems." It also helps that each store only serves customers within a 3km radius.
According to Alizila, Hema's biggest differentiating factor is that it allows customers to order fresh seafood, have in-store chefs cook it and get it delivered to them in half an hour. They can also request to take away the cooked food or for the meal to be served in Hema's restaurant area if they are physically present in the stores.
Customers who are in the stores can also use the mobile app to scan the barcode of any product to see its price and product information. They can then pay for the goods through Alipay at the checkout counters before leaving the store.
Since customers shop through the Hema mobile app, every purchase is logged and preferences are saved. Those data will be analysed and used to deliver personalised product pages to customers. The data also enables Hema to use machine algorithms to plan delivery routes.
According to Alizila, Hema's customers each make 4.5 purchases a month on average, and the conversion rate for making a purchase is as high as 35 percent.
Despite the promising results, Alibaba does not intend to operate a large grocery store, said Zhang. The company is using Hema to demonstrate the benefits of "New Retail" to customers and other businesses that want to digitally transform themselves.
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