A new approach to e-commerce, one that blends the best of different online models, is emerging in China under the description “New Retail.” Hema, a subsidiary of Alibaba, was founded in 2015 and is growing rapidly, demonstrating the power of an omnichannel strategy of merging online and offline grocery shopping experiences that integrates supply chain considerations into the business design. Overall, Hema represents a fusion of the centralised distribution model and store fulfilment model in the typical online grocery distribution. Each Hema store doubles as a distribution centre through an overhead conveyor system, which enables a 30-minute delivery time for customers within 3km of the nearest store. Hema’s approach to transform online grocery demonstrates new possibilities in the future of grocery retail.
Participants will examine different supply chain considerations of online grocery distribution and discover how companies starting with a “clean slate” can create business strategies from these considerations to leverage them into the value proposition. Participants will discuss the interplay between offline and online grocery from both supply chain and customer acquisition perspective. The case also enables rich exchange on the potential future opportunities and limitations of Hema’s approach.