Alibaba’s offline business is growing

Date : 20 September 2018

At its 2018 investor day, Alibaba stated its offline Hema stores are key to its strategy.

Hema outperform traditional stores by five times

Alibaba currently has 64 of its high-tech Hema supermarkets in 14 Chinese cities, with 10 million active shoppers per year. Hema specialise in fresh foods, with in-store foodservice and dining areas for shoppers to enjoy the freshest foods while shopping for daily necessities. About 60% of its sales come from online orders. These stores also double as fulfilment centres.

Hema shopper data is used to make personalised recommendations and order fulfilment. Average daily sales of an established Hema store is said to be US$117K. Annual sales of such stores are said to be five times that of traditional stores.

Banking on multichannel retail model

In recent years, Alibaba has been making heavy investment in offline retailers to help them digitise and offer online services. The data generated is used to improve operations and services. Alibaba is banking on this retail model where online and offline are integrated. Hema stores are a key testing bed for this concept.  CEO Daniel Zhang, who will replace Jack Ma as chairman in a year, is the driving force behind this and said that analytical investment will be a top priority for the company.

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