Hema is really anxious, following the low price every day, this time to the members of the brake knife.
Recently, many users have found that Hema cannot open and renew X members. In this regard, an insider close to Hema revealed that Hema is vigorously doing discount transformation, and after the price reduction of all goods is completed in the future, there is no need to buy additional members, and you can enjoy low prices.
Two months ago, Hema announced the launch of the discount reform, with the price of more than 5,000 products in offline stores starting on October 13, and the "offline exclusive price" area in the store. At that time, many members complained that they had become a "big wrongdoer" after buying a membership, and they would never renew it after it expired.
According to the data previously disclosed by Freshippo, the direct loss of the cancellation of membership will exceed 500 million yuan. But Hema at the crossroads had to do just that, and after suspending its IPO in November, it had to find its own hematopoietic capacity.
Ali will maintain an entrepreneurial mentality, invest more resolutely, and make more decisive trade-offs", on November 16, Alibaba Group CEO Wu Yongming said at the financial report meeting that for the core business, Ali will maintain long-term focus, maintain high-intensity resources and R&D investment;For non-core businesses, the value of these assets will be realized through earning as soon as possible or through a variety of other capitalization methods.
Recently, there have been rumors in the market that Hema will be **, although it later quickly refuted the rumors, but it is certain that Hema is facing very great pressure.
Don't engage in membership, "give way" discounts
At present, the entrance to paid members in the Hema app has quietly disappeared.
There is a Hema Xiansheng near the residence of Chen Yan, a white-collar worker in Beijing, but she found that the original paid membership entrance in the personal management interface has disappeared. Hema customer service told her that from December 13, due to business adjustments, it is not possible to open or renew Hema X members. As for when the service will be restored, the other party only reminded that it is necessary to pay attention to the message notification on the home page of the app. Some users have also found that expired Hema members can no longer be renewed on the app.
Everything shows that the membership system that Hema Fresh has been implementing for many years is coming to an end. This is exactly 2 months after the start of its discounted transformation.
What should have come is still coming. A paid member of Hema sighed. Previously, with the introduction of offline exclusive prices, the price of goods was cheaper than the membership price, which has made Hema members a little chicken.
It is understood that the paid membership business of Hema Fresh was launched in 2019, when the annual fee was 218 yuan a year, and paid members can enjoy 88% off the whole site on the membership day, various coupons, free vegetables and other rights. In recent years, the paid membership business of Hema Fresh has been adjusted many times, and it has risen to 258 yuan a year.
According to the data at the beginning of this year, the number of paid members of Hema is 3 million, accounting for 5% of the total number of registered members, and the annual membership fee can contribute 58.8 billion yuan in revenue.
The birth of Hema members was once believed by the industry to be a way for Hema to expand its brand recognition among the urban middle class.
But under tremendous pressure from profitability and the shift in the consumer market as a whole, Hema began to adjust rapidly.
In the second half of this year, Hema began to implement the transformation of discounts, and played the low-price card through targeted "moving mountain prices". Around a piece of durian mille-feuille cake, Hema beat the hundred-dollar cake to 470 grams of 39$9. This made Hema taste the sweetness, and Aurora big data shows that from the launch of Yishan Price to the end of September, the average weekly DAU (daily active users) of the Hema app increased by 133%。Subsequently, Hema reduced the price of about 350 Hema fresh offline stores, and more than 5,000 products were generally reduced by 20%.
This is undoubtedly a positive for mass consumers, but it greatly weakens the value of Hema members.
(Picture: The "offline exclusive price" area of the Hema Fresh store).
* 20% reduction, 20% discount, this is not equivalent to canceling the 88% discount for members in disguise?Xiaodong, a member of Hema complained, "I know it's a good thing that it's cheaper, but it's a little unfair to a member like me who pays for it." ”
In addition, some of Hema Fresh's products are significantly different from online and offline**: offline stores have reduced prices, and online products still maintain the previous **. For example, a 350ml bottle of Thai Cocoa Mai coconut water, ** the next exclusive price is 39 yuan, on the app is 5$9.
Xiaodong opened the app and said that in the previous member discount, there was still a consumption of 99 yuan to receive food, and you can do it without going to the store, but now this discount is gone;Some of the previous offers are also gone. "It costs money to do a membership, and there is only 88% off some products on a fixed date, so it is better not to do it, and buy whatever you want anytime, anywhere. ”
The Hema Fresh has been reduced in price across the board, and it is becoming more and more similar to Hema Outlet. Hema doesn't just want the urban middle class, it wants to cover the entire customer base rather than screening out some niche customer groups.
Perhaps it is precisely with these in mind that Hema suspended the opening of paid memberships to further "make way" for the discounted transformation. Jiang Han, a senior researcher at Pangu Think Tank, believes that with the intensification of market competition, especially this year's battle between Hema and Sam, it has led to changes in the entire market, and adjusting the membership policy is actually an inevitable choice for Hema to further promote the optimization of the best system.
Why would Hema rather "offend" its members?
It is better to "offend" members than to do it, which shows the determination of Hema to transform into a discount.
On November 22, Hema CEO Hou Yi appeared at the 2023 New Retail Supply Conference to explain the reason for this change. Why change?According to Hou Yi, the decisive battle of the retail industry in the future must be in the store.
China's retail industry is far from competitive, when e-commerce engages in low-price competition, you have no power to fight back. Hou Yi said that the focus of competition is to put the first physical store because the cost of online retail services has grown linearly, and the cost of offline stores is relatively fixed. "If we can be the most competitive, we can achieve the highest operating efficiency and the lowest operating costs in physical stores.
Hou Yi said that he traveled to 4 countries in 10 days in one go, and found through on-the-spot investigation that from the perspective of global retail development trends, discount management has been integrated into the operation of the world's leading retailers, and change is the only way out.
(Photo: Hema 2023 New Retail Supply Conference).
According to the "2023 China Consumer Insights***" released by iResearch, when a product that exceeds the budget range does meet their preferences, only 26% of consumers will choose to spend moderately and pay for loveNearly 60% of consumers will wait for a price reduction.
As early as the end of 2022, at the Hema ** Business Conference, Zhao Jiayu, chief commodity officer of Freshippo, said that the number of users on the platform who pay attention to cost performance has increased from the original 202% to 396%, these users pay more attention to the ** of goods, the price comparison of the platform and the information of discounts;Especially among young people aged 19-25, many people are not willing to pay a premium, they are more willing to experience new products at a low price.
As early as two years ago, driven by the trend of young people focusing on cost-effective consumption, some temporary discount product brands have become popular. But Hema doesn't want to burn money in exchange for the market. Hou Yi said that discounting does not simply mean making low prices, nor is it equal to fighting the best war, "making good goods not expensive, and beating down the best goods and high-end goods is the ability." ”
Hema wants to achieve low prices through ** chain adjustment. For example, give up the past KA model (that is, purchase goods from the hands of the first businessman) and establish a procurement system with "OEM self-production" as the core. And further streamlining SKUs, from more than 5,000 to more than 2,000.
According to the "753 commodity ** system" announced by Freshippo, in the future, KA products will be 7% off the market price**, the market price of private label goods will be 5% off, and the expiring goods will be less than 3% off the market price.
Such an adjustment means that it will touch the interests of the upstream and downstream of the industry at the same time, and it will also put Hema under tremendous pressure. Wang Yuhao, the founder of the tea consumer brand Chabiubiu, once issued an article accusing that the price reduction of Hema is equivalent to passing on all the losses to the top businessmen.
At the new retail supply conference, Hou Yi emphasized that de-KA refers to saying goodbye to the KA model, but not abandoning the KA brand. At the meeting, brands including New Hope, Jinmailang, Kashi Dairy, etc. reached new order signing agreements with Freshippo, and more customized cooperation between some Ka brands and Hema is also underway.
In the newly launched "Moving Mountains and Fighting Cattle" project, Hema announced a comprehensive price reduction for Angus 150-day grain-fed beef. On December 1, Hema has reached cooperation with three companies, Nulandi, Yueshengzhai and Tianpu Leshi, on the establishment of direct procurement exclusive pastures overseas.
After the First World War of Durian Mille-Feuille, some netizens joked on social ** that Hema "moved mountains", and it was Sam who moved. But if Hema wants to wrestle with Sam, it is not easy to say.
Zhuang Shuai, founder of Bailian Consulting, said that Sam's core is the ability to improve the membership renewal rate, and to achieve it, it needs exclusive ultra-low-priced products, strong self-label product development capabilities, and super-large physical store operation and management capabilities. "These comprehensive capabilities are very demanding, and it is difficult to find retailers in China that can compete with Sam's and Costco. ”
Adjusting the existing membership system has also become the inevitable price to pay on the road of Freshippo's discounted transformation. There are also voices in the market who are worried about whether the group of mid-to-high-end consumer groups screened out through paid members will abandon Hema because of this.
For 100 billion GMV, Hema fought hard
Frequent use of the knife shows that Hema is really in a hurry.
More than a month ago, on November 16, Alibaba disclosed in its third-quarter earnings report that Hema had put its plans to go public on hold and that the company was evaluating market conditions and other factors necessary to ensure successful project implementation and enhanced shareholder value.
In March this year, Alibaba announced the launch of the "1+6+N" organizational change, "1" refers to the full holding of Alibaba Group, "6" refers to the six major business groups of Cloud Intelligence, Taotian, Local Life, Ali International Digital Commerce, Cainiao, and Dawen Entertainment, and many business companies such as Hema and Ali Health, Fliggy, Quark, and Sun Art Retail are included in the "N". Soon after, according to Alibaba's public information, Hema became the first batch of Alibaba's subsidiaries to go public.
In just a few months, Hema changed from the vanguard of Alibaba's spin-off to a postponement of the IPO. Behind this, of course, there is a change in the group's adjustment strategy, but for Freshippo, it also needs to sort out the profit model, improve the hematopoietic capacity, and tell a story that the capital market is more interested in, so as to bring more confidence to investors in the future.
After walking independently", the profitability of Hema has always been a concern for the outside world. Alibaba's 2023 fiscal year annual report shows that Hema is still in the red. In January this year, Hou Yi said in a letter to all employees that in 2022, its main business Hema Xiansheng has achieved profitability. Later, in an interview, he also revealed that the overall business of Hema has achieved profitability in the fourth quarter of last year and the first quarter of this year.
According to LatePost, the overall GMV of Hema in 2021 will be 34 billion yuan, and in 2022 it will reach about 45 billion yuan, and this year's GMV target for Hema is 100 billion yuan. The pressure on the shoulders of Hema is still not light.
At the same time, Hema is also aware of the changes in the consumer environment. The Boston Consulting Group argues that globally, the middle class has become more rational in their consumption and is no longer willing to pay an "IQ tax".China's retail market has reached a time when it "has to change", and it needs product differentiation and vertical integration of the first chain, which is a market law.
Hou Yi is a person who is never afraid to try to innovate. Over the years, Hema has tested a variety of retail formats, including Hema Station, Hema Lane, Hema Vegetable Market, Hema F2, Hema Mini Store, Hema Neighborhood, Hema X Membership Store, Hema Outlet, and Hema Premier. Hema is also gradually closing businesses that do not see profit prospects. For example, the Hema Station was closed after a year, and the Hema neighborhood was shut down at the end of 2022. However, this also shows that there is still a long way to go in the retail sector of Hema **.
Now, the "troika" of Freshippo's main business formats - Hema Outlet Store, Hema Fresh Store, and Hema X Membership Store have been determined. Next, Hema wants to try to tell a story of "discount management" during the period of great retail change to adapt to the new consumer market demand.
Hou Yi said bluntly before, "This is a battle of life and death, and if you can't win it, there will be no future." ”
The consumer in this article is a pseudonym).
Author |Yang Jie.
Edit |Chen Fang.
Operations |Jia Tianyu.