By CHENG Lu
Hema Neighborhood, Alibaba’s community grocery business, ceased operations Monday in Hangzhou and Nanjing, the major cities in the Yangtze River Delta Regions. Hema now operates only in Shanghai where it is headquartered.
The shop managers were told on Sunday evening. Many were shocked for there had been no sign at all that the company was wrapping things up.
Jiemian News called Hema customer service and was told business in Hangzhou and Nanjing was “temporarily suspended,” with no date for reopening.
Community group-buying had been losing money, and employees “just didn’t expect it to happen this soon.”
HOU Yi, CEO of Hema Fresh said in July last year when Neighborhood was launched that “it was the most important strategy of Hema Fresh for the next ten years.” Perhaps he meant “months”?
Within 10 weeks of opening the first store, Neighborhood had more than 400 stores in ten cities and within a year they were all gone except in Hangzhou, Nanjing and Shanghai. Now Shanghai is the only one left.
Hema Neighborhood stores could be found in communities far away from Hema Fresh marts. People place orders and picked them up the next day. Neighborhood stores share the supply chain of Hema Fresh to save on the cost of storage and logistics.
But other costs mounted. Rent for a store in Shanghai is usually 20,000 to 30,000 yuan a month, and the salary of each clerk is more than 10,000 yuan. And there is the cost of fridges and other equipment.
Hema Fresh has been desperately attempting new businesses like Membership stores, markets and pop-up stores, but none of them turns a profit. This year, Hema Fresh started “outlet stores”, which many see as a replacement for the failed community group-buying business.
