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Bricks and Mortar Retail Ecommerce

Alibaba merges online and offline shopping experience with three new physical stores


By Danielle Long, Acting APAC Editor

July 18, 2017 | 4 min read

Alibaba has launched three new Hema supermarket stores in China, as it continues to expand its integrated online and offline retail strategy.

Alibaba Hema

Alibaba launches three new Hema stores in China

The Hema stores are part of Alibaba’s “new retail” strategy, which aims to seamlessly integrate online and offline shopping. Alibaba launched the brand in 2015 in a bid to reinvent traditional supermarkets and transform the grocery shopping experience.

With Amazon recently buying Whole Foods, the competition between Alibaba and the US ecommerce giant is heating up.

In the new stores Hema enables consumers to shop, order groceries for home delivery and eat in-store, all via a dedicated Hema app, which is linked to Alipay.

In the store, consumers can scan barcodes to purchase items and make payments, all via the app. The app also enables users to order fresh food – including live seafood – to be cooked and eaten in-store.

Consumers living within 30 minutes of a Hema store can use it as a fulfillment hub to order online groceries for home delivery. Alibaba said online orders account for more than 50% of total orders.

The app utilises Alibaba’s big data and technology to create personalised recommendations including curating fresh food and products tailored to consumers locations.

Daniel Zhang, CEO of Alibaba Group, said in a statement: “We believe the future of New Retail will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that's taking place. Hema is a showcase of the new business opportunities that emerge from online-offline integration.”

The three new stores brings Hema’s total to 13 stores across Beijing, Shanghai and Ningbo.

According to data from Alibaba, Hema sales are three to five times higher per unit compared to traditional supermarkets with users averaging 4.5 purchases per month and 50 per year.

The app also boasts high conversion rates with 35% of those who opened the app making a purchase.

Ecommerce in China accounts for almost 15% of total retail with a large portion of this driven by mobile commerce. Alibaba said China is “racing ahead” of the US and other markets as it becomes “the world's biggest test lab of merging the online and offline worlds”.

“Hema is the most advanced manifestation of New Retail to date the world has seen, completely transforming the grocery shopping experience as we know it,” Alibaba said in a statement.

It is the latest move by Alibaba as it seeks to extend its merge online and offline retail. Earlier this year the ecommerce giant signed a strategic partnership with China’s largest supermarket operator Bailian Group, while last month Alibaba purchased a stake in the Bailian Group’s largest chain Lianhua Supermarket.

Alibaba’s rival ecommerce site has also been moving into physical retail by partnering with rural convenience store owners in a strategy to launch 1 million branded stores across China.

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