After the new CEO took office, Hema's first wave of adjustment has arrived.
On April 17th, Hema announced the reopening and renewal of its membership system, as well as the upgrading and adjustment of its benefits. It plans to resume X Gold/X Diamond membership card opening and renewal services on April 24th, while upgrading and adjusting the rights of the original members. The Nanjing Hema X membership store (Yanziji Garden City store) will be put into trial operation on April 20th, and the effective date for other areas is April 24th.
The shipping fee rule will also be adjusted synchronously: the free shipping fee threshold will be adjusted to 49 yuan. Previously, the freight rates in Beijing, Changsha, and Nanjing were raised to 99 yuan, but this time they have been simultaneously lowered. However, in more than 20 cities such as Shenzhen and Guangzhou, the freight rates have increased from 39 yuan to 49 yuan. In some cities, Hema stores (Hema Fresh Store, Hema Mini Store) offer free shipping for online orders with a total payment of 49 yuan. If the actual payment is less than that, a fee of 6 yuan will be charged per order.
Hema has also added some membership benefits this time. Compared to before April 24th, after resuming renewal and card issuance, Hema X Gold/X Diamond members have added "Every Monday" and "Every Thursday" as optional weekly member days. Members can choose any day as their member day and enjoy an 88% discount; Gold members have added a 1% discount on shopping at X member stores, and gold and diamond members (main cards) can receive X member store birthday gifts and more.
Less than half a year ago, Hema suspended or renewed its membership. The company launched a grand "discount" transformation campaign in October last year, and many products achieved direct price reductions, which conflicted with the optimal position of the original membership system in the channel. Some users believe that membership is meaningless after seeing the "offline exclusive price".
According to Hema's plan at the time, after all products have been reduced in price, there is no need to buy additional members to enjoy low prices, and all users can buy low prices equally.
Since April this year, Hema stores have quietly cancelled the "offline exclusive price" and resumed the same price online and offline. There is a view in the industry that restoring membership while canceling "offline exclusive pricing" may be a correction in Hema's new strategy after a recent change in leadership.
Although Hema has not completely denied the "discounting" reform proposed by former CEO Hou Yi, its actions are no longer as radical as they were a few months ago.
As the founder of Hema, Hou Yi launched the battle for change because he believed that after the pandemic, global economic growth slowed down, consumption was sluggish, and retail enterprises were facing the challenges of the times. Only through self innovation and making products more competitive in price can Hema win this life and death battle.
Despite facing numerous challenges from the outside world, Hou Yi's actions were decisive and radical. After the launch of the discount strategy, Hema's practice of reducing prices and streamlining SKUs has caused some suppliers to criticize. There has also been a series of discussions outside about Hema's increase in packaging fees, changes to the membership system, and employee adjustments and salary reductions.
It's just that Hou Yi couldn't hold on until the last moment. A month ago, Hema underwent a sudden high-level adjustment, and Hou Yi officially stepped down as CEO of Hema. Former CFO Yan Xiaolei took over. When a new round of adjustments is implemented, the future direction of Hema is highly anticipated.
A person close to Hema told Interface News that after the new CEO takes office, there are not many changes that can be seen so far. The adjustment of NB (Neighbor Business) business unit has not yet been implemented, but Hema is overall revising its previous one size fits all transformation, with a pullback in its route. The core middle-class users in the past are once again valued, and "Hema is more like the old Hema.".
At the beginning of Hema's establishment, its user positioning was focused on the "new middle class group", and in recent years, the core of its external competition has also been its loyal middle class users.
Taking the membership system as an example, Hema membership was born in 2020. By the end of 2022, the scale of its paid members has approached 3 million, accounting for only 5% of registered members. However, the annual membership fee alone can contribute to Hema's revenue of 588 million yuan.
For the new management, promoting discounting is fraught with difficulties. On the one hand, it can easily trigger resistance from existing users, and on the other hand, it can lead to many dissatisfaction from suppliers - many of whom have been taken down due to SKU streamlining. Hema can only provide customized low-priced products by deeply binding and cooperating with suppliers, but the market may not give Hema more time.
In addition, there have been successful cases in the industry that focus on high-value users, such as Sam and Costco, indicating that Hema's core advantages accumulated in the past may not be abandoned.
Hema internally divides consumers into 5 levels, L1 to L5, and big data classifies them based on indicators such as user spending power and repurchase rate on the platform.
"Today, Hema regained its focus on L3 to L5 users, which is exactly the same as the original Hema road line." The L3 to L5 levels mentioned by the above people represent some Hema users with consumption potential and strength.
Against the backdrop of the overall contraction of Alibaba's new retail strategy, whether to stay or leave in the future, Hema needs to prove its capabilities.