Just one day after debunking rumors of being sold, Hema experienced a major high-level adjustment.
On March 18th, Interface News learned that Hou Yi officially stepped down as CEO of Hema and will serve as Hema's Chief Honorary Advisor in the future. Hema's Chief Financial Officer, Yan Xiaolei, will become the new CEO.
Alibaba Group CEO Wu Yongming also informed Hema employees of the above-mentioned personnel changes through a full staff email. In the letter, Alibaba highly praised Hou Yi's contributions to the start and development of Hema, and referred to him as an honorary retirement.
An insider close to Hema told Interface News that the email content for the personnel change was very concise. Regarding Yan Xiaolei (flower name: Baihe), the current CFO of Hema who also serves as CEO, Wu Yongming commented in an email that she is very familiar with the business team and has sharp business insights. "We look forward to taking Hema's development to the next level under her leadership."
Yan Xiaolei joined Alibaba in 2016 and served as the financial manager of UC Business Unit and Intime Group. He has been serving as CFO since joining Hema in 2018. The above individuals are not surprised that Yan Xiaolei can take over as CEO. In the past few years, Yan Xiaolei has been in the core management position of Hema.
As the "number one project" of Alibaba's new retail, Hema has been highly anticipated since its inception in 2015, and Hou Yi has been serving as the CEO of this business, leading Hema to expand its territory.
In March 2016, Hema received an investment of $150 million from Alibaba; In 2017, Alibaba founder Jack Ma and then Alibaba CEO Zhang Yong personally visited the stores, and Hema Fresh, which had been preparing internally for more than two years, officially surfaced. That year, Hema opened 18 stores in one go. As of now, Hema has over 360 stores and tens of millions of users in 29 cities.
Before joining Alibaba in 2015, Hou Yi had many years of work experience in the offline retail industry. In 2009, he joined JD.com and successively served as the Chief Logistics Planner and President of the O2O Business Unit of JD.com Logistics. After joining Alibaba to establish Hema and serving as CEO, he also served as the President of Alibaba's Agriculture Division in 2019.
Hou Yi helped Hema establish a new retail system from scratch, integrate digital management systems, and define new supermarket service experiences and business forms. As one of the founders, Hou Yi is well-known to the outside world for his innovation and distinctive personal style.
The development of this business model also represents a microcosm of Alibaba's thinking on new retail strategies.
The concept of "new retail" was first proposed by Jack Ma at the Yunqi Conference in 2016. He said that the era of pure e-commerce will soon come to an end, and in the next ten or twenty years, there will be no concept of e-commerce, only the concept of "new retail". Starting from this, Alibaba has also begun to lay out its presence in the new retail field.
In addition to Hema, Yintai and Gaoxin Retail are also important experimental fields for Alibaba's "new retail". In 2017, this large Internet company privatized Yintai with HK $19.8 billion and invested HK $22.4 billion to acquire 36.16% of the shares of Gaoxin Retail in the same year.
At this point, Alibaba has taken Taobao and Tmall as its online foundation, while offline it has gathered a new retail army consisting of Hema, Intime, RT Mart, Suning, Surprise Home, and Village Taobao.
In recent years, with the impact of the epidemic and changes in consumer attitudes after the epidemic, the offline retail industry has collectively been impacted. Yintai and Gaoxin Retail have not brought impressive performance to Alibaba, and even in the past period of time, Gaoxin Retail has been in a declining revenue channel, and the problem of losses has not been improved.
As Hema continues to expand nationwide, the supply chain and fulfillment costs are being tested. Profitability has become a problem that Hou Yi has had to face in the past two years.
From 2022 to 2023, through the improvement of operational efficiency, Hema achieved growth in same store sales and significant losses, and even the main business model Hema Fresh achieved profitability in 2022. Hema has also extensively explored various retail formats, but overall profitability remains a major challenge.
Hema had the opportunity to further expand its scale through the capital market. In May 2023, the board of directors of Alibaba Group approved the plans for Cainiao, Alibaba Cloud, and Hema to go public within 5-6 months. There are rumors that Hema's valuation could reach $6 billion to $10 billion. However, only six months later, the plan was shelved due to the industry's belief that the market generally gave low valuations to consumer enterprises, which did not meet expectations.
Afterwards, there were rumors that Hema was actively seeking to introduce new strategic investors. Regarding the suspension of Hema's IPO, Alibaba Group Chairman Cai Chongxin once stated that "the current market conditions cannot reflect the true intrinsic value of these businesses." However, he emphasized that the company will continue to explore creating value through separate financing of different business units. Given the challenging market situation, it will not be rushed.
For Alibaba today, focusing on core businesses and revitalizing the growth of e-commerce and cloud computing is the primary goal, while integrating or exiting non core businesses is an inevitable option.
In the past February, Alibaba Group Chairman Cai Chongxin responded to rumors of "Alibaba exiting physical retail" at a financial report meeting, saying, "Currently, Alibaba still has some traditional physical retail businesses on its balance sheet, which are not the core focus business. Ali's exit is also reasonable. However, considering the current market situation, the exit may take time to achieve."
In fact, there have been frequent rumors of Hema selling recently. On March 17th, there was market news that "Alibaba has basically confirmed the sale of RT Mart and Hema to COFCO internally, with RT Mart estimated at around 10 billion yuan and Hema estimated at around 20 billion yuan. The framework agreement between the two sides has been drafted." Both Hema and RT Mart denied this.
This is not the first time that Hema has reported being sold. In December 2023, Hema debunked rumors about the market news of being sold by Alibaba. In February 2024, a spokesperson for Hema once again denied market rumors that Alibaba was considering selling several consumer industry assets, including its grocery business Hema. Therefore, a series of actions such as Hema's changes, employee adjustments, and salary cuts have become a topic of external attention recently.
As for how Hema will go in the future, it will be a suspense left by the new CEO to the outside world.