The Dark Horse of New Retail ——FRESHIPPO

In the digital economy era, the amount of data generated by online app is amazing. According to IDC statistics, the annual global production volume will soar from 16.1ZB in 2016 to 163ZB in 2025(Feng.ifeng.com, 2019). Due to the vigorous development of the Internet economy and e-commerce retail in China, a culture called “stay at home” has emerged in society. Chinese enterprises have also begun to explore their own’ data path’, and FRESHIPPO, a subsidiary of Alibaba Group, is an innovator in retail industry.

FRESHIPPO 1.0

FRESHIPPO 1.0 is an Internet kitchen with online take-out as its main business and sideline for in-store orders and fresh food material sales. FRESHIPPO suffered heavy losses because of this not too innovative business model.

FRESHIPPO 2.0——New Life Driven by Reconstruction and Data

FRESHIPPO summed up the reasons for the previous failure and made innovations in the three aspects of “people”, “goods” and “field”.

https://www.youtube.com/watch?v=uEbYNJZ9iJ4

Innovation in “Human” aspect:

The’ 88 vip’ is a membership that brings together the benefits of Tmall, FRESHIPPO and Are You Hungry, thus breaking the gap between online and offline. Using Alibaba’s e-commerce platform big data to achieve personalized concessions which can give consumers a reason to buy.

Innovation in “Goods” aspect:

FRESHIPPO will label fresh products with QR or bar codes containing commodity information in the transfer warehouse and send the information online. The symmetry of online and offline information solves the standardization problem of non-standard products. FRESHIPPO will screen out products that better meet the individual needs of local people through big data which makes FRESHIPPO breaks the 85/15 principle of modern retail.

Innovation in “Field” aspect:

FRESHIPPO uses the Tyson polygon algorithm to locate sites based on big data, which greatly reduces the requirements for store conditions and saves more rent.

FRESHIPPO reduces the delivery time from half a day maintained by Jingdong Logistics to less than half an hour by setting up a transfer warehouse (stocking) and a front warehouse (saleing) in a “store is warehouse” mode. On-line orders are based on the store’s unique “sorting conveyor belt” and goods not available in the store can be delivered the next day.

In the restaurant area of the store, FRESHIPPO uses a brand-new model in which most dishes are delivered by robots and soup is delivered by waiters. moreover, the food materials are selected by diners themselves, and even payment can be made through face scanning.

Big data is the basis for innovation in these three areas and for new retail in the future. With the support of Alibaba’s big data, FRESHIPPO has achieved the following achievements before July 31, 2018(微信公众平台, 2018):

1. The number of online order turnover is 1.5 times that of offline orders and the average number of online order for a single store is 1200+.
2. Monthly sales Increase in single store is above 10% and the accumulated number of new young customers in single store is more than 20000.
3. The turnover per square meter of mature stores more than 50,000, which is obviously greater than that of traditional supermarkets.

Yonghui supermarket is one of the first enterprises in mainland China to introduce fresh agricultural products into modern supermarkets, so they have a complete industrial chain and rich experience in the fresh food industry(Baike.baidu.com, 2020). However, Yonghui relied too much on the infrastructure network established under the old model when trying to use new technologies(Bilibili.com, 2020), resulting in slow progress(Which was describe in a lecture of an education institude called HUNDUN University). FRESHIPPO successfully achieved disruptive innovation from scratch by using its Alibaba Group’s user data, Alibaba Cainiao’s distribution capability and Alipay’s payment channel. Never before has any retail model been able to reach every customer, which is also an important reason why FRESHIPPO can make such rapid progress.

On November 15, 2018, some citizens said that they found the staff in FRESHIPPO DaNing store had changed the labels secretly, and they moved the time back 6 days(Sohu.com, 2018). The incident also exposed the undisclosed and untraceable nature of FRESHIPPO’s label information sources. Workers can even return expired products to the transfer warehouse and then re-label the products and send them to other stores. This will lead to serious public food safety problems and social trust crisis. Its excessive expansion will also lead to problems in operation and management, because FRESHIPPO’s expansion speed is much faster than the cultivation speed of excellent managers. But I believe that in the future, they will optimize the management efficiency of their stores, rapidly transform and integrate traditional retail chains and launch a sprint to second and third tier cities in China. FRESHIPPO has the opportunity to become a multi-billion dollar business segment and contribute new users to Alibaba’s ecology.

Reference:

Sohu.com. (2018). 盒马鲜生被曝更换日期标签：涉事生鲜73盒_先生. [online] Available at: https://www.sohu.com/a/277681635_590727 [Accessed 6 Mar. 2020].

微信公众平台. (2018). 首次披露盈利数据！新零售学霸盒马走通成功之道 ！. [online] Available at: https://mp.weixin.qq.com/s?src=11&timestamp=1583470694&ver=2199&signature=3lQT1GJ1F*f0PpYOof9OxSo74YRo87h622yeGI2Q8l5keflzBrnpxtsiicdgMnSXrQVEoJXyGfs3aJYR6ipOV3ovrQtIfhiGwZ7J7xLIqZ0*rlR8r68CHEejXNzYrgoa&new=1 [Accessed 6 Mar. 2020].

Baike.baidu.com. (2020). 永辉超市_百度百科. [online] Available at: https://baike.baidu.com/item/%E6%B0%B8%E8%BE%89%E8%B6%85%E5%B8%82/3103040 [Accessed 6 Mar. 2020].

Bilibili.com. (2020). 【公开课】阿里肩上的盒马：新零售的试错、创新和重构. [online] Available at: https://www.bilibili.com/video/av38469885?p=8 [Accessed 6 Mar. 2020].

Feng.ifeng.com. (2019). 互联网成数据宝库，网络数据采集技术推动人工智能发展_大风号_凤凰网. [online] Available at: http://feng.ifeng.com/c/7rEAfa0Xxiq [Accessed 6 Mar. 2020].