Introduction

Freshippo (Hema) is a fully offline-to-online integrated grocery supermarket chain in China. The chain targets shoppers looking for fresh, quality ingredients and aims to have at least 2000 stores by the end of 2022.

We studied Freshippo and its most prominent customer experience success factors that differentiate the retail grocery chain from its competitors.

Challenges

On the last leg of a massive public health challenge, the retail industry is facing consumers with new purchasing behaviours and preferences. What used to be normal is now refreshed, with current trends riding on online ordering and delivery services, predictive product recommendations and more. These are a few challenges grocery retail services face:

• Inability to Inability to consistently deliver fresh products on time and on-demand,
• Lacking a seamless online-to-offline buying experience that meets customers expectations, and
• Limited to zero personalisation, undifferentiated experiences

Best practices

1. Value-added grocery experience

Freshippo promises high-quality fresh foods (particularly seafood) at an attractive price point. It adds value by providing customers the option to have their chosen groceries cooked to dine in or to-go. The retail grocery’s ability to offer high-class cooking services with an innovative menu carries a high perceived value.

2. Technology-integrated customer experience, from online to offline

Freshippo offers a similar inventory of groceries online and offline. Customers get to scan QR codes on product labels in physical stores to:

A. Add a product into their online cart

B. Get in-depth product information:

1. Provides information on the farm and province where the fresh ingredients are from
2. Time and date when the product entered the store
3. Recipe ideas
4. Customer reviews

C. Receive personalised offerings and recommendations from Big Data that tracks, learns and understands customers.

1. If customers would like the chosen ingredients to be cooked in-store and dine on-site or to-go
2. Ingredient pairings based on preferences and where to find them (e.g. the red wine by brand X is a great beverage to go with this lobster — You can find it on Aisle 5)

Customers can checkout automatically with RFID-enabled tags or facial recognition. There are also robots delivering dishes and cleaning up after customers, post dine-in.

3. Store as fulfilment centres

Freshippo allows fast delivery. Online customers enjoy free delivery within 30 minutes if their destination is within 3km of a Freshippo store. This also applies to in-store customers who want groceries delivered to their homes. Freshippo offers a range of delivery options from 30 minutes and next-day to 72-hours.

Outcomes

Takeaway

The experience economy has two main components – time well saved and time well spent. From Freshippo, we learn that we can nail these two factors by:

Time well saved – Creating optimal fucntional experiences

• Reimaging shopping experiences with digital

1. Consider building an online grocery platform with real-time inventory updates as the foundation.
2. Elevate your in-store shopper’s customer experience by providing specific in-store product locations through your app

• Building an efficient delivery service

1. A lot goes into nailing a frictionless, fast delivery service. You can build your delivery network or consider partnering with logistics companies to enhance your delivery services. Take Freshippo’s 30-minute delivery time as the benchmark for efficient services.

Time well spent – Creating emotional experiences

• Arming customers with information that matters

1. Provide customers with a sense of security and comfort by giving out information about your products – where it is from, nutritional value, freshness etc.
2. Make the process seamless and improve customer experience by letting your customers access these details in your app

• Provide personalised recommendations

1. Each customer carries a reservoir of data – it’s about accessing it and then using it to fulfil your customer experience goals
2. Customers like to be surprised, while knowing they are also in control. By studying their buying patterns, consider recommending products that complement their usual go-to. It’s different enough to surprise them, but predictable enough not to alarm them. For example, you know your customer constantly buys a particular wine. Contemplate recommending a particular food option that goes well with it.

• Add additional value on top of your core product

1. Do a deep dive into your customer’ journey and identify areas where you get to bring additional value into your customer’s experiences. For example, kickstart a retail grocery that also offers cooking and dine-in options – seeing that customers will need to cook the ingredients after. Customers who opt for these services get to build positive memories that encourage stronger brand affection.

End note

Freshippo (2020) Investor day presentation: Freshippo – Innovating the future of new retail. https://www.alibabagroup.com/en/ir/presentations/Investor_Day_2020_Freshippo.pdf

The Economic Times (2022) Alibaba’s grocery chain Freshippo considers funding at $10 billion value. https://economictimes.indiatimes.com/tech/funding/alibabas-grocery-chain-freshippo-considers-funding-at-10-billion-value/articleshow/88890393.cms?from=mdr