Alibaba's Freshhema Fuels the Early Winter with Hot Pot Service
Freshhema, the trailblazer of the 'new retail' concept initiated by Alibaba, is marching on the hot pot market. The most likely to be standardized cuisine in China is expected to bring some warmth to the Freshhema with new ideas.
Freshhema (盒马鲜生), Alibaba's subsidiary in the fresh grocery sector, has launched a brand new service – hot pot, available in all of its stores in China.
On October 17, 2019, the CEO of Freshhema Hou Yi (侯毅) announced that the offline stores now offer several kinds of hot pot for consumers in the dining area, including the traditional Sichuan spicy one, Chaoshan beef pot, Hainan coconut chicken flavor, etc. This new line of service will also be provided online while evolving in the future.
China welcomes a extremely cold autumn this year, implying an early start of the peak season of the hot pot business. The time Freshhem chose to layout the new service shows its demand for market development and the strategy to tap on the catering industry more aggressively. But why hot pot?
Chinese food has no fixed standards or formulas, depending heavily on the chef‘s technical experience on everything from fire temperature to seasoning. Therefore, the difficulty in standardizing Chinese food has become the biggest pain point restricting its expansion. Hot pot, however, is an exception. Though quite counting on the chef’s technique in chafing the seasoning, there is no significant difference among the dishes in various hot pot restaurants. Materials can be produced, distributed and standardized relatively easily.
The delicious and fun communal eating experience that hail from Eastern China is expected to be a CNY 70 million (USD 9.89 million) business in 2022 with a five-year CAGR of 10.2%. Especially the Sichuan hot pot with heavy oil and spicy taste of the mixture in the chafing dish is addictive, which tends to bring more returnees and sustainable income.
On the other hand, the online ordering hot pot service has been facing problems in slow delivery, less variety in dishes and the ability to retain freshness. Freshhema who keeps fulfilling its orders within 30 minutes in its 3-kilometer business circle, will pose challenges to other players of online hot pot service, as well as other fresh grocery counterparties such as Miss Fresh, 7-Fresh and Super Species.
However, the high delivery cost that has hovered over the fresh grocery market might be heavier once the online hot pot delivery service is on, dragging the company further from a state of profit.