Hema built a Costco challenger in China's hottest retail fight — it closed all ten stores

In October 2020, Alibaba's Freshippo opened its first Hema X membership store in Shanghai — a warehouse-format, paid-membership chain built to fight Sam's Club and Costco on their own ground, in the one market where both were expanding fast. By October 2023 there were ten Hema X stores across China's biggest cities, and the format was the centerpiece of Freshippo's growth story.

The format never found its footing. Against Sam's Club, Hema X could not match the global supply chain and local procurement that made Sam's treasures worth the membership fee; against Costco, it faced an assortment that leaned toward an American lifestyle Chinese shoppers did not fully want. Its own product differentiation and in-store experience, the company later admitted, were weak — and its delivery machinery, Freshippo's old advantage, did not transfer to the bulk-buy format. The stores never validated a mature model.

The retreat was total: Beijing, Suzhou and Nanjing stores closed in late July 2025; the last one, Shanghai Senlan, shut on 31 August 2025. Freshippo redirected the money toward what it does better — the core Freshippo stores and Hema NB, a hard-discount community format targeted at 300 stores in fiscal 2025. The case is not that membership retail fails in China — Sam's Club and Costco prove otherwise — it is that a membership store needs a reason to exist that is not 'the incumbent, but local'.

Closed all ten stores and redirected money to core Freshippo and Hema NB, admitting the format lacked proprietary goods and a reason to exist.

Membership retail sells curation, not inventory — Hema X had shelves but not the proprietary goods that make a membership fee feel like a bargain.

Fighting Sam's Club on supply chain and Costco on assortment means competing at the two things they do best, with neither advantage of your own.

Freshippo's delivery strength was the wrong muscle for bulk-buy warehouse retail; the capability that built the parent did not transfer to the format.

Entering an incumbent's format requires a reason the incumbent cannot copy — 'the same model, closer to home' is not a moat, it is a head start for the competitor with the deeper supply chain.