This thesis will go deeper in how Hema’s O2 O model is different from normal O2 O models and what effect this model has on customers and the customer loyalty.The reason I chose this subject is because Hema is a fairly new retail concept that only started in 2016 and it is developing fast.While in China online shopping is not new anymore,online grocery shopping is fairly new and difficult to execute.Fresh groceries are normally goods that people like to see and feel before they make their purchase.Hema combines online grocery shopping with a physical store where consumers can see and feel the products.Another unique part of Hema is that it opened the offline store and online store at the same time unlike normal supermarkets that only open the online store after their physical store.Hema is now a well-established grocery store and everywhere in Shanghai you can see Hema delivery drivers driving around the city.The combination of all these innovative and unique characteristics of Hema sparked my interest and had me decide to further investigate this.Because Hema is quite new and already very popular I investigate in this thesis on which factors Hema focuses to retain loyal customers.The methodology I use is an explanatory single case study,first I use the theoretical framework of the O2 O customer loyalty model to define what the influential factors are to improve customer loyalty.After that I use previous research to define what an O2 O model is and in the next section I explain how Hema’s O2 O model is different from traditional O2 O models.To confirm the differences between Hema’s O2 O model and the traditional model I conducted an interview with the store manager of a Hema store.The interview with the store manager of the Hema store also provided me insights on how Hema keeps customers loyal.The next part are the findings of a recent research on customer satisfaction conducted by other researchers.These findings are used to check what factors make customers choose Hema and connect these with the factors that are important to improve customer loyalty.The last part of the findings consists of four in-depth interviews with Hema customers,in these interviews I asked the customers what they value about Hema and how they got in touch with Hema.The results of these interview helped me to get different insights that I wasn’t able to get from the survey done by the other researchers.These insights are used to confirm what factors customers value about Hema and how Hema uses these factors to improve their customer loyalty.As a result of my thesis I gained a better insight in Hema’s O2 O model and how this affects customer loyalty.The main differences between a traditional O2 O model and Hema’s O2 O model are that Hema combines their supermarket with dining and a supermarket.Another important difference is that Hema combines their supermarket with a distribution center,which allows Hema to decrease their delivery time for online orders to 30 minutes.Hema also uses an application that helps customers have a better view on product’s quality and also provides the customers with a community platform where customers can talk to each other about Hema and their products.With the different findings from different data sources I can conclude that the most important factors for Hema from the O2 O customer loyalty model are product quality and offline experience.The quality of the products is what makes Hema different,Hema offers the best quality products and customers are able to check the quality with the Hema app.With the Hema app customers can trace every product from the place of origin till the delivery to their door.The other main factor that decides the customer’s loyalty is the offline experience on which Hema put a lot of effort.People can go to the offline store and have an experience that they never had before.The customers can catch live seafood and have it cooked in front of them.Also customers can participate in weekly events where they can win gift cards from Hema.With these finding I conclude that Hema focuses on the customer satisfaction strategy to increase customer loyalty.This strategy is built on the customer’s perceived value,satisfaction and trust.These primary factors come out of the product quality,offline experience and other secondary factors.Customer loyalty is also enhanced by the lock-in strategy but this is not what Hema focuses on.The lock-in strategy is mainly derived from the convenience and psychological switching costs which are build on Hema’s convenience and the perfect integration of the Hema app with other Alibaba apps.