The American coffee company and the Chinese retailer will benefit from mutually complementary strengths
Starbucks has announced an extension of the collaboration agreement with Alibaba for their Chinese business. It’s a move that will see several businesses within the Alibaba group, including delivery platform Ele.me and Hema supermarkets, work to strengthen the coffee giant’s infrastructure in China.
According to Kevin Johnson, president and chief executive officer, Starbucks Coffee Company, the chain is growing and innovating faster in China than anywhere else in the world. “Our transformational partnership with Alibaba will reshape modern retail, and represents a significant milestone in our efforts to exceed the expectations of Chinese consumers. Starbucks China is one to watch, and I have full confidence in the team that will bring the new innovation behind the Starbucks Experience to life,” he said.
“Starbucks is more than a destination for premium coffee and we share the same vision to pioneer a new coffee culture and lifestyle through innovation and technology,” said Daniel Zhang, chief executive officer of the Alibaba Group. “We are thrilled to expand our existing partnership with Starbucks by leveraging our cutting-edge New Retail infrastructure and digital power to enable an unprecedented experience for consumers.”
New retail describes Alibaba’s strategy, launched in 2016, to enable a blending of online and offline commerce. Rather than focusing on converting online users to offline and vice versa, the group is attempting to build a unified retail experience.
Among the first initiatives to come out of this deepened partnership is a pilot to delivery services in Beijing and Shanghai using Ele.me’s on-demand delivery platform, which already has three million registered riders. This will launch in September 2018, initially in 150 stores, but by the end of the year Starbucks aims to expand the delivery programme across 30 cities to more than 2,000 stores.
Supporting the delivery set-up will be another aspect of the collaboration as another company in the Alibaba ecosystem, Hema supermarkets, will create a series of Starbucks delivery kitchens.
These will utilize Hema’s fulfilment and delivery capabilities to complement the delivery of handcrafted Starbucks coffee and tea beverages offered through existing Starbucks stores.
A key component of the collaboration is the creation of a virtual Starbucks store in China, which will see Alibaba create an online management hub that can deliver an integrated customer experience through multiple platforms, making use of the Starbucks app as well as Alibaba’s customer-facing apps.
With this ambitious development, the two companies have set out to build on their individual retail and technology strengths to improve the customer experience. “Through our partnership with Alibaba, we are breaking the physical and virtual barriers between the home, office, in-store and digital space, making China the first Starbucks market to deliver a seamless Starbucks experience across all facets of our customers’ lives and further reflecting the uniqueness and strategic importance of the market,” concluded Belinda Wong, chief executive officer, Starbucks China.
Starbucks entered mainland China in 1999 when it opened in the China World Trade Building in Beijing. Today it has 3,400 stores in more than 140 cities.