Alibaba Group (NYSE: BABA; SEHK: 9988) announced yesterday that Starbucks will expand its reach to Chinese customers by introducing its mobile order and pay feature “Starbucks Now” to multiple platforms in the Alibaba’s ecosystem including Taobao, digital mapping and information provider Amap, local services app Koubei, and Alipay.
By activating “Starbucks Now” through any of these Alibaba-affiliated apps, users can pre-order and pay for their favorite Starbucks beverage and food online, and then pick up in-person at most Starbucks stores across China.
Previously, this service was only available through the Starbucks China mobile app.
The extended service enables Starbucks to engage with more Chinese consumers through multiple channels that tap into the Alibaba Digital Economy’s user base of nearly 1 billion.
It also gives China’s growing number of coffee lovers the added convenience of having their online orders ready for pick-up at the store location of their choice whether on the way to the office or on an adventure in an unfamiliar city.
On Alibaba’s e-commerce platforms, including Taobao and Tmall, more than 18 million Chinese consumers bought RMB 2.5 billion worth of coffee products in the 12 months from 2017 to 2018, up 18% year-over-year.
Insights of Starbucks and Alibaba’s strategic partnership
Starbucks and Alibaba announced their strategic partnership on August 2, 2018, in Shanghai. It involves multiple digital channels from the Alibaba ecosystem, including Ele.me, Hema, Taobao, Tmall, Koubei, and Alipay.
They announced plans to leverage Ele.me’s on-demand platform to pilot delivery services in Beijing and Shanghai in September 2018. And, this delivery program will expand across 30 cities to more than 2,000 stores in China by end of 2018.
Starbucks will partner with Hema supermarkets to create “Starbucks Delivery Kitchens” specifically designed for Starbucks delivery order fulfillment, further expanding delivery capabilities while ensuring the highest levels of the third-place in-store customer experience.
Both will co-create an unprecedented virtual Starbucks store that will integrate multiple platforms across Starbucks and the Alibaba ecosystems, to enable a seamless and even more personalized experience for members to register, redeem benefits and enjoy an extensive range of services.
“Thanks to the elevated customer experience delivered by our over 45,000 partners, Starbucks is growing and innovating faster in China than anywhere else in the world,” said Kevin Johnson, president and chief executive officer, Starbucks Coffee Company.
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.
The strategic partnership is part of Alibaba’s broader New Retail push, which aims to transform how commerce is conducted by merging online and offline experiences. New Retail was introduced by Alibaba in 2016 and has since become a trending topic in China’s retail industry.
Both Starbucks and Ele.me collaborated to develop a unique, customized delivery infrastructure that has been meticulously determined each step along the way, including dedicated Ele.me delivery riders, precise delivery time, and custom carriers.
Both companies have created a tailored order-to-delivery Starbucks program that upholds the unparalleled experience and quality that customers have come to expect in Starbucks retail stores. Through this delivery partnership, Starbucks and Ele.me have pioneered a best-in-class coffee delivery service standard for Chinese customers.
In addition, Starbucks will partner with Hema supermarkets to be the first retail brand to establish dedicated “Starbucks Delivery Kitchens” within their locations. The “Starbucks Delivery Kitchens” will utilize Hema’s distinct fulfillment and delivery capabilities to complement the delivery of handcrafted Starbucks coffee and tea beverages offered through existing Starbucks stores.
Starbucks will also leverage Hema’s highly effective consumer insights and unique fulfillment expertise to further penetrate and better serve the needs of individuals and families in communities across China.
This intentional strategy will inform the future network planning for new Starbucks stores, combined with “Starbucks Delivery Kitchen” locations, to further expand the scale and reach of Starbucks delivery services,while enabling our partners (employees) to continue to elevate the third-place experience for the customer.
Starbucks will open “Starbucks Delivery Kitchens” in selected Hema supermarkets in Shanghai and Hangzhou as soon as September 2018, with plans to expand its presence to other cities over time.
A key strategic initiative under the partnership is the development of a pioneering, first-of-its-kind virtual Starbucks store in China. This digital partnership will see Alibaba develop a centralized online management hub, with the unique capabilities to integrate and deliver a consistent Starbucks Experience across multiple digital platforms.
This innovation will transcend the traditional limitations of a single-app visit by providing the consumer an elevated, and even more personalized Starbucks digital experience across the Starbucks app and Alibaba’s customer-facing mobile apps, including Taobao, Alipay, Tmall, and Koubei.
This latest innovation will revolutionize the traditional offline-to-online model by effectively extending the reach of the Starbucks Experience into the everyday lifestyle ritual of the Chinese consumer, regardless of time or place.
Whether it is at home or in the office, within a Starbucks store or online, Starbucks customers will be able to access and enjoy a one-stop Starbucks Experience when purchasing merchandise online, buying a Starbucks handcrafted beverage to be delivered to a friend or sending a Starbucks gift of love on the “Say it with Starbucks” social gifting platform.
Starbucks will progressively integrate its Starbucks Rewards (SR) membership platform onto the centralized system to leverage its consumer insights to deliver a truly personalized experience to its customers while establishing a strong foundation for the future development of Starbucks digital experiences in China.