The recent tie-up between Starbucks and Chinese e-commerce giant Alibaba to offer coffee delivery has caused quite a buzz in the industry.
For one thing, it’s the first time the US-based coffee chain has gone into the online food delivery business. For another, it highlights how Alibaba is accelerating efforts to form relation-ships with offline merchants and service providers.
The new delivery service, utilizing Alibaba’s one-stop shopping space Hema Fresh Market and its on-demand food delivery platform Ele.me, which has 3 million delivery riders, will connect to Starbuck’s existing outlet network.
It’s not yet clear how smooth the system will work, nor how Starbucks staffers will divide their time serving customers from different sales channels.
Trial operation on the new service, which will dispatch coffee orders from existing Starbucks outlets, will begin with 150 stores in Beijing and Shanghai next month, expanding eventually to more than 2,000 Starbucks outlets in 30 mainland cities by the end of this year.
Hema Fresh Market sites will also be altered to add coffee stalls that can make coffee to Starbucks’ specifications and serve as dispatch centers.
The new partnership may be part of Starbucks’ plans to buck up trade. In the second quarter, same-store sales at Starbucks China fell 2 percent. The Seattle-based company has announced plans to add 600 new outlet a year in the next five years, taking its domestic presence up to 230 cities.
Established coffee chains are facing competition from the many small coffee shops springing up everywhere in China. Such enterprises require relatively small startup capital.
Starbucks has denied that its Alibaba partnership was prompted by local competition, insisting that negotiation for the venture began a year ago, with many factors to iron out to ensure that consumers receive the same brew whether they are ordering in-house or online for takeaways.
In 2017, consumption of ready-made coffee drinks away from home in first- and second-tier cities dropped 8.5 percent, while growth in the packaged beverage sector was booming, according to research firm Kantar Worldpanel.