TECHNOLOGY

Starbucks makes big digital deal in China

BY Deena M. Amato-McCoy

A new partnership is expected to help Starbucks Corp. expand its digital presence in one of its fastest-growing — and key — markets.

The coffee giant is teaming up with Chinese e-retailer Alibaba, a move that will enable Starbucks to extend its brand to more customers in China — both online and in stores. To support the plan, Starbucks will leverage key businesses within the Alibaba ecosystem.

First, Starbucks will leverage the Chinese e-retailer’s on-demand platform, ele.me, to offer delivery services throughout China. The service will include dedicated Ele.me delivery riders, precise delivery time, and custom carriers. The program will launch in 150 stores in Beijing and Shanghai in September, then expand to more than 2,000 stores in 30 cities by end of 2018.

To further bolster its delivery network in the country, Starbucks will also create “Starbucks Delivery Kitchens” in Alibaba’s Hema small-scale supermarkets. These locations will be tasked with fulfilling delivery orders to customers in surrounding areas. The first Starbucks Delivery Kitchens will open in selected Hema supermarkets in Shanghai and Hangzhou in September, and more will be added in other cities over time, Starbucks reported.

The coffee retailer is also building its mobile app into many of Alibaba’s e-commerce sites and customer-facing apps, including Taobao, Alipay, Tmall and Koubei.

“Through our partnership with Alibaba, we are breaking the physical and virtual barriers between the home, office, in-store and digital space,” said Belinda Wong, CEO Starbucks China. “[We are] 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.”

These enhancements coincide with Starbucks’ aggressive Chinese expansion plan, which is already underway. In May, the coffee giant announced plans to build 3,000 stores — 600 net new stores annually — during the next five years in Mainland China, which will double the market’s store count from its current 3,300 locations. Starbucks said it expects to more than triple revenue and more than double operating income in China by the end of fiscal year 2022 from fiscal year 2017.

Starbucks kicked off the plan in June, when it opened its newest multi-level flagship format in the Beijing Fun shopping area. It will be Starbucks’ largest store globally (aside from its Roasteries concept).

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