Starbucks and Chinese retail and tech conglomerate Alibaba Group announced the formation of a strategic partnership to create a coffee delivery service in China. With pilot programs launching in Beijing and Shanghai in September, the initiative will leverage partners such as the Ele.me on-demand food delivery platform while “Starbucks Delivery Kitchens” are planned across Hema supermarkets for order fulfillment.
Ultimately, the two will expand the delivery service to cover 30 cities and 2,000 stores by the end of the year in addition to using Alibaba’s network of brands—including Tmall, Taobao and Alipay—to establish a virtual Starbucks store for personalized online experiences.
In a statement, Starbucks Coffee Company CEO and president Kevin Johnson said, “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. Our transformational partnership with Alibaba will reshape modern retail, and represents a significant milestone in our efforts to exceed the expectations of Chinese consumers.”
With this program, customers will be able to buy beverages using either the Starbucks app or Alibaba’s suite of mobile apps, which include Taobao, Alipay, Tmall and Koubei. Additionally, customers will be able to send coffees to friends and loved ones through the “Say It With Starbucks” social gifting platform, and plans are underway to integrate the Starbucks Rewards program into all systems.
In combination with other initiatives, the partnership with Starbucks is another step in Alibaba’s broader New Retail plans to reshape China’s retail market by merging online and offline platforms.
The New Retail Strategic Opportunities fund was launched in 2016 and has been making strides in transforming retail using artificial intelligence and other technologies. For example, it partnered with clothing brand Guess in July to launch an AI-driven concept fashion store in Hong Kong.
Alibaba has also been investing heavily into out-of-home, putting $2.23 billion into Focused Media, a company that operates outdoor digital screens in Singapore, Hong Kong and China. The company currently claims to reach 200 million Chinese consumers across 300 cities with plans to grow that number to 500 million people in 500 cities.
The e-commerce giant also put $867 million into the physical home goods and DIY retail store chain Beijing Easyhome Furnishings in February, making it the fourth major investment it made into brick-and-mortar type retail stores. The other three include hypermarket (mega-sized big box stores) operator Sun Art, the InTime shopping malls and rival offline electronics retail giant Suning.