Starbucks partners Alibaba group to increase the beverage company’s physical and digital presence in China. Kevin Johnson, CEO of Starbucks said that in this agreement, the company will leverage Alibaba’s properties including Hema and Ele.me. This ownership of all properties will help in expansion of delivery service in China. They will also incorporate Starbucks virtual store in all Alibaba group properties.
Starbucks partners Alibaba which will lead to generation of 500 million or even more users to access Starbucks. Starbucks is also expecting to partner with Ele.me which is a food delivery platform. This collaboration will help Starbucks to deliver in 150 stores in Beijing and Shanghai. It will also broaden delivery to 2,000 more stores in 30 cities before the end of this year. Starbucks is also planning to build 600 of “Starbucks delivery kitchens” which will provide service delivery to surrounding areas in the next several years.
The CEO claims that this partnership of modern retail between Starbucks and top tier technological capability of Alibaba will significantly boost the business.
The Starbucks’ fiscal third quarter has China as the highest growth driver for the company. Chinese market generated 17% revenue for Starbucks while 2% percent fell for retailers. The maximum amount of transactions of Starbucks is coming from China. The CEO said that they might have had a negative 2% sales but with this new partnership with digital flywheel and Alibaba, the digital flywheel in China will rocket fuel the market.
The coffee consumption has tripled in China in the past four years thus, Belinda Wong, CEO of Starbucks China said in Starbucks third quarter conference that this new delivery service will devote to the high standards for delivery service for their customers in China. Starbucks shares closed down at 0.88% for $51.93 and rose slightly after few hours of trading to $52 per share.