If there was any doubt about the power of digital to drive market growth and dominate the coffee industry, it can be truly put to rest now, as this week saw the announcement of one of biggest industry developments imaginable. The President of Starbucks, Kevin Johnson, confirmed a partnership in China with the Alibaba Group – one of the top ten biggest internet companies in the world.
Johnson described the plans as “rocket fuel”, and outlined the three key pillars of this powerful partnership that will drive the company’s growth in it’s most important international market and reassure nervous investors who have seen competition intensify in recent months, with local brands such as Luckin Coffee challenging the American coffee brand’s dominance in the region.
Image Source: Shutterstock
Here are the three key pillars of the partnership announced:
- Starbucks is opening virtual stores on all Alibaba group properties, giving Starbucks direct digital access to more than 500 million Chinese consumers who use the group’s platforms such as Alipay. This integration is being compared to having the brand completely embedded in each Alibaba platform, similar to the hugely popular Starbucks app. According to Starbucks China CEO Belinda Wong, the virtual stores will benefit from fully integrated membership data between the two brands, and “will include a loyalty program and a centralized platform where they can order coffee, buy merchandise, or gift a coffee to a friend.”
- Starbucks will offer coffee delivery services from over 150 stores within one month, and from over 2,000 stores by year end, leveraging the network of over 3 million drivers available through Ele.me – a Shanghai-based logistics company recently acquired by Alibaba as part of it’s strategy to own the entire eCommerce infrastructure in China. Delivering coffee has been a key differentiator for competitor coffee brand Luckin Coffee, in recent months, and this video describes how the service extends each store’s reach by a multiple of 16 times versus the 500 metre radius that a typical customer is willing to walk to reach a store.
- Starbucks is starting operations to brew coffee outside it’s own store network for the first time in China, with delivery kitchens being installed in Alibaba’s small format supermarket stores called Hema that are already enjoying “blistering success”.
Delivery services dramatically multiply the available area that each Starbucks store can sell coffee to.
The partnership offers compelling digital, delivery and data benefits to both brands and may perhaps serve as an interesting model in other markets as the leading players both online and offline seek to leverage their unique assets for ultimate ownership of customer’s spend. Wong describes an enhanced “end to end digital experience” for customers that Johnson said will “reshape consumer retail in China”.
Undoubtedly a story to watch closely.
Image source: Shutterstock.
Liquid Barcodes is a leading global loyalty technology company specialized for the convenience store and foodservice industries. Our proprietary cloud-based technology platform allow retailers to create and manage their digital marketing campaigns with a proprietary process we call the “customer connection cycle’ to engage, promote and reward customers activities in real-time across digital and media channels.
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We have developed the most advanced loyalty and digital marketing technology platform specifically for convenience store and foodservice retailers globally.
Retailers use our self-service dashboard to create and manage loyalty driven marketing campaigns that increase purchases with their existing customers, as well as effectively target and acquire new customers through partners or paid media channels.
One core component of live loyalty is gamification. We have gamified branding, loyalty and promotions. We believe this approach is essential in order to get customers’ attention and ultimately truly engage them with repeatable actions thereby winning their loyalty.
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Chief Content Officer, Liquid Barcodes and Independent Loyalty Consultant.
With over twenty-five years marketing experience, I specialise in loyalty marketing consulting, managing consumer loyalty propositions, strategy and operations. In addition to working with Liquid Barcodes, my clients have included Telefonica O2, Three Mobile, Electric Ireland, Allied Irish Bank and The Entertainer, as well as Avios – the global points currency for some of the world’s top airlines. I am also a judge for the Loyalty Magazine Awards.