Liquid Barcodes

Resources

Coffee Goes Cashless in China

Paula Thomas, Chief Content Officer, Liquid Barcodes

07/20/2018

Can China’s newest coffee brand – Luckin Coffee – use a smartphone-led digital disruption strategy to beat Starbuck‘s powerful high street presence in China – its biggest international market? This is one of the radical suggestions emerging in the incredible start-up story of the fledgling Chinese coffee chain which has already opened 525 stores since November 2017, despite only launching operations nearly a decade behind Starbucks, which commands a market share of almost 81% in the country. Luckin Coffee is a true digital disruptor – re-inventing the coffee shop concept in a market with explosive potential, with Howard Schultz, executive chairman of Starbucks, predicting that the coffee market in China will achieve the same scale as that of the United States within nine years.

In part because of the speed of their store expansion, and in part because they have courted the association, almost every news story about Luckin Coffee features comparisons to Starbucks – with this high profile publicity just one part of a highly effective marketing strategy that has already driven the company’s valuation to over $1 billion. Together with an internet-style approach to customer acquisition that reflects the female founder‘s digital mindset, the Luckin Coffee launch strategy combines celebrity endorsement with aggressive online and offline advertising and publicity campaigns, along with an disruptive cashless payment policy to sell over five million cups of coffee in just the last four months.

luckin store

Completely Cashless

Luckin Coffee‘s founder, Qian Zhiya, is described as viewing coffee shops like a tech business – targeting the country’s savvy and sophisticated urban population with highly subsidized acquisition offers including:

  • Free coffee when you download the app.
  • Free coffee when you refer a friend.
  • Free coffee when you buy two.
  • Five free coffees when you buy five.

Like many online brands, but rarely in offline stores – to buy or claim a coffee in Luckin Coffee you simply can’t pay with cash – one of the first retail brands in the world to do so. Every coffee (whether free or bought) requires you to download and pay through the company’s app or pay through WeChat. With every free coffee comes a digital profile – a digital connection to the customer – and a highly cost-effective future marketing channel.

luckin coffe app

Pricing Policy:

A key aspect of the Chinese market is the relative cost of Starbucks coffee to mid-market consumer income in the US versus in China – with the affordability of freshly brewed coffee affecting the overall market size and potential. Despite a premium pricing policy, Starbucks has managed to attract a loyal and growing customer base in China creating as a “powerful, independent but complementary engine driving…global growth.”

China is historically a nation of tea drinkers, with coffee consumption actually currently one of the lowest in the world at 5-6 cups per capita per year, compared to over 1,215 in Scandinavia – so the pricing policy to set market rates at approximately 20% lower shows a clear intention by Luckin Coffee to change consumer behaviour by increasing both product affordability and accessibility.

Celebrity Endorsement:

Celebrities in China are increasingly seen as ‘fashion influencers‘, so it’s unsurprising to note that Luckin Coffee has appointed Chang Chen and Tang Wei as brand ambassadors. The two actors feature in the brand’s slick home page video and advertising campaigns both online and offline – using a consistent dominant blue brand background palette to stand out and cut through the media clutter.

Although less well known, and less prominent on the website – Luckin Coffee is also using a ‘coffee celebrity ‘ – Andrea Lattuada to build the brand and train it’s staff – positioning both its coffee beans and its baristas as the best in the world. Lattuada is a the former judge of the World Barista Championships and so brings credibility to the overall product and proposition.

luckin coffee cup

Tang Wei – Actress and Brand Ambassador for Luckin Coffee

Distribution Strategy:

While Starbucks has a huge headstart on the new brand, one channel it hasn’t focused on is coffee delivery, made possible by the affordability of local couriers in China. By contrast, of the 525 Luckin Coffee shops have opened so far, an incredible 44 per cent are effectively “take-out kitchens” – with your drink being free if your order doesn’t arrive within half an hour. However, Qian is clear that any new retail brand should “combine online with offline” allowing the customer to decide how to collect or receive their drink, and once the full store footprint is in place, she expects take-out kitchens will only comprise 15 per cent of the network.

luckin coffee app

Luckin Coffee App Delivery Screens 

Legal Challenge:

Perhaps the most unexpected news in the short history of Luckin Coffee is its decision to launch a legal challenge against Starbucks – accusing the brand of breaking monopoly laws by negotiating lease agreements with landlords that prohibit other coffee brands from operating in the same building. Other accusations include pressuring suppliers to work exclusively with Starbucks. The action has been described by Starbucks as ‘hype’ , who said they “welcome orderly competition…..and creating real value for Chinese consumers”.

Meanwhile, the challenger brand is undoubtedly causing operational concerns to Starbucks, offering significantly higher salaries up to three times higher to poach qualified staff so it’s unlikely the two brands will comfortably co-exist for the forseeable future.

luckin coffee vs starbucks coffee

Ambitious Goals:

Luckin Coffee already describes itself as the world’s leading brand for serving fresh coffees. It’s actually a long way from that position for now, but it will be fascinating to see if the combination of the founder’s ambition, combined with her funding and disruptive model will see this Chinese brand overtake it’s American rival in the same way other Chinese entrepreneurs have beaten established Western players. Whether it’s Alibaba versus Amazon,  WeChat versus WhatsApp, or Didi Chuxing versus Uber, it’s clear that Chinese consumers welcome homegrown challenger brands and for now, the Chinese coffee market seems ripe for digital disruption.

About Us:

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.

How we do it:

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.

Check out some of our exciting/proven results here:

www.LiquidBarcodes.com

About Me:

Paula Thomas

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. 

—————————————————————————————–


Blog post

Everyone Wins With App Games

Games reward customers for visiting an app and encourage them to visit the store. Customers love to feel appreciated, they love a good deal and they especially love winning.  Customers are excited when they get a good discount or coupon. And, they truly feel like winners after playing and winning a game. It is easy […]

Blog post

Liquid Barcodes Connects With Convenience Industry Leaders in Texas

The Liquid Barcodes team networks and learns at 2023 NAG Conference in Austin, Texas. Last week, Liquid Barcodes attended and exhibited at the US convenience industry conference held by the National Advisory Group (NAG). Among those present from the Liquid Barcodes team were Saurabh Swarup, General Manager of North America and Jose Santiago, Head of […]

Blog post

5 Cs of Summer: Cold Coffee, Clean Cars & Convenience

Subscription programs are a great way to secure long-term customer loyalty and revenue. Whether you are providing a subscription for beverages or car washes, securing recurring monthly revenue is imperative to stay competitive.   Summer is around the corner and retail marketers are crafting sunny campaigns to increase customer traffic to the store. Help those […]

Blog post

Circle K Makes a Splash With Car Wash Subscription Program in Europe

Circle K has extended its highly successful car wash subscription program to Norway after successful implementations in the United States, Canada, Denmark, Sweden and Estonia. Circle K’s vast global network of car washes has digitally transformed operations with its revolutionary car wash subscription program. First launched in Denmark and the U.S. in 2020, the program […]

Blog post

Newly Redesigned Brezelkönig App Accepts Payments and Rewards Loyalty

Swiss foodservice chain Brezelkönig releases app update which offers customers the convenience of earning rewards and paying for products with the app in stores.  The recently-updated Brezelkönig app allows pretzel-loving customers to enjoy recognition and rewards for their loyalty. Additionally, the Brezelkönig app accepts payments to make the customer experience even more convenient.  Brezelkönig is […]

Blog post

Sunshine Gasoline Introduces ACH-Only Mobile Payment for Fuel

Florida convenience retailer releases fuel payment app accepting only ACH payment, saving thousands in payment processing fees for the retailer. Sunshine Gasoline upgraded its Max Carwash App to Sunshine Brand featuring a special fuel pay program, powered by C-StorePay by Liquid Barcodes, which allows consumers to conveniently pay for fuel using the app. Customers simply […]

Blog post

2022: An Outstanding Year for Liquid Barcodes and Our Customers

In 2022, Liquid Barcodes witnessed a year of unprecedented growth with customers, products and team members. Every great business has an inspiring founding story and Liquid Barcodes’ 10-year journey is inspiring the future of loyalty. Beginning as a startup in Norway, the company opened its second office in the United States in early 2022 and […]

Blog post

What Is C-StorePay?

Liquid Barcodes’ proprietary C-StorePay makes paying for fuel, in-store merchandise, and subscription programs convenient for customers, reduces credit card fees for retailers, and integrates easily into existing loyalty programs Announced in October 2022, the revolutionary Liquid Barcodes C-StorePay product rose to the top of retailers’ 2022 wish lists at the NACS Show, even achieving a […]

Blog post

Polish Retail Leader Żabka Launches Coffee Subscription Program

Polish retail giant, Żabka introduces a monthly coffee subscription program across its vast store network. With its new coffee subscription program, Żabka Polska will certainly dominate the beverage category in Poland’s unique convenience market. In July 2022, Dr. Adam Manikowski, Managing Director of Żabka Polska, was featured on the popular Global Convenience Store Focus video […]

Blog post

Loyalty Apps Engage Customers

98% of loyalty app users love using a loyalty app and want more features from it. In September 2022, NACS published a report examining customer engagement with convenience loyalty programs. Unsurprisingly, customers feel most engaged, appreciated and valued by the stores to which they belong in a loyalty or membership program – nearly ¾ of […]

Blog post

Save Thousands in Credit Card Fees With ACH

Visa and Mastercard announced an increase in interchange fees earlier in the year and retailers are taking action and sending a message by migrating their customers to new solutions, including mobile app-based ACH payments, and in the process increasing profits by not only reducing credit card fees but also boosting loyalty via innovative app-based incentive […]

Blog post

Maxol Launches First-of-Its-Kind Loyalty App

Maxol, Ireland’s largest family-owned forecourt and convenience retailer, announced it has launched a new customer loyalty app with never-before-seen features in the Irish market. After more than a century serving Irish customers, Maxol’s 240+ stores and service stations are located throughout Ireland and have enjoyed global recognition for their best-in-class operations, store design and offers. […]

Blog post

Delivering Personalized Content With Machine Learning and Image Recognition

Build personalized customer connections, improve efficiency, and make intelligent, data-driven decisions using machine learning and image recognition.   It’s 7:15 in the morning and a customer – Amy – is on her way to work. She is on the hunt for coffee and breakfast and stops at a convenience store. She opens her store app […]

Blog post

Circle K’s Use of Beacon Technology to Activate Car Wash Subscription Program

Beacon Technology and Car Wash Subscription Programs Beacon technology used in tandem with a customer-facing car wash subscription program revolutionizes the customer experience by providing a quick, convenient experience. Innovation is the key to continued growth and ensuring a frictionless customer experience should be top of mind for any retailer. Circle K’s vast global network […]

Liquid Barcodes

Put a rocket under your loyalty program

With our loyalty platform, we help design and operate world-class, tailor-made subscription and reward programs that make sure your customers always come back.

Book a Demo →

We are trusted by global brands.

Convenience retailers all over the world have engaged and rewarded consumers with our tailor-made loyalty programs.

To our case studies →

Liquid Barcodes
Liquid Barcodes
Liquid Barcodes
Liquid Barcodes

Convenience retailers all over the world have engaged and rewarded consumers with our tailor-made loyalty programs.

To our case studies →

Liquid Barcodes
Liquid Barcodes
Liquid Barcodes
Liquid Barcodes