Starbucks is broadening its ongoing relationship with Alibaba, forming a partnership under which the U.S. coffee colossus will work with the Chinese marketplace maven's subsidiaries and technology platforms to augment the customer experience for Starbucks customers in China, according to a Starbucks press release.
Starbucks plans next month to start using the on-demand platform of Ele.me, the food delivery and catering company Alibaba acquired earlier this year, to pilot delivery of Starbucks orders in Beijing and Shanghai. The delivery program is expected to expand by the end of this year to into 30 cities, covering orders from more than 2,000 stores.
Starbucks and Alibaba also plan to develop a virtual Starbucks store for Chinese customers, with Alibaba creating a centralized online management hub to drive a consistent and more personalized "Starbucks Experience" across multiple digital platforms, including the Starbucks app and Alibaba's customer-facing mobile apps Taobao, Alipay, Tmall and Koubei.
These two international giants have danced together before. Late last year, Alibaba contributed technology to a mobile augmented reality app designed to enhance the experience of customers roaming the vast roaster location Starbucks had recently opened in Shanghai. This week's announcement, however, indicates a much broader working relationship.
While Starbucks has been aggressive about expanding its physical store presence in China and establishing a vibrant coffee market where there wasn't one before, it has not been as aggressive there on the digital side (as the New York Times coverage of this week's news also pointed out.)
Perhaps that isn't surprising from a company that closed its U.S. web store last year, but China is a different market. The country is one of the most cutting-edge markets in the world when it comes to digital mobile payments (Alipay) and advanced delivery platforms (Ele.me, like others in China, has been pursuing drone delivery, an opportunity developing much faster in China.)
Part of the delivery plan that Starbucks and Alibaba are hashing out calls for "Starbucks Delivery Kitchens" to be established in the Shanghai and Hangzhou locations of Alibaba's fast-growing Hema supermarket chain. So, there is a physical aspect to this joint strategy, and Starbucks said that ultimately its developments with Alibaba companies will inform future network planning for new Starbucks stores.
Starbucks appears to be entrusting a lot of its digital strategy in China to Alibaba and its affiliates, but it's hard to argue against that plan, as those companies have both the market experience and the technology pedigree to help Starbucks deliver on its digital goals.