Starbucks Partners with Alibaba to Shift China’s Coffee Industry into the Digital World

By Deanne Sheldon-Collins | 03 Aug 2018

The two influential companies plan to reshape the coffee industry in China, with updated delivery services and a virtual store expanding Starbucks across platforms.

Starbucks Coffee Company and Alibaba Group have announced a strategic partnership designed to upgrade the “Starbucks Experience” in China. This move is the latest in Alibaba’s New Retail strategy, a range of initiatives the multinational conglomerate has been rolling out since 2016.

“Our goal is not to get into the brick-and-mortar retail business,” says Alibaba of the strategy, “but rather to help brick-and-mortar operators upgrade and digitize their operations, including the customer experience, inventory management and retail spaces, enabling them to better serve consumers in the digital era.”

Plans for the Starbucks upgrade include partnering the coffee chain with other key Alibaba businesses based in China: online retailing giants Taobao and Tmall, on-demand food delivery platform Ele.me, payment system Alipay, and supermarket chain Hema.

A virtual Starbucks store will take the company to new levels of multichannel trading, incorporating platforms from across both the Alibaba and Starbucks networks. Updated delivery services – including “Starbucks Delivery Kitchens” to be established in collaboration with Hema – will extend the coffee chain’s reach to over 2000 stores across 30 cities by the end of this year.

Kevin Johnson, Starbucks President and CEO, describes the partnership with Alibaba as “transformational”. He says it “will reshape modern retail, and represents a significant milestone in our efforts to exceed the expectations of Chinese consumers.”

Alibaba CEO Daniel Zhang also highlights the initiative’s potential to revolutionise retailing. “Starbucks is more than a destination for premium coffee and we share the same vision to pioneer a new coffee culture and lifestyle through innovation and technology,” he says. “Alibaba is thrilled to expand our existing partnership with Starbucks by leveraging our cutting-edge New Retail infrastructure and digital power to enable an unprecedented experience for consumers. This partnership is again a testament to the success of our New Retail strategy.”

The New Retail goal is to merge offline and online experiences, redefining commerce by integrating and streamlining a range of platforms. CEO of Starbucks China, Belinda Wong, appears confident that her company’s relationship with Alibaba will do just that: “through our partnership with Alibaba, we are breaking the physical and virtual barriers between the home, office, in-store and digital space.”

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