Global coffee chain Starbucks (NASDAQ: SBUX)announced that it has formed a deep, strategic “New Retail” partnership with Alibaba Group Holding Ltd. (NYSE: BABA) in order to increase the coffee chain’s physical and digital presence in China. The partnership will leverage all of Alibaba’s properties, including Ele.me, Hema, Tmall, Taobao, and Alipay. Starbucks announced plans to pilot delivery services beginning September 2018.
"We're going to integrate a Starbucks virtual store into all of the Alibaba Group properties," told Kevin Johnson, Chief Executive Officer of Starbucks, to CNBC’s “Mad Money” host Jim Cramer.
"This means that a customer that uses Alipay or Taobao or Tmall or Hema has an integrated Starbucks virtual store similar to the mobile app embedded right into that experience," the CEO said. "That opens up 500 Million or more active users of those apps that will have access to Starbucks."
Ele.me, a food delivery platform, will be opening 150 stores in Shanghai and Beijing with Starbucks before expanding to 2,000 stores across 30 cities by the end of the year. Starbucks will also be working with Hema to create “Starbucks Delivery Kitchens” specifically designed for Starbucks delivery fulfillment over the next few years.
According to the International Coffee Organization and the U.S. Department of Agriculture, China has been experiencing a boom in coffee consumption, almost tripling in the last four years.
Starbucks will also be creating a virtual store that will be integrated into Alibaba’s platforms to provide Chinese customers with a more personalized experience, said the two Companies.