Starbucks to Deliver Coffee in China with Alibaba

Starbucks Corporation (NASDAQ: SBUX) is trying to partner with Chinese e-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA) to deliver coffee in China, according to a report from the Wall Street Journal on Monday.

Under the deal, Alibaba’s delivery unit, Ele.me will provide delivery service for Starbucks, which is expected to start this fall, the Wall Street Journal said, citing people with knowledge of the tie-up.

The deal is expected to be announced later this week.

Last week, Starbucks posted fiscal third-quarter financial result that topped analysts’ estimates. But comparable store sales in China decreased 2%, compared with a 4% increase in the prior quarter.  

Starbucks said during the earnings call that the company is planning to try delivery service in China.

Belinda Wong, CEO of Starbucks China, said during the call. “We start this fall in Beijing and Shanghai with plans to expand across the country as we enter calendar 2019. We're fine-tuning details and approach over the coming weeks, fully confident that delivery will enhance the premium Starbucks experience our customers expect, fueling comp growth and financial performance in FY 2019 and beyond.”

China is one of the fastest growth coffee market. Starbucks dominated the market since it entered Chinese market in 1999. But now it faces more competition than before. In one hand, other global coffee brands also want to gain some market shares in China, while local coffee brands are growing rapidly.

Beijing-based startup Luckin Coffee raised $200 million in the latest funding round, valuing it at $1 billion. Luckin allow customers to order using smartphone. It now has 660 outlets in China.

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