A deal between Starbucks and Alibaba that involves launching a mobile or internet base coffee delivery is to be officially announced on August 2, according to numerous media reports citing unnamed sources. Ele.me is reportedly in charge of the distribution. The people familiar with the tie-up said the service might start in September in selected locations.
Starbucks China has yet to launch a platform of this kind in the country where on-demand delivery is the bread-and-butter among local businesses. In fact, even fresh farm produce can be ordered online and deliver on the same day among Chinese consumers.
The lack of an online delivery platform may have contributed to Starbuck's recent sales drop in the country. Starbucks' fiscal third-quarter revenue reported on July 26 exceeded Wall Street estimates. While China proved to be its biggest sales driver, same-store sales in the country dropped to 2 percent during the last quarter. The company posted increases of 4 and 6 percent in the previous two periods.
With Ele.me leading the slated on-demand delivery system, Bloomberg believed Starbucks had acquired a strategic partner. Alibaba's delivery unit has hundreds of thousands of staff who deliver across China every day. More so, Ele.me is supported by Ant Financial, a mobile payment method also owned by Jack Ma's Alibaba Group.
Belinda Wong, the chief executive of Starbucks China, mentioned Starbucks's plan of testing a new delivery method in Beijing and Shanghai during the July 26 fiscal call. Wong, however, said that the plans would not commence soon, not until the fiscal year of 2019. She added that the new delivery system is aimed at improving Starbucks' same-store sales.
The reported tie-up between Alibaba and Starbucks started gaining traction during Howard Schultz's visit to China on July 9. Schultz has stepped down from his position as executive chairman effective in June.
During his visit, Schultz said Starbucks' sales decline would only be temporary. He said he could work with Ma to boost Starbucks online distribution in the country.
"I have been very dear and close friends with Jack Ma for many, many years... and suffice to say there will be news coming that will relate to our plans for accelerating and integrating mobile commerce at a higher level into our core business," Reuters quoted Schultz as saying.
Schultz also underscored that his visit happened at a time when there is trade tension between China and the US. While Starbucks is not immune to geopolitics, Schultz said he believes that China will remain a growing market for the American coffee chain. The company is, in fact, planning to double its Chinese chains to 6,000 by 2022.
