Chinese Starbucks company will be joining hands with Alibaba Group in delivering the former's favorite drink and baked products throughout China.
More and more Chinese will soon be greeted with the uplifting aroma of Starbucks beverages and sumptuous baked goods delivered to their doorstep, that is if the tie-up plans between the two firms come to fruition.
According to CNBC, Ele.me, Alibaba's food delivery division, will handle the logistics in a deal expected to be announced on Thursday, August 2. Delivery of Starbucks products is expected to start this fall, that is if there's any truth to the claims made by some unnamed sources.
In a statement given to the media outlet, Alibaba said that the company and its counterpart "are always exploring new ways to deepen our long-term partnership in China."
"We have nothing more to share at this point," the Alibaba spokesperson clarified.
The coffee retailing giant is yet to confirm the report.
Financial analysts, however, are quite optimistic that the purported deal will indeed get through, given that this business agreement can help bolster Starbucks' sales plummet in the Chinese market.
In its quarterly sales report for Q2 in China, Starbucks listed a 2 percent decline - a far cry from its impressive 7 percent growth in the same period in 2017.
Different reasons are being looked into. In a report from Fortune, "Starbucks" has already lost its luster as an aspirational brand. The slump was further brought down by stiff competition such as the emergence of home-grown coffee companies like Luckin Coffee which is based off in Beijing. Just this year alone, Luckin has already opened more than 600 stores and its rapid expansion is expected to continue well in the next few years.
In an earnings call, the Seattle-based café chain admitted on its apparent poor sales performance in the Asian market. However, it offers assurance to investors citing plans to improve its delivery service starting this fall in Shanghai and Beijing.
As pointed out by Reuters, Starbucks executive Howard Schultz mentioned earlier of an impending scenario where the coffee brewing firm will be doing business together with the e-commerce giant.
Financial analysts see this yet-to-be-confirmed partnership as a long-sought solution to Starbucks' sale drought in this region.
"An imminent announcement of a delivery solution is an important first step, as is a roll out of mobile ordering, Sharon Zackfia, an analyst for William Blair was quoted as saying by the news outlet.
