Luckin Coffee, an emerging Chinese coffee, is planning a partnership with Meituan Dianping delivery services to compete against the partnership of Starbucks and Alibaba's Ele.me. According to sources, Luckin coffee is rumored to use the services of Meituan to deliver coffee and other products using the latter's wide delivery network in China.
The plan for collaboration was rumored after the globally famous Starbucks announced its partnership with Ele.me, Alibaba's food delivery arm, in August. Prior to the partnership, Starbucks experienced weakening sales since it has no delivery network in China.
Luckin Coffee plans to use Meituan's Waimai app in placing orders to be delivered in 20 cities in China. if the collaboration plan succeeds. Meituan failed to give a comment regarding the rumored collaboration
Luckin is currently taking orders using the company's own app and the orders are delivered by a Chinese logistics firm SF-Express. The rumored partnership with Meituan will significantly increase the capacity of Luckin in delivering its products and it will also heighten the competition in China's food delivery market.
Zhang Yi, CEO of mobile internet consultancy iiMedua Research Institute, said that, for Luckin, the partnership means it can expand further from offline to online in the coffee retail business and, for Meituan, it might not be aiming for more orders from Luckin but it wants to send signal to other warm food providers that it can deliver a cup of warm coffee in a timely manner.
Luckin is known to sell American-style coffee and other bakery items. The firm starts its operations in Beijing and Shanghai at the start of 2018.
The delivery competition in China is tight. Meituan reported a huge loss of 83.3 billion yuan at the end of the third quarter which reflects the high costs that they are spending on competing with Ele.me and other China-based food delivery services. Meituan and Ele.me is currently engaged in a subsidy war in China's delivery market which is dependent on winning market share.
Lunkin recently doubled its market share to US$2 billion after they earned a new set of financing amounting to US$200 million last week. It has established at least 1,700 branches in 21 cities in China. the company claims that they can deliver orders in the country's major cities at an average of 18 minutes. The company stirs the country's coffee industry with the subsidies they offer to customers like its 50 percent off coupons given every week.
