Starbucks will integrate its online store and customer rewards program with Alibaba’s popular apps and online services, used by more than 500 million people in China, and launch a new delivery service to zip coffee to Chinese consumers from more than 2,000 Starbucks stores in the country at the push of a button.
The deal between the Seattle-based coffee giant and Chinese e-commerce titan underscores the massive opportunity for Starbucks in the world’s most populous nation, despite a recent slowing of its sales growth there. Coffee consumption has nearly tripled in China in the last four years, but the caffeinated beverage still has nowhere near the grip on China as it does on the UK and US.
Starbucks’ deal with Alibaba “is like rocket fuel for the digital flywheel in China,” said Starbucks CEO Kevin Johnson on CNBC.
Alibaba and Starbucks confirmed the new partnership Wednesday night, after news of the deal leaked earlier in the week — describing their new relationship as a “historic moment” that will leverage their respective strengths “to revolutionize the customer experience.”
Starbucks says it will work with Alibaba to integrate a new virtual store and its My Starbucks Rewards program into Alibaba apps including Taobao, Alipay, Tmall and Koubei. Starbucks will partner with Alibaba’s Ele.me for coffee delivery, and create new “Starbucks Delivery Kitchens” inside Alibaba’s Hema supermarkets, starting in Shanghai and Hangzhou as soon as next month.
It’s the latest move by Starbucks to connect its physical stores with the online world through mobile ordering, pickup and delivery. The company is also trying new ways to connect with consumers in the U.S., asking WiFi users to provide their email addresses to get online in Starbucks stores. Starbucks says it has added 6 million “digitally-registered customers” after rolling out that strategy in March.
“Our digital reach is expanding by every measure,” Johnson said on a recent earnings call with analysts.