According to a report published in the Wall Street Journal, Starbucks is entering the food and beverage market in China through a partnership with Chinese e-commerce giant Alibaba Group Holding Ltd. This move follows a slowdown in the earning in the second quarter.
The newspaper reported that late this week, announcement of the deal with Ele.me - Alibaba’s food-delivery service, would be made. The operations would start in the fall, said the news report quoting sources. While not commenting specifically on Ele.me, Starbucks had previously commented that it had plans to tie up with a partner for delivery in China.
“We start this fall in Beijing and Shanghai, with plans to expand across the country as we enter calendar 2019,” said Belinda Wong, the chief executive of Starbucks China.
There was a 2 per cent decrease in comparable store sales in China reported by Starbucks in its financial results for the third quarter that came to an end on July 1.
“The problem is Starbucks is no longer viewed as an aspirational brand,” said Shaun Rein, the managing director of China Market Research Group, according to the Wall Street Journal.
According to analysts, this move form Starbucks comes partly because of new competition in the market. including that from the startup coffee company Luckin Coffee in Beijing. More than 600 stores have been opened by Luckin in the last seven months. The company first brews the coffee and then delivers them to the customers on scooters.
“Luckin tastes good and is cheaper,” said 32-year-old business analyst, Lin Jinghan, adding that Luckin ids a convenient option because it offers delivery straight to the office.
“While recent coffee market entrants have chosen to capitalize on delivery combined with heavily discounted offers, there’s significant compromises at play in terms of quality, experience, and business sustainability,” Wong said during an earnings call with analysts.
She added, “Let me assure you that our new delivery service will adhere to the high standards our customers in China have come to expect with regard to the Starbucks experience.”
(Source:www.fortune.com)
The newspaper reported that late this week, announcement of the deal with Ele.me - Alibaba’s food-delivery service, would be made. The operations would start in the fall, said the news report quoting sources. While not commenting specifically on Ele.me, Starbucks had previously commented that it had plans to tie up with a partner for delivery in China.
“We start this fall in Beijing and Shanghai, with plans to expand across the country as we enter calendar 2019,” said Belinda Wong, the chief executive of Starbucks China.
There was a 2 per cent decrease in comparable store sales in China reported by Starbucks in its financial results for the third quarter that came to an end on July 1.
“The problem is Starbucks is no longer viewed as an aspirational brand,” said Shaun Rein, the managing director of China Market Research Group, according to the Wall Street Journal.
According to analysts, this move form Starbucks comes partly because of new competition in the market. including that from the startup coffee company Luckin Coffee in Beijing. More than 600 stores have been opened by Luckin in the last seven months. The company first brews the coffee and then delivers them to the customers on scooters.
“Luckin tastes good and is cheaper,” said 32-year-old business analyst, Lin Jinghan, adding that Luckin ids a convenient option because it offers delivery straight to the office.
“While recent coffee market entrants have chosen to capitalize on delivery combined with heavily discounted offers, there’s significant compromises at play in terms of quality, experience, and business sustainability,” Wong said during an earnings call with analysts.
She added, “Let me assure you that our new delivery service will adhere to the high standards our customers in China have come to expect with regard to the Starbucks experience.”
(Source:www.fortune.com)
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