Starbucks teams up with Alibaba to better target local market

Starbucks and Alibaba have entered into a partnership where the coffee chain will leverage off the e-commerce giant's digital and delivery network to access more consumers and compete with local boutique coffee shops.

Alibaba's on-demand delivery platform Ele.me is to offer delivery in 30 cities, covering 2,000 Starbucks outlets by the end of this year. The two companies will also initiate partnerships in terms of membership integration and online marketing, according to a joint statement released today. 

Starbucks will also set up coffee making stalls inside Alibaba's Hema Fresh Market stores to allow on-site purchase and delivery to nearby locations.  

“The partnership will reshape modern retail, and represents a significant milestone in our efforts to exceed the expectations of Chinese consumers,” Starbucks Chief Executive Kevin Johnson said in the statement.

The collaboration will also cover other business units within the Alibaba Group such as its online payment platform Alipay and lifestyle services site Koubei. 

Alibaba Group Chief Executive Officer Daniel Zhang pointed out that the experience of purchasing and consuming a cup of coffee would be transformed towards a holistic one that requires the empowering of digital capabilities. 

The Seattle-based company is facing challenges from the quickly-shifting market landscape where local coffee chains are leveraging digital activities to quickly grow and attract new consumers. 

The company is also seeking to allow its seven million members in China to unlock a "new digital lifestyle," as new business models and offerings are reshaping shopper experiences. 

Commenting on the competition in the local market, Starbucks' Johnson said they would stay focused on brand value, which is to offer a premium coffee experience, and said it's ready to take that to the "next level."

Johnson said dialogue between the two parties began a year ago and they've been testing packaging and menu designs as well as smart dispatching system to ensure swift delivery and the high quality of the drinks.