Starbucks Partnership with Alibaba Confirmed by CEO

Starbucks has entered into an official partnership with Alibaba Group with a plan that is multi-pronged to increase the coffeehouse’s physical and digital presence across China, said the CEO and president of Starbucks Kevin Johnson Wednesday.

In this agreement that is exclusive between Starbucks and Alibaba, the chain of coffeehouses will leverage all of the properties Alibaba has including its delivery platform and Hema its supermarket chain, to expand Starbucks delivery services across China.

Johnson said that Starbucks would integrate its virtual store into all the properties of Alibaba Group. What this means added the CEO is that a customer who sues Taobao or Hema or Tmall or Alipay will have an integrated virtual store of Starbucks similar to its mobile app embedded into the experience. Johnson added that with than 500 million active uses of the different apps will have open access to Starbucks.

Starbucks and food delivery platform will partner to open 150 stores in Beijing and Shanghai and that increase delivery in 30 cities to 2,000 stores before the end of 2018.

In the small supermarkets of Hema, Starbucks is planning to build as many as 600 of what it called Starbucks Delivery Kitchens, which are stations that will service the surrounding areas’ delivery orders during the next years.

The Wall Street Journal had previously reported the partnership, but the comments by Johnson were the first official confirmation from the coffeehouse chain about the specific plan it has in place with Alibaba.

During the fiscal third quarter of Starbucks, its business in China, which has historically has been a driver of growth for the coffeehouse, weakened ever so slightly. While revenue at Starbucks in China expanded by 17%, its sales in same store, which for retailers is a key metric of stability, fell by 2%.

Consumption of coffee in China has close to tripled the last four years.

On a conference call for the third quarter results at the company CEO of Starbucks China Belinda Wong told the company’s investors that the new delivery service would adhere to all the high standards customers across China have come to expect.

On Wednesday, Starbucks shares were down at the close by 0.88% while the stock moved slightly higher during trading afterhours.

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