By activating “Starbucks Now” through any of these Alibaba-affiliated apps, users can pre-order and pay for their favorite Starbucks beverage and food online, and then pick up in-person at most Starbucks stores across China.

Previously, this service was only available through the Starbucks China mobile app.

The extended service enables Starbucks to engage with more Chinese consumers through multiple channels that tap into the Alibaba Digital Economy’s user base of nearly 1 billion.

It also gives China’s growing number of coffee lovers the added convenience of having their online orders ready for pick-up at the store location of their choice whether on the way to the office or on an adventure in an unfamiliar city.

On Alibaba’s e-commerce platforms, including Taobao and Tmall, more than 18 million Chinese consumers bought RMB 2.5 billion worth of coffee products in the 12 months from 2017 to 2018, up 18% year-over-year.

Mobile reach in Q1 2020: Tencent, Alibaba, Baidu, ByteDance

Insights of Starbucks and Alibaba’s strategic partnership

Starbucks and Alibaba announced their strategic partnership on August 2, 2018, in Shanghai. It involves multiple digital channels from the Alibaba ecosystem, including Ele.me, Hema, Taobao, Tmall, Koubei, and Alipay.

They announced plans to leverage Ele.me’s on-demand platform to pilot delivery services in Beijing and Shanghai in September 2018. And, this delivery program will expand across 30 cities to more than 2,000 stores in China by end of 2018.

Starbucks will partner with Hema supermarkets to create “Starbucks Delivery Kitchens” specifically designed for Starbucks delivery order fulfillment, further expanding delivery capabilities while ensuring the highest levels of the third-place in-store customer experience.

Both will co-create an unprecedented virtual Starbucks store that will integrate multiple platforms across Starbucks and the Alibaba ecosystems, to enable a seamless and even more personalized experience for members to register, redeem benefits and enjoy an extensive range of services.

“Thanks to the elevated customer experience delivered by our over 45,000 partners, Starbucks is growing and innovating faster in China than anywhere else in the world,” said Kevin Johnson, president and chief executive officer, Starbucks Coffee Company.

Our transformational partnership with Alibaba will reshape modern retail, and represents a significant milestone in our efforts to exceed the expectations of Chinese consumers. Starbucks China is one to watch, and I have full confidence in the team that will bring the new innovation behind the Starbucks Experience to life.

The strategic partnership is part of Alibaba’s broader New Retail push, which aims to transform how commerce is conducted by merging online and offline experiences. New Retail was introduced by Alibaba in 2016 and has since become a trending topic in China’s retail industry.

Both Starbucks and Ele.me collaborated to develop a unique, customized delivery infrastructure that has been meticulously determined each step along the way, including dedicated Ele.me delivery riders, precise delivery time, and custom carriers.

Both companies have created a tailored order-to-delivery Starbucks program that upholds the unparalleled experience and quality that customers have come to expect in Starbucks retail stores. Through this delivery partnership, Starbucks and Ele.me have pioneered a best-in-class coffee delivery service standard for Chinese customers.

In addition, Starbucks will partner with Hema supermarkets to be the first retail brand to establish dedicated “Starbucks Delivery Kitchens” within their locations. The “Starbucks Delivery Kitchens” will utilize Hema’s distinct fulfillment and delivery capabilities to complement the delivery of handcrafted Starbucks coffee and tea beverages offered through existing Starbucks stores.

Starbucks will also leverage Hema’s highly effective consumer insights and unique fulfillment expertise to further penetrate and better serve the needs of individuals and families in communities across China.

This intentional strategy will inform the future network planning for new Starbucks stores, combined with “Starbucks Delivery Kitchen” locations, to further expand the scale and reach of Starbucks delivery services,while enabling our partners (employees) to continue to elevate the third-place experience for the customer.

Starbucks will open “Starbucks Delivery Kitchens” in selected Hema supermarkets in Shanghai and Hangzhou as soon as September 2018, with plans to expand its presence to other cities over time.

A key strategic initiative under the partnership is the development of a pioneering, first-of-its-kind virtual Starbucks store in China. This digital partnership will see Alibaba develop a centralized online management hub, with the unique capabilities to integrate and deliver a consistent Starbucks Experience across multiple digital platforms.

This innovation will transcend the traditional limitations of a single-app visit by providing the consumer an elevated, and even more personalized Starbucks digital experience across the Starbucks app and Alibaba’s customer-facing mobile apps, including Taobao, Alipay, Tmall, and Koubei.

This latest innovation will revolutionize the traditional offline-to-online model by effectively extending the reach of the Starbucks Experience into the everyday lifestyle ritual of the Chinese consumer, regardless of time or place.

Whether it is at home or in the office, within a Starbucks store or online, Starbucks customers will be able to access and enjoy a one-stop Starbucks Experience when purchasing merchandise online, buying a Starbucks handcrafted beverage to be delivered to a friend or sending a Starbucks gift of love on the “Say it with Starbucks” social gifting platform.

Starbucks will progressively integrate its Starbucks Rewards (SR) membership platform onto the centralized system to leverage its consumer insights to deliver a truly personalized experience to its customers while establishing a strong foundation for the future development of Starbucks digital experiences in China.

How Tmall, Alibaba’s new retail, could transform RT-Mart

During the National Day Golden Week (October 1-7) this year, online consumption is showing trends towards refinement, efficiency, and intelligence. Traveling is still the main way people spend their holidays. Overall, both consumption and tourism have shown trends of reshoring from abroad to domestic market and expansion from the first- and second-tier cities to the low-tier cities.

Conspicuous consumption is increasingly popular among Chinese. Data from Tmall shows that from October 1st to 3rd, compared to the same period last year, the sales of aromatic essential oils increased by 239.64%, perfumes by 50.59%, men’s makeup by 69.91%, sunscreens by 79.30% and makeup travel sets increased by 43.49%.

On the eve of the Golden Week, the sales of medical masks for sunburn repair and moisturizing on the Tmall’s healthcare platform showed a 510% increase compared to last year.

Foods and drinks is an ever-lasting theme for holidays in China. Consumers want to eat fresh food conveniently. In the first three days of the Golden Week, the sales of steaks increased by 60%, low-temperature milk by 191.39%, instant food and instant rice by 40.69% and 54.78% respectively, compared to the same period last year.

Tmall Supermarket’s data shows that from October 1st to 3rd, the number of people participated in the flash sale of Maotai (arguably the most famous Chinese liquor) reached 3 million. The sales of liquor increased by 12 times compared to last year. The total turnover of Tmall Supermarket increased by 40% compared to last year.

Hema, the new benchmark for retail, has opened 171 stores in 22 cities across the country. In the first three days of the Golden Week, the average daily sales of Hema stores across the country increased by 22% compared to normal days. In Beijing, Shanghai, Guangzhou, and Shenzhou, the increase was 17.5%; and in second- and third-tier cities, the increase was close to 30%.

Many people who do not want to travel and see crowds of people have chosen to spend their time shopping and eating in Hema stores. According to data from Hema, in-store consumption in the first three days of the Golden Week increased by nearly 30%. The top ten best-selling products were all seafood. The sales of king crabs increased by 3,000%, compared to the same period last year, and over 40,000 Yangcheng Lake hairy crabs were sold.

Home living has become increasingly intelligent. From October 1st to 3rd, on Tmall, the sales of indoor fresh air systems increased by 111%, electric curtains by 168%, home security cameras by 84%, robot cleaners by 17 times and electric mops and brooms by 23 times, compared to the same period last year.

Login below or subscribe here to read the full article.

On September 3, the 5th day of the opening of the Hema Mini in Shanghai’s Pujiang City Life Plaza, RMB 0.99 for Hangzhou cabbages and abalone for RMB 1.99 attracted the senior residents to rush buying. A shopping guide shouted: “steak is on sale, download Hema App and you are eligible to buy one get one free.”

Hou Yi, Vice President of Alibaba Group and President of Fresh Hema Business Group, said that Fresh Hema and Hema Mini cover different areas, those areas that large stores cannot reach can be supplemented by Hema Mini.

Therefore, the mission of Hema Mini is to submerge and quickly cover the suburbs of first-tier cities, third-tier and fourth-tier cities, and even some counties. Hema Mini is expected to account for half of total Hema sales in the future.

Hema Mini is obviously more bound with the masses than Fresh Hema. How is it different?

1. Smaller in space while more refined in the products category. Located outside of Shanghai’s Outer Ring, this store is the “most remote” Hema Mini with more than 1000 square meters with about 4000 SKUs; fresh foods account for nearly 70%. The first two Hema Mini stores, one in Shanghai Zhonghai Huanyuhui and one in Shanghai Changli Road, are reported to have 50% of their order from online.

2. Affordable in price. In Hema Mini, celery is 1.99 yuan per 500g, Shanghai green vegetables are 0.99 yuan per 500g, and the lowest price of pork is 25.8 yuan per 500g. Next to Hema Mini is a CP Lotus Supermarket, whose celery is 2.98 yuan per 500g and the lowest priced pork is 24.88 yuan per 500g.

3. Products are mostly unpackaged. Different from the exquisitely packaged vegetables of Fresh Hema, there are small piles of bulk vegetables from the store’s gate. Shanghai’s senior residents are very attentive when picking the products. Some would yank off the lettuce butts and stuff the leaves into the shopping bag.

4. Less seafood, more fresh river food. Fresh Hema’s iconic seafood has been reduced to a few categories such as dungeness crab and Boston lobster in Hema Mini while there is much more common river food, such as crucian carp and king thorn fish.

Compared with the Fresh Hema stores, there are many deli foods that are produced and sold on-site in Hema Mini, such as steamed buns and rolls, dumplings and wontons, as well as marinated dishes and cold dishes.

5. Suspension conveyor chain is removed, and the dining area is reduced. Hema Mini significantly reduces the cost of hardware and renovation. Ni Xiaojun, head of the Hema Mini project, said there was no need to deploy the suspension conveyor chain as the store area is small and manual product-sorting could meet the demand.

The distribution system of large stores has also been taken out of Hema Mini. The distribution range of Hema Mini is 1.5km which can be reached within half an hour. There are only 24 chairs in the dining area.

According to Hou Yi, Hema Mini’s investment cost is less than one-tenth of Fresh Hema, which is now controlled at around 2 million yuan.

6. Cash checkout is emphasized. In the store, there are six self-service checkouts and three cash checkouts. As there is a high proportion of middle-aged and elderly consumers, there are long queues at the three cash checkouts. However, many of the offers are available only on Hema App.

Hou Yi said that every Hema Mini store’s sale is way beyond expectation. In term of submerging, the company is more bullish about Hema Mini, comparing it with Hema Station and Hema Vegetable Market. He disclosed that, by the end of the year, Hema Mini will have three or four iterations, to study the optimal product structure and cost structure.

Hema Mini is expected to expand rapidly across the country after the Spring Festival.