Starbucks will join hands with ele.me to promote takeout service is expected to be officially announced in early august

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Starbucks will join hands with ele.me to promote takeout service is expected to be officially announced in early august

On Friday, Starbucks reported an increase in revenue and net profit in the first three quarters of fiscal 2018, but same-store sales in China fell 2 per cent in the third quarter. On the same day, the news that it would launch a takeout service in the Chinese market also swept the Internet. According to media reports, ele.me took over the delivery business.

People familiar with the matter told the Securities Daily that the above news is true and that the two sides may formally announce it in early August.

Shen Meng, executive director of Xiangsong Capital, told the Securities Daily that Starbucks used to boast its position as the third space outside its home and office, but in China, although consumer demand is huge, but limited by the vast territory, dense population and store costs, can not be fully satisfied, so dabbling in the takeout market can expand the scale of its business to a greater extent.

Starbucks "hand in hand" Ali pushes takeout

Delivered by ele.me

Recently, it has been exposed in the media that Starbucks will push takeout and be delivered by ele.me. The news that Starbucks is tied up with Alibaba and ele.me takes over the delivery business may be officially announced in August. Ele.me 's official contact with Starbucks began at the end of last year, was close between late 2017 and early 2018, and it was finally confirmed that Ali played a key role in mid-2018. Meituan Dianping also won the opportunity to take over Starbucks takeout business.

A reporter from the Securities Daily immediately asked Alibaba for confirmation. Alibaba said that Starbucks and Alibaba are long-term strategic partners. Starbucks Zhenxuan Bakery, which opened in Shanghai in December last year, is also the largest new retail wisdom store in the world, focusing on the achievements created by the two sides' new technologies. In the future, both sides will have more room to imagine based on the exploration of new retail.

A person familiar with the matter told the Securities Daily that the news is true and that the two sides may formally announce it in early August.

In fact, the news that Starbucks has launched a trading service has been around for a long time. In a conference call in February this year, Wang Jingying, CEO of Starbucks China, said she would launch a takeout service in China.

At the earnings forecast analyst meeting held on June 20, US time, Starbucks President and CEO Johnson also revealed information about the delivery service in China. Starbucks China CEO Wang Jingying and her team are discussing a cooperation in delivery with a large technology company, which is expected to be formed and implemented by the end of this year.

According to the current information, the above large technology companies are Alibaba, Starbucks and Alibaba have "successfully held hands."

According to media reports, Starbucks announced on July 26 that it would launch a delivery service in China from 2019, and the competition between Starbucks and Chinese coffee chains is becoming increasingly fierce.

Industry insiders believe that at present, Starbucks' mobile payment business accounts for only 13%, and there is huge room for the development of takeout business, especially in the Chinese market, where mobile payment is very popular. At the same time, once the takeout business is implemented, Starbucks may be able to better infiltrate the sinking market.

China market in the third quarter

Same-store sales fell by 2%

Behind Starbucks' launch of takeout service in China is its weak performance in the Chinese market.

On July 27th, Starbucks reported three quarters of fiscal 2018, with revenue of $18.416 billion, up 10.35% from a year earlier, and net profit of $3.763 billion, up 79.51% from a year earlier. In the third quarter, Starbucks' revenue in china and the Asia-pacific region was $1.229 billion, up 46% from a year earlier, but global same-store sales rose only 1% year-on-year, the worst performance for Starbucks in nine years.

It is also noted that Starbucks' same-store sales in China fell 2% in the third quarter, showing negative growth for the first time, making it the worst-performing market in the world. According to the media, Starbucks launched the takeout service to boost revenue in China through the expansion of the service.

As for the decline in Starbucks' sales in China, Shen Meng said, "the main reason is that emerging competitors of the same type are springing up like bamboo shoots after a spring rain."

According to statistics from Euromonitor International, Starbucks' market share in Chinese coffee shop services was 57.5% and 58.6% respectively in 2016 and 2017, and 78.8% and 80.7% in the market for chain coffee shop services. the number of stores accounted for 58.6% and 61% of the total number of chain cafes, and the total number of transactions accounted for 71.4% and 73.3% of the chain coffee shop service market.

In 2018, Starbucks was hit by Chinese Internet coffee brands such as Luckin Coffee and Lian Coffee. Luckin Coffee, founded at the end of last year, has been in trial operation since early 2018 and has completed the layout of 660 stores in 13 major cities, including Beijing, Shanghai and Guangzhou.

Luckin Coffee announced the completion of round A financing of US $200m on July 11, with a post-investment valuation of US $1 billion, making it a new unicorn. Luckin Coffee CEO Qian Zhiya said that Luckin Coffee is not mainly to rob Starbucks existing users, but to attract new users with more cost-effective and better service. Luckin Coffee, which currently sells 800000 cups a day in China, is expected to overtake Starbucks by the end of 2018.

Later, Starbucks CEO Johnson said that expanding Starbucks' market share in China was a top priority.

Starbucks has opened more than 3300 stores in more than 140 cities in China, according to Starbucks' Chinese website. At a global investor exchange meeting in May, Starbucks proposed to add 600 stores a year in mainland China, increasing the number of stores in the Chinese market to 6000 by September 2022, from 141to 230cities.

In July, JeffreyTowson, a foreign professor at Peking University School of Management, published several articles saying that Starbucks finally had a serious competitor in China. Luckin Coffee would seize 20 per cent of Starbucks's market share, and Luckin Coffee could win even without subverting Starbucks.

With regard to the competition between Starbucks and new Internet retail coffee such as Luckin Coffee and Lian Coffee, Shen Meng told Securities Daily that Starbucks' competitive advantage lies in its own understanding and reshaping of coffee culture. while many emerging coffee brands are mostly capital-driven money-burning imitators, the time cycle will become a fair judge, although good companies are often challenged by a variety of new things. But the meteor also quickly disappeared into the market.

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