Behind the closure of Starbucks: coffee manufacturing seeks to transform to e-commerce platform

July 9 news, a few days ago, the mainland's first Starbucks Beijing international trade store announced the official closure of the store. High rents and excessive cost pressure have forced cross-border retail and catering companies like Starbucks to scale back strategically.

According to the analysis of industry insiders, Starbucks' withdrawal from ITC further confirms the pressures and challenges faced by physical enterprises in the market environment, such as the global economic downturn, inflation, rising labor costs and so on. However, whether it is the real estate bubble or the change of the overall strategy of enterprises, it is imperative for entity enterprises to change the traditional channel model.

A retailer told Yibang Power Network that the average rent of the first phase of the International Trade Mall is more than 1000 yuan per square meter per month, and the annual rent and population cost of the Starbucks International Trade Store is more than 7 million. By comparison, Starbucks had a turnover of only 5 million yuan per store in Asia in 2012. "it is equivalent to 70% of the consumer's money per cup of coffee pays the rent, not the coffee."

On the other hand, some traditional coffee production enterprises gradually realize the impact of the Internet on traditional channels and begin to test e-commerce, trying to change the existing sales model through new channels and seek transformation.

Take Yunnan as an example, coffee raw bean cultivation in the province accounts for more than 98% of the domestic industry, which has dealt a serious blow to the enthusiasm of the Yunnan coffee industry under the rising planting costs and the increasing traditional sales costs. To this end, some coffee enterprises in Yunnan Province have begun to develop e-commerce, such as Yunnan Aini Coffee choose to open online stores through Tmall, No.1 store, Amazon and other third-party platforms to carry out e-commerce. In addition, Yunnan Changshengda Investment Co., Ltd. adopts to cooperate with third-party platforms to build industry platforms to carry out e-commerce.

According to relevant sources, Changshengda Company is a comprehensive enterprise integrating coffee cultivation, coffee roasting and sales. Since March 2013, Changshengda joined the China Coffee Trading Network and, with the help of B2B e-commerce service provider China Web Library, used the Internet to open up all aspects of production to consumers, reducing the time and risk cost of expanding offline channels.

Changshengda predicts that more than 70 per cent of the company's sales over the next three years will come from ecommerce platforms.

(responsible Editor: Leo)