The featured product of this collaboration is the “Flowing Latte”, designed primarily for delivery. Its unique appeal lies in the gradual separation and freezing of coffee cream and milk during delivery, ensuring a distinct, semi-frozen texture upon arrival. Flavors include French Caramel, Rum Chocolate, and the upcoming Rose.

This collaboration extends beyond online platforms. In-store, the “Peach Feast” series, inspired by the Peach Banquet scene from “Journey to the West”, offers two flavors – Golden Roast Peach Oolong and Golden Roast Oat Peach Latte.

Starbucks’ approach differs from domestic brands like Luckin Coffee, which cater to price-sensitive youths and capitalize on marketing stunts. Starbucks opts for a more conservative strategy, partnering with well-known Chinese content IPs to reinforce its premium positioning.

Despite its cautious approach, Starbucks’ choice of Sun Wukong represents a significant concession to the Chinese market. Sun Wukong’s international appeal aligns with Starbucks’ global brand image, yet it may seem outdated or lack excitement for younger Chinese consumers, who prefer contemporary trends.

Starbucks’ commitment to brand uniformity is evident in its decision not to design custom packaging for this collaboration. This reflects a balancing act between appealing to the local market and maintaining a consistent global brand identity.

In the post-pandemic era, Starbucks has emphasized the importance of the Chinese market. The brand has announced various localization strategies, including the “Ten Thousand Stores Plan”, investment in supply chains, and accelerated product innovation.

Starbucks’ response to the evolving Chinese coffee market has been strategic. The brand is adapting to stay relevant with aggressive competitors like Luckin, HeyTea, and Naixue. Initiatives include offering discounts, live-stream sales, and rapidly introducing new products.

In conclusion, Starbucks’ collaboration with “Journey to the West” represents a cautious yet strategic approach to innovation and tradition in China’s dynamic market. While maintaining its core brand values, Starbucks is learning and adapting to remain a leader in the evolving Chinese coffee industry.

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

In Q3 FY18, Starbucks reported consolidated net revenues up 11% to a record $6.3 Billion from the prior year. The comparable store sales up 1% globally and in the U.S., driven by a 3% increase in average ticket. China comparable store sales decreased 2%.

Net revenues for the China/Asia Pacific segment grew 46% over Q3 FY17 to $1,229.0 million in Q3 FY18, primarily driven by incremental revenues from the impact of its ownership change in East China, incremental revenues from 746 net new store openings over the past 12 months, and favorable foreign currency translation, partially offset by the absence of revenue related to the sale of its Singapore retail operations to a licensed partner in Q4 FY17 and a 1% decrease in comparable store sales.

Q3 FY18 operating income of $234.1 million grew 5% over Q3 FY17 operating income of $223.8 million. Operating margin declined 760 basis points to 19.0%, primarily due to the impact of its ownership change in East China.

Key activities in China

Starbucks hosted its first-ever China Investor Day in Shanghai on May 16, where the company announced plans to build 600 net new stores annually over the next five years in Mainland China – a goal that will double the market’s store count from the end of FY17 to 6,000 across 230 cities by FY22.

Check out details of Starbucks’ partnership with Alibaba here.

WeChat boutique stores don’t have a direct entry path from the main menu and are triggered to display after the brand terms are searched.

So far, only 12 brands have launched their WeChat Boutique Store, including Cartier, Gucci, Lancome, Longchamp, Louis Vuitton, Michael Kors, Montblanc, Nike, Starbucks, Swarovski, Tiffany, and Zara.

The WeChat Boutique Store looks more like a landing page, triggered by search and similar to Baidu brandzone product. All links on the LV Boutique Store page direct to one of its official website pages.

Tencent has set up search application department under  WeChat Business Unit. WeChat launched search in May 2017 and enhanced its search results with data from mini-program in July 2017. It also tested a search advertising product around the same period.

Continue to read: The spending power of 250 million Chinese post-95s

WeChat and Starbucks started strategic cooperation in Dec 2016, which made WeChat Pay available in stores of Starbucks. They started offering social gift cards in early 2017 and launched “Say It with Starbucks” product.

Related: Case Studies – Native Video Ads on WeChat Moments

Starbucks can be located under WeChat Wallet menu along Didi, Meituan, 58, JD.com, and etc. Users can buy friends a cup of Starbucks coffee and stored value cards. An interface is designed for users to write their blessings and send to their friends on WeChat.

This service can be also located in Starbucks WeChat account. Although Starbucks is not the only listed third-party service under WeChat Wallet, it is the only one without any affiliations with Tencent. And, “Limited time promotion” is also shown in gray color under its brand name. It could be an additional channel for the monetization of WeChat.

Gift cards are not new for marketers but could be very powerful if used on WeChat considering the high social engagement level on WeChat.

Read more on WeChat mini-program or top WeChat stats in 2016 »

Tencent and Starbucks announced strategic cooperation in Guangzhou today; and from today on, WeChat Pay is available in about 2,500 Starbucks stores in China.

Starbucks customers simply need to have a payment QR code under WeChat Wallet and scanned to make the payment, which takes roughly about a few seconds.

Starbucks will also launch social gifts on WeChat in early 2017, becoming the first retail brand experiencing this WeChat feature.

The number of WeChat monthly active users reached 846 million in Q3 2016. The cooperation will help further promote WeChat Payment adoptions, which at the same time drives branding and engagement on WeChat for Starbucks.

Many retailers in China have adopted Alipay, WeChat Pay, or both. KFC integrated Alipay in July 2015 while McDonald’s started accepting both Alipay and WeChat payment in September 2015. Starbucks might want to build its own membership payment ecosystem; but, it could be a good decision to collaborate with WeChat facing the unique culture and policies issues in China.