Yesterday, MNB took note of a Los Angeles Times story about how Starbucks, “facing a rare sales decline in China, is betting a rapid rollout of delivery service will get the business back on track … Starbucks says deliveries will help it will fend off competitors that are already offering the service, coupled with deep discounts.”
Now, the Wall Street Journal adds another wrinkle to the story, reporting that “under the deal set to be announced later this week, Alibaba’s Ele.me food-delivery unit will provide delivery this fall.”
The story says that “Starbucks stands to gain if Alibaba uses its marketing clout to steer customers to its coffee, said Jeffrey Towson, an investment professor at Peking University.” While “Starbucks has mostly had the China market to itself since opening its first store in the country in 1999,” the Journal writes that the coffee retailer has been hit hard by the combination of increased competition, new government regulations, and the fact that it is viewed less as an aspirational brand than it used to be.
Now, the Wall Street Journal adds another wrinkle to the story, reporting that “under the deal set to be announced later this week, Alibaba’s Ele.me food-delivery unit will provide delivery this fall.”
The story says that “Starbucks stands to gain if Alibaba uses its marketing clout to steer customers to its coffee, said Jeffrey Towson, an investment professor at Peking University.” While “Starbucks has mostly had the China market to itself since opening its first store in the country in 1999,” the Journal writes that the coffee retailer has been hit hard by the combination of increased competition, new government regulations, and the fact that it is viewed less as an aspirational brand than it used to be.
- KC's View:
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The problem is that it does not necessarily follow that if people don’t want to go out to Starbucks, they’ll be willing to have it delivered.
The issue is whether Alibaba can bring its estimable marketing muscle to bear in such a way that counteracts the current trends.
