Brewing the digital coffee culture in China

For years Starbucks has wielded its charm as the goddess of Cafe in China, often located in a fancy location charging Chinese consumers at a premium price. But recent headline news of “Starbucks and Alibaba partnership for coffee delivery” grabbed much public attention and many feel as if “oh…the uptown coffee lady is holding hands with a geeky e-commerce guy in order to thrive in China, if not for survival…”. As always, Alibaba could not be happier to act as a white knight of “retail digital transformation” associated with a famous brand.

The thing is Starbucks’s market dominance is now facing serious challenges from local coffee upstarts, spearheaded by a startup like Luckin with its war chest of USD 200 million for an all-out fight. However, Luckin is not the only formidable rival. And what makes matter worse? Starbucks is even late in coffee delivery service.

Shanghai-based startup Coffee Box started delivering coffee from Starbucks to customers since 2014. Without any formal deal with Starbucks, it just dispatches couriers to buy coffee on behalf of its customers and charges $0.30 for the service. It has neither website nor app but leverages Wechat as a gateway to curate a large user base. Now it is successful enough to dump Starbucks and only delivers its own branded coffee and drinks.

A few days ago, this digital savvy startup fired another bazooka: a mini-program game to open your virtual “pocket cafe”, a trick to play on the psyche of every coffee lover’s dream of owning a cafe; and above everything else, to turn each of its customers into a reseller.

Inside the game:

-you can create your personalized storefront, menu, marketing message, then start to sell your coffee via Wechat.

-The gamification of pocket cafe also adds different levels of hurdles. For instance, you would need to reach a certain sales target to unlock more product offers on your menu.

-Many KOLs also joined the campaign so it would display a scorecard to rank the popularity of their virtual cafes.

 

 

The results are overwhelming. According to the media, over 520,000 virtual cafes have been rolled out, with 10% of them accomplished real sale transactions; the top 1. virtual cafe sold around 200 cups on the very first day. Many experts consider this digital tactic is an extremely smart move to create brand awareness and acquire new customers.

It is said Starbucks will also integrate across Alibaba’s platforms to create a virtual Starbucks store so Chinese customers can have more personalized experiences. We do not how such a strategy can fend off the increasing threats from the local startups, but one thing is for certain, the coffee culture in China is getting more digital creative.

By: Cecilia Wu