Starbucks has officially smacked a partnership with Alibaba Group with a multi-pronged plan to as well the beverage company’s digital and physical presence in China, Starbucks President and CEO Kevin Johnson told CNBC on Wednesday.
In the restricted agreement, the global fast-casual chain will leverage all of Alibaba’s fortunes, including delivery platform Ele.me and supermarket chain Hema, to expand enunciation services throughout China.
“We’re going to integrate a Starbucks virtual have faith into all of the Alibaba Group properties,” Johnson told “Mad Money” multitude Jim Cramer in an interview.
“This means that a customer that benefits Alipay or Taobao or Tmall or Hema has an integrated Starbucks virtual bank similar to the mobile app embedded right into that experience,” the CEO hinted. “That opens up 500 million or more active users of those apps that ordain have access to Starbucks.”
Starbucks will also partner with Ele.me, a bread delivery platform that Alibaba acquired this year, to exposed 150 stores in Shanghai and Beijing and then broaden delivery to 2,000 holds in 30 cities “before the end of the calendar year,” Johnson said.
In Hema’s small-scale supermarkets, Starbucks schemes to build up to 600 of what the company calls “Starbucks Delivery Pantries” — stations that will service delivery orders for abutting areas — over the next several years.
While the partnership was before reported by the Wall Street Journal, Johnson’s comments marked the maiden official confirmation by the coffeemaker about its specific plan with Alibaba.
Profession the initiative “a transformative strategic partnership around modern retail,” Johnson bring up the combination of Alibaba’s top-tier technology capabilities and Starbucks’ retail dexterousness “will be an accelerator for our business, no doubt.”
In Starbucks’ fiscal third quarter, its China firm — which has historically been a growth driver for the company — weakened degree. While Starbucks’ revenues in the Chinese market grew 17 percent, its same-store garage sales, a key metric for retailers, fell 2 percent.
“Most of the growth of transactions in China is be received b affect from our new store growth,” Johnson told Cramer on Wednesday. “Now, yes, we did secure a negative 2 percent same-store sales comp last quarter, but, you advised of, if … I look at what we’re doing here with Alibaba and the digital flywheel and enabling deliverance, this is like rocket fuel for the digital flywheel in China.”
Coffee consumption in China has less tripled in the past four years, according to the International Coffee Categorizing and the U.S. Department of Agriculture.
On Starbucks’ third-quarter conference call, Starbucks China CEO Belinda Wong tattled investors that “our new delivery service will adhere to the high standards our people in China have come to expect … as we expand our business [there].”
Quotas of Starbucks closed down 0.88 percent on Wednesday at $51.93. The customary ticked up slightly in after-hours trading to $52 a share.
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