SHANGHAI: Starbucks, the US coffee chain that has more than 3,300 stores in China, is the latest major international brand to form a strategic partnership with Alibaba, the Chinese e-commerce giant.

The two companies announced in a statement that they have struck a deal enabling Starbucks to collaborate across key businesses within Alibaba’s network to boost delivery services in China, which in recent years has become a fiercely competitive market for coffee.

These businesses include, Alibaba’s on-demand food delivery platform that has three million registered delivery people, Hema supermarkets, in which dedicated “Starbucks Delivery Kitchens” will be established, the Tmall and Taobao online marketplaces, as well as the Alipay digital payment service.

Working with and beginning next month, Starbucks will pilot delivery services from 150 Starbucks stores in Beijing and Shanghai with plans to expand the programme to more than 2,000 stores across 30 cities by the end of the year.

The aim is to deliver orders within half an hour and will pit the new service against local start-up Luckin Coffee, which is already valued at $1bn after less than a year of operations.

China is the second largest market for Starbucks after the US and the company is betting on its new alliance with Alibaba to revive sales growth following the challenge posed by Luckin Coffee and others.

For a start, the two companies were keen to emphasise in their statement that the initiative fits Alibaba’s philosophy of “New Retail”, which aims to merge online and offline customer experiences, and they claimed the partnership will enable a “seamless Starbucks Experience and transform the coffee industry in China”.

“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 CEO of Starbucks.

“Our transformational partnership with Alibaba will reshape modern retail, and represents a significant milestone in our efforts to exceed the expectations of Chinese consumers,” he added.

Daniel Zhang, CEO of the Alibaba Group, also commented on the new alliance. He said: “Starbucks is more than a destination for premium coffee and we share the same vision to pioneer a new coffee culture and lifestyle through innovation and technology.

“Alibaba is thrilled to expand our existing partnership with Starbucks by leveraging our cutting-edge New Retail infrastructure and digital power to enable an unprecedented experience for consumers.”

Sourced from Starbucks, Alibaba; additional content by WARC staff