Retail

How Starbucks Elevates Online Ordering In China

Starbucks has designed a new store around order-ahead and delivery as the upstart coffee company Luckin Coffee takes hold in the Chinese market. Starbucks opened its inaugural Starbucks Now store in Beijing, China to combine digital and physical customer touchpoints. The experience is said to combine the café environment of the coffee chain with the Starbucks Delivers and Mobile Order & Pay services. According to an announcement from the company, “This streamlined experience allows customers and delivery riders to conveniently get their favorite beverages and food at Starbucks.”

When customers enter the store, a Starbucks barista will greet them at a concierge counter to help with pickup or ordering. Diners can select a beverage from a menu of handcrafted options as well as food products. For those who want to consume their food and drink within the store, the location offers limited seating. The store itself is located in the center of the financial district of Beijing; the company says it is the first express format location created to meet the needs of the modern urban lifestyle in the country.

Starbucks China Retail Chief Operating Officer and President Leo Tsoi said in the announcement about the new express retail concept, “The Starbucks Now store is a testament to our unwavering commitment to delivering innovative customer experiences through new retail formats. This new retail format and design approach provides us with a platform to offer customers a fast and convenient retail experience to suit their on-the-go lifestyle.”

The store also has a dedicated area for Starbucks Delivers orders, with “quick and easy” pickup supported by baristas. In addition, online orders from Starbucks Delivers and Starbucks Now will be stored in an in-wall system with a pickup portal that is associated with every order. At the same time, the store can function as a “centralized dispatch center” for delivery orders within a designated radius, allowing baristas at neighboring locations to focus on in-store diners. The company also noted that beverage orders with Starbucks Delivers will be made by baristas in a central kitchen in Starbucks Now stores at peak times.

The company says it is “deeply rooted” in China and continues to grow its digital offerings and capabilities to exceed the expectations of consumers there. It rolled out its Starbucks Now and Mobile Order & Pay experience in May for 300 locations in Shanghai and Beijing; it is now offered in more than 1,300 stores in four cities. The news comes as the latest PYMNTS Mobile-Order Ahead Tracker found that almost half – or 45 percent – of customers say mobile options would encourage them to more frequently use online ordering services.

China’s Digital Coffee Market

Starbucks is not the only sizable quick-service coffee contender in the Chinese market. Upstart Luckin Coffee plans to open 2,500 new stores in the country this year to overtake Starbucks. Luckin Chief Marketing Officer Yang Fei said at a presentation in Beijing, according to previous reports from Reuters, “What we want at the moment is scale and speed.” The company’s strategy involves a focus on delivery, technology and steep discounts for customers.

Luckin plans to open a total of more than 4,500 stores by the end of this year. At that rate, the company would overtake Starbucks, which has more than 3,600 stores in the country, per reports in January. As of the time of the report, Luckin had locations in 21 major Chinese cities, and a total of more than 1,700 shops. The startup says it has a store within a radius of 500 meters from anywhere in downtown Beijing and Shanghai.

For its part, Starbucks said in October that it is building a new store in China every 15 hours, and CEO and President Kevin Johnson noted that boosting growth in the country is one of its “three strategic priorities.” The company plans to open another 2,000 stores by 2021, and it is said to build more new company-operated locations in China than in its home country of the United States.

Starbucks China CEO Belinda Wong said, per reports at the time, “To us, we open 500-plus stores a year, but to us, it’s not about 500. It’s about opening a store 500 different times, because you’re in a different neighborhood and we’ve got to build that relationship with our customer.”

With an emphasis on order-ahead technology and delivery offerings, Starbucks is driving digital innovation with its new retail store experience in China amid a competitive quick-serve coffee market.

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