Market Overview

Starbucks and Alibaba Group Form Strategic Partnership to Transform the Customer Experience in the Coffee Industry in China

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  • Marking a significant milestone for the two companies, Starbucks
    and Alibaba poised to enable a seamless Starbucks Experience through
    deepened partnership
  • Starbucks to collaborate across key businesses within the Alibaba
    ecosystem, including Ele.me, Hema, Tmall, Taobao and Alipay, to
    significantly elevate the Starbucks Experience for Chinese customers:
    • Announces plans to leverage Ele.me's on-demand platform to
      pilot delivery services in Beijing and Shanghai in September 2018;
      delivery program to expand across 30 cities to more than 2,000
      stores by end of 2018.
    • Partners with Hema supermarkets to create "Starbucks Delivery
      Kitchens" specifically designed for Starbucks delivery order
      fulfillment, further expanding delivery capabilities while
      ensuring the highest levels of the third-place in-store customer
      experience.
  • Companies to co-create an unprecedented virtual Starbucks store
    that will integrate multiple platforms across Starbucks and the
    Alibaba ecosystems, to enable a seamless and even more personalized
    experience for members to register, redeem benefits and enjoy an
    extensive range of services.

Starbucks Coffee Company ("Starbucks") (NASDAQ:SBUX) and Alibaba Group
Holding Ltd. ("Alibaba") (NYSE:BABA) today announced a deep, strategic
"New Retail" partnership that will enable a seamless Starbucks
Experience
and transform the coffee industry in China. Collaborating
across key businesses within the Alibaba ecosystem, including Ele.me,
Hema, Tmall, Taobao and Alipay, Starbucks announced plans to pilot
delivery services beginning September 2018, establish "Starbucks
Delivery Kitchens" for delivery order fulfillment and integrate multiple
platforms to co-create an unprecedented virtual Starbucks store – an
unparalleled and even more personalized online Starbucks Experience for
Chinese customers.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20180801006123/en/

At a press conference in Shanghai today, Starbucks and Alibaba Group unveiled details of a strategic ...

At a press conference in Shanghai today, Starbucks and Alibaba Group unveiled details of a strategic partnership that will enable a seamless Starbucks Experience and transform the coffee industry in China. Collaborating across key businesses, including Ele.me, Hema, Tmall, Taobao and Alipay, Starbucks will pilot delivery services beginning September 2018, establish "Starbucks Delivery Kitchens" in Hema and integrate multiple platforms to co-create an unprecedented virtual Starbucks store. The partnership promises to give an even more personalized online Starbucks Experience for Chinese customers. (Photo: Business Wire)

The announcement marks a historic moment as two iconic, global companies
build on their distinct retail and technology strengths to revolutionize
the customer experience. Leveraging the Alibaba ecosystem and New Retail
infrastructure, Starbucks will be able to further unify a seamless Starbucks
Experience
between its stores and online for customers.

"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 chief
executive officer, Starbucks Coffee Company. "Our transformational
partnership with Alibaba will reshape modern retail, and represents a
significant milestone in our efforts to exceed the expectations of
Chinese consumers. Starbucks China is one to watch, and I have full
confidence in the team that will bring the new innovation behind the Starbucks
Experience
to life."

Daniel Zhang, Chief Executive Officer of the Alibaba Group, 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. This partnership is again a testament to the success of
our New Retail strategy."

The strategic partnership is part of Alibaba's broader New Retail push,
which aims to transform how commerce is conducted by merging online and
offline experiences. New Retail was introduced by Alibaba in 2016 and
has since become a hallmark strategy of the retail industry.

Creating an Unparalleled Order and Delivery
Experience Powered by the Alibaba Ecosystem

Best-in-class coffee delivery service through Ele.me

Working with Ele.me, China's leading on-demand food delivery platform
with 3 million registered delivery riders, Starbucks will pilot delivery
this September in 150 stores located in key trade zones in Beijing and
Shanghai with plans to accelerate and expand its delivery program to
more than 2,000 Starbucks stores across 30 cities by the end of calendar
year 2018.

Both Starbucks and Ele.me collaborated to develop a unique, customized
delivery infrastructure that has been meticulously determined each step
along the way, including dedicated Ele.me delivery riders, precise
delivery time, and custom carriers. Both companies have created a
tailored order-to-delivery Starbucks program that upholds the
unparalleled experience and quality that customers have come to expect
in Starbucks retail stores. Through this delivery partnership, Starbucks
and Ele.me have pioneered a best-in-class coffee delivery service
standard for Chinese customers.

"Ele.me has a robust infrastructure for on-demand delivery in China. We
are pleased to partner with Starbucks to launch these reliable and
trusted delivery services to satisfy customers' needs and capitalize on
the delivery sector's great potential. It is an important milestone for
Ele.me to deepen our collaboration with retail chains and further expand
our penetration in the food delivery sector," said Wang Lei, Chief
Executive Officer of Ele.me.

Distinct Fulfillment and Delivery Capabilities through Hema
Supermarkets

In addition, Starbucks will partner with Hema supermarkets to be the
first retail brand to establish dedicated "Starbucks Delivery Kitchens"
within their locations. The "Starbucks Delivery Kitchens" will utilize
Hema's distinct fulfillment and delivery capabilities to complement the
delivery of handcrafted Starbucks coffee and tea beverages offered
through existing Starbucks stores. Starbucks will also leverage Hema's
highly effective consumer insights and unique fulfillment expertise to
further penetrate and better serve the needs of individuals and families
in communities across China.

This intentional strategy will inform the future network planning for
new Starbucks stores, combined with "Starbucks Delivery Kitchen"
locations, to further expand the scale and reach of Starbucks delivery
services, while enabling our partners (employees) to continue to elevate
the third-place experience for the customer. Starbucks will open
"Starbucks Delivery Kitchens" in selected Hema supermarkets in Shanghai
and Hangzhou as soon as September 2018, with plans to expand its
presence to other cities over time.

"Our Chinese customers have a high expectation of their Starbucks
Experience
and we are proud to introduce a premium delivery
experience that reflects the same service and quality they've come to
love and expect from us in our stores – we will never compromise," said
Belinda Wong, chief executive officer, Starbucks China. "More
significantly, through our partnership with Alibaba, we are breaking the
physical and virtual barriers between the home, office, in-store and
digital space, making China the first Starbucks market to deliver a
seamless Starbucks Experience across all facets of our customers'
lives and further reflecting the uniqueness and strategic importance of
the market."

Digital Innovations Transforming the Retail
Industry

A key strategic initiative under the partnership is the development of a
pioneering, first-of-its-kind virtual Starbucks store in China. This
digital partnership will see Alibaba develop a centralized online
management hub, with the unique capabilities to integrate and deliver a
consistent Starbucks Experience across multiple digital
platforms. This innovation will transcend the traditional limitations of
a single-app visit by providing the consumer an elevated, and even more
personalized Starbucks digital experience across the Starbucks app and
Alibaba's customer-facing mobile apps, including Taobao, Alipay, Tmall
and Koubei.

This latest innovation will revolutionize the traditional
offline-to-online model by effectively extending the reach of the Starbucks
Experience
into the everyday lifestyle ritual of the Chinese
consumer, regardless of time or place. Whether it is at home or in the
office, within a Starbucks store or online, Starbucks customers will be
able to access and enjoy a one-stop Starbucks Experience when
purchasing merchandise online, buying a Starbucks handcrafted beverage
to be delivered to a friend or sending a Starbucks gift of love on the
"Say it with Starbucks" social gifting platform. Starbucks will
progressively integrate its Starbucks Rewards (SR) membership platform
onto the centralized system to leverage its consumer insights to deliver
a truly personalized experience to its customers, while establishing a
strong foundation for the future development of Starbucks digital
experiences in China.

Starbucks and Alibaba are trusted business partners who share common
values in the spirit of innovation and the unrelenting pursuit of
product and service excellence. This deepened partnership is a
significant step as both companies partner together to elevate the
customer experience across China.

About Starbucks

Since 1971, Starbucks Coffee Company has been committed to ethically
sourcing and roasting high-quality arabica coffee. Today, with stores
around the globe, the company is the premier roaster and retailer of
specialty coffee in the world. Through our unwavering commitment to
excellence and our guiding principles, we bring the unique Starbucks
Experience to life for every customer through every cup. To share in the
experience please visit us in our stores, online at Starbucks.com
and through the Starbucks
Newsroom
.

About Alibaba Group

Alibaba Group's mission is to make it easy to do business anywhere. The
company aims to build the future infrastructure of commerce. It
envisions that its customers will meet, work and live at Alibaba, and
that it will be a company that lasts at least 102 years.

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