Alibaba expands Starbucks delivery service to more Chinese cities as it ramps up competition with Luckin

Alibaba Group Holding’s on-demand delivery services unit Ele.me plans to expand a Starbucks coffee delivery service across more Chinese cities as it ramps up competition with a raft of new entrants including beverages upstart Luckin Coffee, which is backed by Tencent Holding.

Starting from October 22, customers in nine new cities will join those in Beijing and Shanghai in being able to receive Starbucks coffee deliveries direct to their door, courtesy of Ele.me, Alibaba said on Friday.

Starbucks started delivery services in September in Beijing and Shanghai following the announcement of a partnership with Alibaba the previous month. The service is expected to expand to “more than 2,000 stores across 30 cities by the end of the year,” Belinda Wong, chief executive of Starbucks China, said in a statement.

The market for on-demand delivery is crucial for Chinese internet giants as it opens up an entry point to other services such as online payments, and also provides further insights into consumer spending patterns. The expansion also comes amid intensifying competition in China with a partnership forged by Tencent and Luckin in September, which leverages the ecosystem of WeChat, Tencent’s dominant messaging, social media and payment app.

Coffee-and-bakery chain Luckin, which began operations in November 2017, has staked out its claim to be a domestic challenger to Starbucks in China. “Starbucks is a great company and has done tremendously well, especially in educating Chinese consumers about coffee,” said CEO Qian Zhiya earlier this year. “But it does not equal coffee in China and neither is it the sole contender,” she said, adding that all countries have local coffee brands.