Starbucks to widen online reach in China through new alliance with Meituan, ending exclusive deal with Alibaba’s Ele.me

Seattle-based Starbucks’ new partnership could potentially expand its business by tapping into Meituan’s vast domestic customer base
Meituan had a 67.3 per cent share of China’s food delivery market in 2020, compared with a 26.9 per cent share for Ele.me in the same period

Starbucks

Ann Caoin Shanghai

Published: 9:00pm, 19 Jan 2022

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US coffeehouse chain Starbucks is gearing up to expand its online presence across China through a new alliance with on-demand local services giant Meituan, ending an exclusive partnership with Alibaba Group Holding-backed food delivery provider Ele.me.

Seattle-based Starbucks said the collaboration with Meituan, which operates China’s largest online food delivery platform, will enable more consumers across the mainland to make reservations at its stores and get their coffee delivered, according to a statement published on Tuesday on the American firm’s official WeChat account.

Starbucks, which opened its first mainland store in Beijing in January 1999, currently operates more than 5,400 stores located in more than 200 cities across the country. The US company could potentially expand its business by tapping into Meituan’s vast domestic customer base, which totalled about 62 million monthly active users at the end of September last year.

With that alliance, Starbucks ended its three-year exclusive partnership with rival Chinese online delivery platform Ele.me. Customers can now choose to use either Meituan or Ele.me for delivery services. Ele.me parent firm Alibaba, which owns the South China Morning Post, did not immediately respond to a request for comment on Wednesday.

The Starbucks menu is shown on the Meituan app displayed on a smartphone at the US coffee chain’s flagship store in Beijing on January 18, 2022. Photo: Reuters

Starbucks’ partnership with Ele.me started in August 2018, which fostered the development of the US company’s Zhuanxingsong service on the mainland. That enabled consumers within a certain distance from a Starbucks store to order drinks and food via Ele.me, which completed each delivery within 18 minutes on average.

The Zhuanxingsong service has been updated under the new alliance with Meituan, according to a statement from the Beijing-based company on Tuesday. It said the service will offer exclusive discounts, membership benefits and customised ordering. Meituan, which reportedly embarked on a major hiring spree last year, also said it established a dedicated team of delivery riders for Starbucks.

Meituan, according to data from Statista, had a 67.3 per cent share of China’s food delivery market in 2020. By comparison, Ele.me had a 26.9 per cent share.

Starbucks’ food-safety issues deepen in China as US coffee giant orders review

The stakes are high for Starbucks to further expand and improve its operations across China, weeks after the company initiated a thorough inspection of all its stores nationwide after food safety concerns were raised in Wuxi, a city in eastern Jiangsu province, and went viral on Chinese social media.

The partnership with Starbucks marks a big win for Meituan, months after it reported a worse-than-expected loss in the third quarter last year.

In October, the State Administration for Market Regulation slapped a 3.4 billion yuan (US$533 million) fine on Meituan for abusing its dominant market position. Alibaba was levied a record antitrust fine of 18.2 billion yuan by the regulator in April for market abuses.

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