Chinese media outlet Sina Tech reported on Thursday that the three-year exclusive cooperation between Starbucks and Ele.me will expire on December 31 this year. As a result, Starbucks is seeking new partners in the Chinese mainland market.
Sources also revealed that the new partners might be SF Express, Meituan and Sam’s Club, all of which have delivery capabilities and are discussing cooperation with Starbucks.
Starbucks’ choice of strategy may be a direct result from the anti-monopoly movement in Internet industry as a whole. Since exclusive cooperation is discouraged, companies no longer feel it is a priority to be linked with one specific platform.
Over the past three yearsm Starbucks has had an exclusive cooperation with Ele.me. In that time, the online retail market for coffee in China has changed quite a bit. Many brands such as Tims Coffee, Costa Coffee and Luckin Coffee have formed partnerships with multiple platforms, and are able to provide consumers with coffee delivery services on Ele.me, Meituan and SF Express.
“Nowadays, the coffee retail market faces greater consumption habits and fierce competition. Starbucks is no longer the preferred single option. Starbucks has considered opening several delivery channels for a long time. The move has happened especially since sales on a single platform, a practice known as “pick one of two” in China, was banned. As a result, Starbucks had to accelerate its layout in a few different business agreements.
In October this year, Meituan was fined 3.442 billion yuan ($533.8 million) for monopolistic behavior in the service market in regard to online food and beverage delivery platforms.
According to the State Administration for Market Regulation, since 2018, Meituan has assumed a dominant position in the market. Meituan has implemented a “pick one of two” approach, namely forcing merchants to use its services exclusively, thereby restricting relevant market competition, weakening the innovation and development vitality of platforms.
Starbucks’ annual report for fiscal year 2021 suggets an annual revenue of US $3.7 billion in China. Calculated on the previous proportion of food delivery orders, which is about 15%, Starbucks’ take-out market in China is worth about 3.5 billion yuan.
Recently, two Starbucks stores in Wuxi had been intensively questioned by authorities for food safety concerns and have subsequently been closed for further investigation.