It seems like Luckin Coffee has really put Starbucks on it nerves. The Chinese coffee shop put a distance from the other by offering cashless payments and takeaway purchase only. Now, the former is set to make similar service available.
To purchase a cup of Luckin Coffee, customers need to have its app. Then they either go to the store and have a cup to go or ordering it from the app through the delivery services. “Starbucks Now” has a similar method with its own cashless payment.
It also has its own Starbucks Delivers also. Belinda Wong, CEO of the store in China stated that it is one of several digital initiatives in China. The initiatives include locally relevant gifting and e-commerce experiences. The company is expecting 8.3 million active users by the end of second quarter of 2019.
Is this Starbucks’ strategy to make sure Luckin can’t be profit?
Previously, the company seemed unfazed by Luckin challenge. Kevin Johnson, the CEO at the headquarters stated that Luckin’s heavy, heavy discount is not sustainable. While Starbucks is “generating the return on invested caputals to build new stores at this rate”.
The American coffee shop is indeed opening a new shop in China in every 15 hours. It is to reach the goal of 6000 stores by the end of 2022. But Luckin is most likely to overtake it within a year as it open one new store in every 2 hours.
Yet, many customers in China had previously stated that they prefer Starbucks’ coffee over Luckin’s. The former, even without discounts has many loyal customers. While the later got many customers that are interested only on its discounts and its fast services.
With the new digital app and cashless payment, Starbucks might put Luckin even further from profit. As the Chinese coffee has reported more and more loss that far ahead of its revenue since its launch.
