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Alibaba Joins Hands With Starbucks

|Includes: Alibaba Group Holding Limited (BABA)

Alibaba has paired up with Starbucks to improve its Online to Offline presence.

For a very long time, Alibaba Group Holding is trying to improve its mobile payment services. Alipay is the largest and most used methods of payment for online shoppers and it is significantly growing. Recently, it planned to expand in Europe which is one of the hottest destinations for Chinese tourists. Furthermore, the Chinese tech giant is working to become partners with several food companies and outlets in an attempt to take an early lead in the Online to Offline (O2O) market. For that matter, sources have confirmed that it has signed another big deal.

It is believed that Alibaba Group has joined hands with one of the biggest coffee houses in the world, Starbucks. The online retailer is known for selling food items via its Tmall marketplace by signing deals with various food companies and franchises. Starbucks confirmed that it has officially launched an online store in the region 'as part of what the company referred to as an effort to expand its digital reach and consumer base in one of the world's fastest-growing markets'.

Starbuck's online store on Tmall includes gift cards, coffee vouchers, food vouchers, and special e-cards. The vice president of Alibaba Group, Jie Jing, stated "With the rapid development of eCommerce, more and more global renowned brands are partnering with Tmall to bring to their customers a seamless premium experience, anywhere, anytime."

Starbucks is also growing in the region. The coffeehouse reported a nine percent increase in sales for the fiscal year of 2015. It is expected to further grow enormously this year. Chinese online shoppers love American food and Alibaba's Tmall is known for selling American food on its platform. The company has deals with its American partners. One of its biggest partners is Costco who is famous for its mixed nuts on the platform. Costco and Amazon both have its online store on the Tmall website.

Alibaba is looking to bolster its Online to Offline presence and it believes that this is the best opportunity that it can get to make it happen. On the contrary, Starbucks expects to be boosted amongst the Chinese middle class population with the help of Alibaba partnership.

Analysts are now concerned whether this partnership would remain only in between Alibaba and Starbucks or Alibaba can involve Alipay, its mobile payment system, to boost its business as well. Most analysts affirmed that such move is imminent and can be seen in the near future. All eyes are on the e-commerce giant now.