Starbucks with WeChat: "Come and have a coffee with us"

15 Mar 2017
Starbucks' latest arrival in Italy is arousing plenty of interest in the next move of the world's most famous coffee shop brand, which boasts more than 25,000 coffee shops spread across every continent. The company's progress in Italy has been held back by the widespread presence of coffee bars in every town, no matter how large or small. It was precisely this social and commercial model that inspired the founder, Howard Schultz, to launch his incredibly successful business. When asked in 2007 why his company did not operate in Italy, he replied as follows: "Italians don't like plastic cups, because they don't even think about taking coffee away from the bar and drinking it while they walk or drive". But times change, and a different business model will most likely lead Starbucks to success in Italy as well. In China, meanwhile, there have been no barriers to Starbucks' success: the company is practically synonymous with coffee here, an alternative to the country's traditional tea which has been so well-received by consumers that the chain now has around 2,500 stores in more than 100 cities; about half are managed directly and the rest are franchised. Starbucks is growing rapidly in China and is aiming to double its total number of stores there to 5,000 within the next five years. These kinds of figures can only help the company's digital marketing operations, since nothing works better in China than digital technology. This premise explains Starbucks' recent agreement with Tencent, the group behind WeChat, a messaging and services platform which counts more than 800 million active users each month (as of January 2017). The first step in the agreement, made in December 2016, saw all the company's stores beginning to accept payments via WeChat Wallet, the electronic wallet which is one of China's most popular services (still unavailable in the West as an integrated part of our most popular social media platforms). The next step was announced just a few days ago: a unique marketing operation that could make the deal even more of a success. Using their Wallet, WeChat users will be able to pre-pay for a coffee for a friend, who will receive a QR code that they can present in any Starbucks to enjoy their free drink. In addition, users will be able to gift other products and electronic promo cards to be used at any Starbucks store in the country. These kinds of initiatives are nothing new for Starbucks, which has previously run "social gifting" promotions on Twitter and Facebook. What makes this initiative different is that WeChat is not just a social media platform but also (or mainly) a mass-market channel for other services, most notably financial services such as mobile payments and money transfers. During Chinese New Year, for example, it is now a tradition to use the WeChat mobile app to send virtual "hongbao" - red envelopes containing small amounts of money - to friends and relatives. This is essentially an innovative form of gamification which spreads the word about the payment system and locks in users. And now it's all about the digital "come and have a coffee with us" (although the coffee is real!).