- Many Chinese coffee shops have offered home deliveries since 2017
- During Covid-19, US coffee delivery orders exploded by more than 300%
- Starbucks has begun expanding its partnerships with delivery firms in response to changing consumer behaviour
AS A general rule, America doesn’t like to admit it has copied anything from China. Despite the vast trade relations between the two countries, they tend to see themselves as separate from each other – powerhouses within their own spheres of influence.
Yet the recent rise of coffee deliveries in the US has undoubtedly stemmed from trends born more than 7,000 miles away. For people in China, opening an app, ordering coffee, and having it arrive a few minutes later is an essential and deeply ingrained part of the country’s burgeoning coffee culture.
As of December 2022, some 520 million people in China used online food delivery services, predominantly on either Meituan (by Tencent Group) or Ele.me (by Alibaba Group). And in a survey of coffee deliveries specifically, around 85% of respondents accepted coffee delivery services at different levels.
For Americans, the growing use of delivery platforms as a means of consuming coffee is closely tied to Covid-19. A few months after the outbreak in 2020, orders of coffee deliveries jumped by a staggering 340%, with many offering the service for the first time.
However, it was China that had paved the way long before the pandemic. In 2017, Luckin Coffee, the country’s largest coffee chain, launched a delivery service, with the bulk of its sales coming via an app, rather than in-store. Its phenomenal growth set a precedent for other businesses, while posing a serious challenge to the traditional brick-and-mortar model. Now something similar appears to be happening in the US.
The rise of coffee deliveries in China
Luckin was one of the first in China to offer coffee delivery direct to people’s homes. However, a measure of the sector’s popularity and success is more evident by its use among smaller, independent chains.
According to data from iiMedia Research, small and independent coffee shops accounted for 62.4% of all coffee delivery orders in 2020 – with large chains accounting for 16.3%.
Covid-19 and China’s strict “zero-Covid” policy clearly made delivery a crucial lifeline for coffee businesses. According to a report by QuestMobile, the number of monthly active users on coffee delivery apps in China reached 48 million in March 2021, up 17.1% from the same period in the previous year.
But it is not just the pandemic that was responsible for its explosive growth – young people have also played an important role. Delivery services in China are disproportionately used by those aged 22-39, who are both tech-savvy and well-versed in the Chinese digital app ecosystem dominated by WeChat and Alipay.
As well as being more willing to spend their disposable incomes on small luxuries such as coffee, they favour convenience above all else. By having their coffee delivered to their doorsteps, they can avoid the hassle of waiting in long queues at coffee shops or spending time travelling to and from cafés.
Instead, customers need only to select and place an order on their preferred delivery service, customise their choice, and wait for no more than half an hour for the delivery to arrive. Offering some form of coffee delivery has, therefore, become essential for surviving in an increasingly cut-throat market.
And, as China’s two big delivery players continually battle for a larger slice of the market with a seemingly endless flurry of coupons and special offers, it has only fired up the market.
Shaping the US coffee market
In January, five years after accelerating its delivery service in China, Starbucks announced it would expand its partnership with DoorDash, a food delivery app with a 50% market share in the US.
“Delivery continues to represent a significant growth opportunity for Starbucks,” said the coffee chain’s senior VP, Brooke O’Berry. “As customer behaviours evolve, we continue to innovate the Starbucks Experience to connect with them through meaningful and valuable digital experiences.
“Our partnership with DoorDash allows us to provide our customers with another convenient way to enjoy Starbucks wherever they are.”
In other words, US consumers were showing signs of a growing preference for home delivery over brick-and-mortar coffee shops. And, like in China, they want the process to be as integrated as possible. Rather than having to download a separate app, they want to use one they already have to buy groceries and simply add a freshly brewed cup of coffee to the list.
Importantly, the success of this model in China has given the big US players a confidence boost. Many, such as Starbucks, have seen firsthand how it has come to form an important part of sales. Back in 2019, roughly 6% of Starbucks’ sales in China came from delivery; by 2021, it was at nearly a third.
The thinking goes, therefore, that something similar will play out in the US, where coffee delivery is still relatively untapped. And American businesses will no doubt be looking to China to see how the future of the segment could play out.
That said, the two markets aren’t identical. One of the reasons delivery has been able to develop at such a pace in China is because they are relatively cheap – food delivery costs are about 10 to 20% of the price in the US, which appeals to the country’s more price-sensitive population.
The US delivery service landscape is also more varied than China’s, with several companies, such as Uber Eats, Grubhub, and Postmastes, offering similar services, as opposed to the Chinese market’s duopoly.
However, it is likely that, similar to China, the US delivery brands will begin battling it out for the smaller, independent chains as the big players solidify their partnerships.
There is also a belief that automation could grow in line with this shift. Already. Chinese company Hi-Dolphin has created a robot coffee kiosk solution for the market after the pandemic, with food safety and anti-bacterial technologies fully integrated with online ordering and digital payment solutions.
Perhaps in the not-too-distant future, a robotic barista will be in charge of handling all coffee deliveries at each store of large coffee chains in the US too, making coffee deliveries even more attractive.
After all, China’s coffee delivery culture has had a huge impact on the way the US market has developed. It’s safe to say it will continue to shape the industry, whether Americans like it or not.