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05 JUL. 2018

Going Deeper than the Buzz with Luckin Coffee: When an Internet Business Goes into Serving Coffee

In May 2018, the name Luckin Coffee became known almost overnight across the Tier-1 and Tier-2 cities in China, along with its distinct blue cup. Zhiya QIAN, the founder and CEO of Luckin Coffee declared in an interview, “We will open 500 shops within 5 months with the initial capital of 1 billion RMB.”

But what kind of company is behind these ambitious words? Let’s take a closer look at the brand by using our 4 Facets of Brand Positioning to discover the story behind the buzz.

Serving Coffee in the Internet Business

In most cases when a new comer joins the coffee market, it focuses its marketing on the “great quality of the coffee” which is by itself not attractive enough to the Chinese consumers. This time around, Luckin did it differently and went another way.

Truth – Fast Delivery, Low Price

The main painpoints of traditional coffee brands are “inconvenience” and “high price”, which created an opportunity for Luckin Coffee. By collaborating with SF express, a high-end delivery company in China, Luckin guarantees that the coffee you order on the ‘Luckin APP’ is delivered to you within 30 minutes.

Different from traditional competitors, customers can only order and pay their coffee via Luckin’s own APP. For customers, it integrates the digital experience with coffee consumption which will lower the likelihood of queueing up or waiting; and for the brand, the APP continuously grows a huge database of valuable customer profiles for future actions.

The average price of Luckin coffee is around 20 RMB. More so, “1st coffee free for new users”, “buy 2 get 1 free”, “buy 5 get 5 free”… all these catchy promotions are driving a dramatic increase of users to the APP.

Vision – Affordable and Accessible to Everyone

Calling itself a new retail professional coffee brand, Luckin Coffee provides affordability and accessibility to consumers by balancing quality, price and convenience under their new retail business model. They believe that by doing so, everyone in China will be able to have a cup of high quality coffee whenever and wherever they want.

Occasion – Ordering online, Drinking at Office

Luckin Coffee focuses more on the Internet attributes. You order several cups of coffee online with colleagues to get free ones during a meeting, sharing the APP to a non-user friend before the coffees are delivered within 30 minutes. One more cup free! You don’t need to go downstairs to grab heavy cups anymore.

Personality – An Ambitious Outlaw

No one can deny that Luckin Coffee is an ambitious outlaw who has broken the rules in the coffee industry in China. It claimed to spend 1 billion RMB (around 150 million US dollar) to obtain consumers while opening over 500 retail shops within a half year. As a new comer, it even aims overtly at the top 1 position in China.

What Will Be the Future?

While Luckin claimed Starbucks as its biggest rival, these two brands are actually not competing on the same lane. Luckin seems more in competition with convenience store coffees such as 7-11 or ParCafe in FamilyMart or with the instant coffee brands like Nestle.

Being more like a typical Internet (platform) brand such as Mobike and Didi, Luckin’s strategy is fundamentally different from what traditional food & beverage brands would do. Coffee for Luckin is merely a quick, no so costly tool to get access to as many consumers as possible and will capitalize on it later.

What will Luckin’s future look like? The next move probably would be taking advantage of the large number of consumers they have obtained and expanding horizontally. In the future, Luckin wouldn’t probably limit itself as a coffee brand. However, looking at the status quo being a coffee brand, Luckin should seriously start thinking how to grow brand loyalty from all those droves of consumers and retain them after their promotion finishes.

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