Previously, an unconfirmed internal document of Luckin Coffee revealed the company’s mission that Luckin equals the combination of Starbucks, Seven-eleven, Costco and Amazon. The new move seems to be the implementation of the plan.
Luckin Coffee (LK: NASDAQ) is famous for surpassing Starbucks as China’s largest coffee chain within only two years. But it seems never enough for the company to only sell coffee. Recently, it has quietly launched an online shopping mall on its mobile app and WeChat mini program.
The shopping mall named Chaopin (fashion goods) can be accessed through Luckin’s app main page. Products are categorized into six segments: coffee peripherals, consumer electronics, snacks, nuts, epidemic prevention products and apparel. The current SKUs are mostly focused on electronics.
It is worth noting that Luckin continues the subsidy policy for its new products. For example, the original price of AirPods2 headsets at CNY 1,246. Compared with JD.com and Pinduoduo (two of the most active competitors in the price war of consumer electronics), Luckin Coffee offers a price at CNY 799, which is CNY 200 and CNY 60 cheaper respectively.
From the products Luckin provides on the online shopping mall, we observed the consistency of the brand image it wants to convey, trying to stay simple and keep the style of ‘literary and artistic.’
According to Ran Caijing, the order placed on Chaopin will be processed and delivered from Luckin’s e-commerce warehouse, which is an independent system with Luckin’s coffee delivery.
Before Luckin’s initial public offering, there was a popular but unconfirmed slide that revealed the long-term mission of the company: be part of everyone’s everyday life, starts with coffee. The slides also showed an equation that Luckin equals the combination of Starbucks, Seven-eleven, Costco and Amazon. The explanation is that Luckin will provide the coffee with the same quality as Starbucks, operate a sophisticated operation network like Seven-eleven and select cost-effective items for consumers similar to Costco. Eventually, it aims to become a one-stop shopping platform driven by powerful technology like Amazon.
After two years of development, Luckin has completed the first two stories by creating an aspirational and innovative coffee chain – the Starbucks plus Seven-eleven. Now the third story has begun, the company will try to provide consumers selected goods at a much lower price.
However, some observers say this approach is nothing but a new way to boost Luckin’s GMV, which is more like a capital operation than an applicable strategic movement. The appearance of the Xiaolu Cha franchised store and the newly launched vending machines has all been following the same logic.
Every business has its border. Luckin will keep expanding its border for sure, since the company’s story seems long from being complete. But will it last that long while bearing a huge loss? The fourth-quarter financials will probably answer this question.