This nascent coffee brand has gone completely viral and is said to rival Starbucks
初期的，幼稚的 病毒性的 对手，竞争
If you asked coffee drinkers in cities a few months ago where they bought coffee, you would most
likely have heard "Starbucks", the uncontested go-to spot for the caffeine-dependent. Today, however,
无竞争力的， 毫无疑问的是 老地方 对咖啡因依赖的人
a less familiar name may come up more often as it is barging into the coffee retail market in China:
barge，蹒跚，闯入/ 闯入
Luckin.
Unlike Starbucks, the Seattle-born global juggernaut, Luckin is a homegrown novice, despite its English name and sleek design. Barely five months old, this toddler is punching far above its weight. Up until April 11th, its 344 stores dotted 13 cities, with Beijing (81 locations) topping the list. Luckin churns out over 30 stores every week, and by May expects to reach 500 total stores nationwide. The speed and scale are comparable to the Nazi blitzkrieg and the waves are quickly being felt among coffee drinkers.
Luckin comes prepared. It has a clear business model based on a niche market. Its stated goal is to convert Starbucks goers into Luckin lovers. Its prices are carefully set to be about ten yuan lower than the coffee at Starbucks but a few yuan higher than at such alternatives as convenience stores and bakeries. The perfect traction thus would be Starbucks fans who wish the coffee were slightly cheaper and yet retained the same standard.
On its website as well as its paper cups, Luckin seems to fulfill precisely such wishes. It boasts three major highlights: premium Arabica coffee beans, recipes devised by award-winning baristas, and fresh brewing, all signs of high caliber. According to some accounts, its beans are generally 20%-30% pricier than Starbucks’, a testament to its obsession with quality. Well-prepared recipes appeal to coffee aficionados who want more than a cup of drinkable coffee. Freshness serves a similar purpose.
What truly sets Luckin apart from Starbucks is its delivery-focused approach. Either out of the difficulty of running its own delivery operation or persistence on superb taste, Starbucks does not deliver. Luckin attempts to fill the void by positioning itself first and foremost as a coffee delivery brand. It promises fast delivery; customers who have not received coffee 30 minutes within placing an order automatically qualify for a free coffee on Luckin. For those who are picky about quality, they can order coffee on their Luckin app and pick up the drink at the nearest coffee bar.
Coffee delivery may remind some heavy coffee drinkers of another coffee brand which went out of fashion more rapidly than into fashion: Coffee Box (pictured), formerly known as Lyan Coffee. In 2015, seeing the lack of delivery by big coffee brands like Starbucks and Costa, Lyan got off the ground by jumping on the O2O (or, online to offline) bandwagon. Its initial business rationale is to amass Starbucks users while delivering coffee to them and then monetize them by rolling out its own coffee brand (Coffee Box). It was allegedly bad at managing the burn rate and prematurely launched the program. Fans were said to be lukewarm about it.
Luckin’s genes vary entirely from Lyan's as well as Starbucks’. Though a coffee company and perceived as such, Luckin claims to be an Internet company through and through. All orders, for instance, have to be completed on its proprietary app. This means great difficulty of user conversion but greater ambition of turning users into loyal fans too.
Another hallmark of its identity as a tech startup is its startlingly quick scalability, both in terms of user acquisition and store additions. It has adopted the typical growth hacking approach that has long characterized such Silicon Valley titans as Uber, Airbnb, and Dropbox. Users can give away free coffees on their Luckin app, and once their friends redeem the gift they can themselves get free coffees. (To be honest, this is part of my motivation for penning this post )
This simple yet classic tactic ensures a persistently high referral rate while keeping costs low. Thanks to the high margin of the coffee business, Luckin's customer acquisition cost (CAC) can be slashed. The cost of acquiring an app user--two free cups of Luckin (one for the new user and one for the existing user)--is 48 at face value. Yet the real cost may well be between 18-25, and by some measure, far lower than the average CAC of an e-commerce app user.
The customer lifetime value (CLTV) can further justify its CAC. If its coffee is consistently good, and the brand is getting stronger to fend off other serious contenders, Luckin can benefit from the CLTV in the long run because coffee drinkers consume it repeatedly and are likely to stay with the brand they like. Unlike many other drinks, coffee is addictive and is a necessity. I, for example, drink seven to fourteen cups of coffee per week. A day doesn't really start until I quaff an Americano.
Luckin's growing fan base is thanks also to its careful pick of spokespeople. Tang Wei and Zhang Zhen, two likable actors, appeal to the right audience Luckin eagerly seeks to tap into. While Starbucks may consider hiring celebrities unnecessary, Luckin takes them to be the holy grail. Every invite link sent by existing users is accompanied by a charming pose as if by accepting the invitation, a user is welcomed into a high-class club.
Now Luckin is making waves and making Starbucks uncomfortable. But the question is, will the momentum last? Will Luckin the David outcompete Starbucks the Goliath? Will Starbucks wake up to the alarm and take up the challenge? Will coffee enthusiasts remain passionate about it when they are weaned off the freebies? Only time will tell. Until then, why don't you hop on the bandwagon and treat yourself a free and fresh coffee?