Current Events > Luckin Coffee (Chinese big-coffee) with a new app idea: Offer electronics

(+) Yeah! (+)

As with the company's coffee strategy, many of these items sell at discounts that bring prices lower than on China's leading e-commerce sites. A company spokesperson would not say how long these bargain rates would last. But this gets at a leading concern surrounding Luckin's strategy. Its success has long relied on deep discounts, which contribute to quarter after quarter of financial losses.

One might ask: Who would buy a pair of headphones while grabbing a coffee? A factor worth considering is that the items, ostensible impulse buys, do not exist as in-store inventory and must be shipped by Luckin's exclusive courier partner, ZTO Express, the company told MarketWatch.

But some industry watchers are less than dismissive of the underlying logic. "Who knows," said Matthew Brennan, managing director of China Channel, which organizes tech-related conferences. "It could be random. People have birthdays, for example, and you might suddenly remember you haven't gotten someone a gift," and all you needed was to see the product on the app.

As for the by-delivery-only nature of the purchases, Brennan said he ordered a coffee mug from his home, and it arrived, in typical Chinese fashion, in 15 minutes.

Brennan echoed some industry analysts -- and presumably the company's own hope -- in observing that, with cheap coffee driving foot and app traffic, some percentage of that customer volume, once engaged, will be enticed to consider the higher-end -- and higher-margin -- offerings.

Luckin raised $500 million during its May IPO (http://www.marketwatch.com/story/luckin-coffee-p rices-ipo-at-17-increases-number-of-shares-it-will-sell-reports-2019-05-16), offering shares at $17, which had nearly doubled until the coronavirus crisis in China and now stand at $25. Despite losing money overall, Luckin achieved, it said, its first-ever positive store-level profit margins in the third quarter of 2019 (http://www.marketwatch.com/story/lu ckin-coffees-stock-shoots-up-after-r evenue-rises-above-expectations-2019-11-13). Revenue growth has continued to climb, as well.

Look for this to become more normal in America too. But this is a brilliant idea for big-corporate apps

---

welp

---