Success story

[Case study] How luckin coffee became a hit in China

23 June 2018

How Luckin Coffee become a new hit in China is quite an intriguing story. In a few months, it has become one of the most popular cafe franchises and coffee delivery services in Beijing and Shanghai.

What is Luckin Coffee?

Luckin Coffee was founded in November 2017 by Ms. Qian Zhiya, founder and former COO of the car service company UCAR (rival of Didi Chuxing). In fact, the CEO of UCAR, Mr. Lu Zhengyao, was the angel investor behind Luckin Coffee’s massive operating budget – by the end of May 2018, it has successfully opened 525 coffee shops in China.

A fiercely competitive market

In the past few years, the consumption of coffee in China has been on the increase. According to International Coffee Organization, China’s coffee market will grow to 300 billion RMB by 2020. However, it is difficult for new comers to gain visibility since competition is fierce. On the one hand, international coffee shop chains like Starbucks and Costa are expanding their presence and on the other hand, retail channels like 7-Eleven or McDonalds are trying to consolidate their market share. This is in addition to local operators that already exist in the market. For example, the Shanghai-base startup Coffee Box has been providing a coffee delivery service since 2012.

When Luckin Coffee entered the market with the ambition to open coffee shops as well as providing delivery services, it had to overcome this enormous level of competition. Therefore, it was crucial for Luckin Coffee to gain exposure as quickly as possible. With a competitive price point, major celebrity endorsements, and strong branding, the company have everything going for them. But all of this is worthless if they can’t get the message out to prospective customers.

Who wouldn't love it?

Apart from inviting celebrities to endorse the brand (in this case, the Taiwanese actor Chang Chen and Chinese actress Tang Wei), Luckin Coffee needed to broadcast the brand’s message to its targeted audience. Today, the main coffee consumering group in China are young white-collar workers in CBD areas, who also happen to be the first generation of social media users.

After the opening of Luckin Coffee’s first coffee shop in Beijing in November 2017, the brand launched its first WeChat Moments advertising campaign, targeting users living within 1.5 kilometers of the coffee shop in addition to young WeChat users in Beijing’s central business district. Within 2 days, it had successfully attracted 2,000 app users and tripled the number of customers coming through the doors.

A sample of one of Luckin Coffee’s WeChat ads contains the following:

  • Trial opening of Luckin Coffee
  • An offer from Chang Chen of 1 cup of maestro coffee
  • Price points: Coffees for no more than 27 RMB
  • Freshness guarantee whether your coffee is delivered or you pick it up

In addition to the written and visual content, two links displayed below the ad allow users to reclaim coupons and display the address of the coffee shop on a map. If users click the imbedded link on the poster they are redirected to a landing page which includes a video clip, the brand’s story, and coupon reclaim buttons. Tencent’s statistics show that users have stayed on the landing page for an average of 29 seconds.

In addition, the brand fully utilizes the social and communal nature of the app by allowing users to share coupons with their WeChat contacts, or direct on WeChat Moments, after downloading the Luckin Coffee app and registering their details. If other users successfully register and order coffee after clicking on a shared link, the person who referred them also receives a new coupon.

Campaign result

Along with advertisements (posters, videos, etc) displayed inside elevators in Beijing and Shanghai’s CBD office buildings, Luckin Coffee’s social ad campaigns were a huge success.

In the two months after it was launched, Luckin Coffee’s WeChat ads received 20 millions impressions which translated to 70,000 new app users. The brand’s official WeChat account gained nearly 60,000 followers after the campaigns.