It has been six months since Luckin Coffee set up its first store in Singapore.
Last week, we wrote an article on Luckin’s latest store (the 23rd store) in Singapore, mirroring its China store format.
Following the article, we did a poll with Momentum Works’ Chinese content channel on WeChat. Amongst ~1300 community members who voted, 54% think Luckin Coffee is doing better than expected in Singapore.
We have also received some interesting comments, which reflect some of the sentiments from the ground:
“(Hope Luckin helps to) lower the coffee prices in Singapore! $8 for a cup of coffee is too much.
“Is it because it’s cheap? But Luckin Coffee doesn’t taste good. Manner Coffee is my ‘White Moonlight’ (perfect personal preference).”
“I only bought one cup, got it at 90% off. Then I uninstalled the app, even though there were many 50%-off coupons left unused.
“If the operation in Singapore goes well, could they replicate it in Malaysia?”
“I agree with the person who mentioned Manner in the comment above, and Manner’s apple rolls and almond croissants are my must-order every time. But we don’t have Manner here yet, so for now, I still like Luckin Coffee, even though I don’t drink coffee. If they can offer prices like for bubble tea, then I can keep drinking.”
“Uninstalled after the first order.”
“The good-tasting coffee in Singapore are all not from chain stores…”
“First order for one dollar, but most don’t return after trying it.”
“Luckin Coffee in Singapore is more expensive compared to that in China.”
“Everyone is just taking advantage of discounts. In reality, after trying it once, most won’t repurchase. You get what you pay for. I think % Arabica tastes better (personal preference, no offence).”
Some thoughts
1. Overall, opinions about Luckin Coffee are mixed, reflecting the diverse preferences of consumers when it comes to coffee.
Ultimately, as discussed in our bubble tea in Southeast Asia report, the key lies in building (decent) flagship products – Luckin has taken a headstart in this area with its range of well-tested signature products like coconut latte.
- On value propositions, Luckin focuses on “Selection” (vast selection of coffee and non-coffee signature products), “Speed” (online ordering and pick up) and “Savings” (through vouchers: a coffee at only 99 cents).
However, as we see from the comments above, relying on these value propositions alone is not enough and will not convert into a lasting advantage. The bigger question lies in retaining customers in the long term. We will cover this topic in detail in our upcoming Coffee in Southeast Asia report. Stay tuned!
- While many consumers claimed they did not return after their first purchase using the first 99-cent voucher, Luckin’s strategy has no doubt attracted many to try Luckin Coffee for the first time.
The customer acquisition cost under this strategy is significantly lower than online ads: only the cost of coffee + 99 cents + payment cost, compared to at least $5 to get an install via online ads. It is a pretty good conversion to turn consumers into first-time paying customers.
It remains to be seen how they will perform in the next six months when the demand and order number moderate.
More insights
Momentum Academy has also condensed some of the learnings from Luckin’s innovations into “Sip, Innovate, Repeat” immersive workshop on coffee and bubble tea.
You can contact [email protected] if you are interested in bringing such learnings to your organisation.
