Starbucks Rolls Out M-Commerce That Can’t Really Buy Anything

Written by Evan Schuman
October 1st, 2009

It’s becoming the quintessential image of the 2009-era Mobile-Commerce app from major retailers. It’s attractive, stable, slick and a little fun. But because of a well-merited petrifying fear of letting a mobile device actually talk with POS, it often can do virtually nothing, at least in terms of consummating transactions or even making it easier for consumers to make purchases. Starbucks’ new mobile app is the poster child for such beautiful but ultimately impotent M-Commerce efforts.

In late September, Starbucks introduced two very different M-Commerce applications, both designed for the iPhone. One was for a very limited trial, impacting eight stores in Seattle and eight more in and around Silicon Valley (specifically Cupertino, Mountain View, Sunnyvale and San Jose).

That app, called Starbucks Mobile Card, allows a consumer to enter his/her Starbucks loyalty card number and to then see balances and related information. It also allows that consumer to enter a credit/debit card number and to use that payment card to add money to the Starbucks CRM card. A consumer walking into a Starbucks could then show the phone’s screen and allow it to be scanned as payment, in lieu of using the actual CRM card.

Starbucks Mobile Card is a limited trial, but the capability to access data about the card value is useful even though such data could just as easily be accessed from the chain’s Web site. There’s also a question of whether forcing a customer to take out their phone and have it scanned is really materially better than having them do the identical thing with a card. On the other hand, consumers can forget their loyalty cards, but it’s much less likely that they’ll forget their phones.

The real problem child is the nationally rolled out program called MyStarbucks. It’s also an iPhone app, and it offers a lot of Web repeat functions, such as a listing of all products and the associated calories and nutrients. Plus, MyStarbucks finds local Starbucks locations and provides basic information about each of the $2.4 billion chain’s 15,700 locations.

Here’s where things get frustrating. The app allows the customer to select and store a favorite location. It also allows that customer to create and save several favorite drinks, choosing from a laundry list of options. The problem is that there seems to be nothing digitally interesting that a consumer can do with that information, shy of posting it for groups of friends.

Why not take the next logical step and allow consumers to drag one of their favorite drinks to one of their favorite stores and have that data transmitted to that store, to save the time spent waiting in line to place the order and then waiting for that order to be made? The MyStarbucks app could even have been integrated into the Mobile Card trial, allowing for a complete buy-online-pick-up-in-store experience. There are quite a few reasons why it didn’t.


9 Comments | Read Starbucks Rolls Out M-Commerce That Can’t Really Buy Anything

  1. Rod Koch Says:

    The great thing about having loyalty cards on your iphone is that no matter how many loyalty cards you have your iphone never gets any fatter or heavier. My billfold is currently overflowing with loyalty cards and too often I don’t have the right one when I need it.

  2. Randy K Says:

    On the surface you make a logical argument for the app, but is it consistent with the experience Star Bucks set out to create for their customers? I think Star Bucks intended to let people slow down and enjoy their coffee and discussion. I don’t believe it was ever intended a “coffee-port” experience where customers fly in and out as fast as possible. No, I think it’s more than that and the app doesn’t fit the experience. They made a tough decision to hold off on that one, but I think it’s the right decision.

  3. Sean Wheatley Says:

    The fundamental question in my mind is what do Starbucks customers really want? Is the need worth the investment? The experience of walking into a Starbucks, placing your order and anticipating the taste of coffee it part the the overall experience. Technology should be used to improve the experience not replace it.

  4. Karen Oxenford-Melcher Says:

    What would be the return on investment (ROI) to Starbucks (or any retailer of perishables) for making the technology integration investments required to enable mobile POS? Would the app REALLY drive that many incremental sales as to pay for itself? I’m skeptical.

    Buy-online-pick-up-in-store makes sense because it mirrors the way many consumers now shop, by which I mean doing research online and comparing prices before making a purchase. Making it simple for the consumer to make the purchase online as soon as they have made the decision to buy reduces the incidence of consumers delaying purchases, while in-store pick-up eliminates those nasty shipping charges that turn off many shoppers and lead to abandoned carts. It simplifies things for the consumer, but also drives incremental sales for the retailer – justifiable ROI.

    A mobile device app could potentially lead to incremental impulse sales. For example when I’m chatting with a friend and admire a new purchase of hers; I might jump on my iPhone to nab the same item. But this makes much more sense in a non-perishable world, partly because if the consumer fails to pick up the item, no harm, no foul – it can be re-stocked for resale. There might be some ROI here, but the case is less concrete than the online case, so no surprise that retailers aren’t rushing in. I would look to leaders like Best Buy that pioneered the original concept to lead the way to mobile devices since they have already fundamentally figured out the integration and in-store logistics, so it probably would require less investment to extend the model to mobile.

    Beyond the additional challenges with perishables (everything from the timing of when to make the order, to how to handle orders not picked up (take the expense of the waste? charge the customer anyway??), I don’t see a Starbucks app fundamentally changing consumer behavior. If I want a Starbucks beverage, I’m going there. Allowing me to pre-order on my iPhone might make my life easier, but Starbucks already had the sale, so they didn’t gain anything. Now, giving me an app to find the nearest store – that does help, because if I’m in a strange town it means that I really will head to Starbucks instead of settling for an alternative that I happen to pass…

    I’m just not seeing the ROI on accepting a mobile order in a perishable world, so I’m not surprised that Starbucks hasn’t tackled this one yet.

  5. Evan Schuman Says:

    You spoke of the incremental ROI. Let me temporarily take off my journalist hat and speak as a consumer in general and a Starbucks customer in particular. I am a big fan of their beverages. (Their prices, not so much, but five of their double-espressos has gotten me through many a deadline night.)
    The problem is the delay. I drive to the store and wait in line. Then I explain my rather complicated drink order. They relay it to someone making the drinks. I then go through the payment process. Once done, I have to wait for the drinks to be finished and packed up. All told, it can easily absorb 20 minutes. That alone has caused me to not bother on many occasions.
    But if I could have my drink memorized and could zap it to the store from my car or at the office or at home in a few seconds and then be able to get in and out of the store in a two minutes, that would be a huge incentive. I would personally spend a lot more there and I am guessing I wouldn’t be the only one buying more.
    This has the potential of making that visit 10 times faster. And, yes, that should boost revenue. It also has the side benefit of accelerating the performance for everyone else because the time I don’t have to spend is also time the Starbucks employees don’t have to spend.
    I would argue that there is indeed a very good ROI potential here.

  6. Paul L Says:

    @Randy K “I think Star Bucks intended to let people slow down and enjoy their coffee and discussion. I don’t believe it was ever intended a “coffee-port” experience where customers fly in and out as fast as possible.”

    Randy, is the experience you are looking for of enjoying your coffee and discussion really tied to standing in line?

    I view the next step of the application as, I’m sitting and discussing / reading and want a drink, I pull out my phone, order, pay and pickup.

    I could do without having to stand in line behind 20 people who are just using SB as a coffee-port.

    Now what they lose is impulse buys of items along the register.

  7. Evan Schuman Says:

    Paul, you said: “Now what they lose is impulse buys of items along the register.”
    Not at all. Those mobile consumers still need to go to the counter to pick up their order (like any buyonline pickupinstore app) and they will then be exposed to the checkout impulse items. Maybe those impulse purchases will drop slightly as customers won’t have their wallets open, but it wouldn’t likely be much of a decrease.

  8. Noble Long Says:

    I’ve got an app called Wallet Zero for my Android phone which stores Loyalty Program numbers. You type in the information including the member number and it’s shows a barcode on the screen whenever you bring up the account. The problem is – the barcode is unscannable so the clerk ends up typing in the number. Other than that it’s a great app for replacing those cards that take up wallet space.
    There is potential for much more. Why not an app that gives you the ability to pay via mobile, leave feedback, order ahead, track rewards points, etc? The technology is there, the ROI is a given, SB’s target audience are typically hip to the newest trends – so what are they waiting for?

  9. shopgirl Says:

    Evan, I agree that this would be a plus. How about an express line for payment as well? There are many days when I don’t stop at Starbucks because I don’t have the time or the patience to wait in line. I find the drive thru is faster. This would be similar.


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