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Starbucks Rolls Out M-Commerce That Can’t Really Buy Anything
The customer chooses one of her favorite drinks—perhaps from a pull-down menu—and associates it with her store and then uses her newly funded Starbucks card to pay for it, all from her phone. She could then schedule a time—on the phone—to pick it up.
She arrives, skipping all of the lines—including payment—and grabs her already-paid-for order, and she’s on her caffeinated way.
We spoke with several people working for or with Starbucks to try and get an answer to why Starbucks got so close to a powerful mobile app but stopped just shy of making something powerfully useful. Beyond being told that those kinds of integrated capabilities are likely to happen sometime in the future, nothing concrete about it was shared.
Starbucks is far from alone in being hesitant to cross that frightening POS boundary. Some have tried mild interactions. J.C. Penney has now started a trial at some 16 Houston area stores to read coupon barcodes from phones, a move that the chain claimed was the first such effort made by a major retailer outside of grocery.
But the danger of POS interference is virtually nil with that kind of barcode scan. The likely worst-case scenario would be akin to cashiers having trouble scanning the barcode on a box of cereal. They would likely give up and simply enter the code manually, with no probably POS damage.
To make the Starbucks integration happen—to create a true buy-online-pick-up-in-store mobile experience–would require a much deeper integration with the POS, which is not something that IT departments generally find comforting. At the very least, lengthy testing would be required.
A standalone mobile app—such as what Starbucks rolled out—might be less useful to the consumer, but it’s a lot easier to sell internally.
A CIO at a very large restaurant chain said points of resistance will go way beyond IT. It might touch on store physical layout, with questions of how and where to set up that order pick-up line.
There are also questions of when the food/beverage order would be released. Coffee is very time sensitive. Should the onus be placed on the consumer to select a time of pickup and if traffic makes them late, it’s their tough luck? The restaurant CIO said his chain has even gone so far as to explore GPS applications that would alert the restaurant when the customer’s phone was within a pre-determined distance, as in “We’ll get an alert when the customer’s five minutes away and then we’ll make their order.” Added the CIO: “Maybe we don’t make the order until the GPS detects them entering the parking lot.”
-Marc
October 1st, 2009 at 7:14 am
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.
October 1st, 2009 at 8:19 am
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.
October 1st, 2009 at 10:00 am
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.
October 1st, 2009 at 1:16 pm
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.
October 1st, 2009 at 1:54 pm
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.
October 7th, 2009 at 2:14 pm
@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.
October 7th, 2009 at 2:30 pm
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.
October 8th, 2009 at 10:16 am
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?
October 15th, 2009 at 9:58 am
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.