Online Ordering Comes To Starbucks

Starbucks is looking to step it up a notch. This fall, the company plans to test giving its mobile app customers the ability to pre-order purchases for later pick up. The big question is why. Is it really just about cashing in on the OLO trend or an effort to give a big boost to the number of people who have the app?

Starbucks is so confident in the belief that customers view its mobile app as the easiest to pay that it’s planning to take it to the next step: pre-ordering for pick up later.

During a recent William Blair Growth Stock Conference, Scott Maw, Starbucks chief financial officer, said the company this fall plans to

test the express order and pay concept in an undisclosed market. During the pilot, users of the Starbucks mobile app can order in advance, confirm an order or modify one, walk into the store and pick it up.

“The test market is really to iron out probably a dozen different things that we have to figure out,” he said. “What’s the customer experience? What’s the wait time? What’s the impact for people that have to stay in line? How do partners execute on it? What’s the impact on the drive-through? All those questions we have hypotheses on. We’re going to test this very significantly, learn from that, and then in the back half of next year we’ll roll it nationally.”

There’s also the chance the coffee goes cold before the customers picks the pre-order up. Moreover, others that have implemented similar mobile functionality have had to grapple a little bit with the pay piece of that, Maw said. “We’ve got that solved but there are a lot of other things that we have to learn.”

Starbucks believes the express pay feature will help with throughput and customer service, and it will give customers different options that range from drive-through, walkup, or order in advance, Maw said.

Maw noted during the event that Starbucks has the top mobile app in the market, though he couldn’t say who the runner up might be. Customers use the app some 5 million times per week.

“We know we have a significant portion of the total share, and the real power in these assets is how they work together,” he said, citing the mobile, digital and loyalty functionality.

In terms of loyalty, Starbucks has some 8 million active My Starbucks Card members, and the card drives increased frequency of visits, Maw said. “If you’re a loyalty member you know it’s fair,” he said. “If you come a lot, you get a lot of rewards.”

But what the card also does is give Starbucks the ability to collect information about its customers. In doing so, it can provide one-to-one digital marketing to inform customers of the right type of offers and updates in its stores that fit their buying behaviors, Maw said. “And we’re in the early days of building out that capability and that direct-marketing capability and learnings,” he said.

About one-third of customer payments are conducted with some form of Starbucks card. The mobile app, which holds the card information, is used for 14 percent of Starbucks payments, Maw said.


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