Starbucks’ mobile app lets customers order and pay ahead
Starbucks will introduce for the first time "Mobile Order and Pay" nationwide in 2015. The service, to be tested within the Portland area before the end of the year, enables customers to place orders in advance of their visit for a quick pick up.
"Mobile ordering will deliver convenience, frequency and speed of service and over time, become the fastest and easiest way for customers to order, pay and pick up their purchases," Starbucks said in a statement.
Beyond enabling shoppers to avoid long lines, the service is expected to support Starbucks’ mobile payment app, which is strongly entwined with its loyalty rewards program. According to Starbucks, the mobile-payment app now accounts for an estimated 15 percent of total transactions, up from 10 percent in 2013.
The move is also part of several initiatives Starbucks is rolling out to target the digital consumer, particularly the tech savvy Millennial crowd.
"Holiday 2013 witnessed a seismic shift in consumer behavior in which many traditional brick-and-mortar retailers experienced a decline in foot traffic compared to significant growth in online shopping," said Howard Schultz, Starbucks CEO, in a statement. "Customers researched, compared prices, and then bought the brands and items they wanted online, frequently utilizing a mobile device to do so."
Other moves taken by Starbucks as part of its holiday push will include red cups in stores, a line of holiday handcrafted beverages, a holiday-inspired gift card set, and a "Starbucks for Life" sweepstakes. My Starbucks Rewards card members will gain access to special in-store events, sneak previews of new products, and promotions, including packaged coffee in grocery stores.
Chipotle also offers what many are calling "line-busting" mobile ordering, as are Dunkin’ Donuts, McDonald’s and Taco Bell. With Apple’s new mobile payment system set to launch on Monday, any acceptance of mobile pre-pay ordering will help support what’s being predicted as a break-out year for mobile pay in 2015.
- Starbucks Unveils Reimagined In-Store and Digital Innovations for Holiday 2014 and Beyond – Starbucks
- Starbucks to roll out ‘pay ahead’ in 2015 – USA Today
- Starbucks to test smartphone ‘pay ahead’ option in Portland – The Oregonian
- Skip the coffee shop line: Starbucks to test pre-order mobile feature in Portland this year – GeekWire
- Apple Pay Set to Transform Mobile Payments Starting October 20 – Apple
Discussion Questions
How appealing will the ability to order and pay ahead be for consumers at Starbucks and other chain eateries? Will acceptance play a role in easing apprehension over mobile payment overall?
As a qualifier let me state I am not a Starbucks devotee and would not be a user of this app. However, I would be one of its largest fans. Why? Anything that will speed up the order/prep process where people are ordering drinks that have five-plus adjectives I regard as a great thing.
I do however see some issues that will have to be addressed. Who gets priority, the human in line or the one online? This applies to the preparation and the delivery processes. How long in advance should I order? What happens if I get held up and my drink gets cold? I am sure that there will be some hiccups in the implementation, but while not a fan of their coffee I do admire Starbucks as an organization and I am sure they will figure it out.
This is a very appealing—and rapidly exploding—phenomenon. It should bode especially well for operators such as Starbucks as they strive to provide personalized convenience. I’m anxious to see how much growth they will add to the currently-reported 15 percent of payments made through mobile. No reason to believe it cannot push near one-third of all transactions. Others will surely follow if they haven’t already done so.
As a Starbucks fan who too often leaves the store because of a big line, I can’t see why this won’t be a big hit for a lot of their customers.
On a much less “techy” level, there’s a sub shop near a local high school that has hit a home run with students. They can text in their orders and have them ready and waiting for them. Lunch business for the sub shop has sky rocketed, as students have limited time and don’t want to stand in a long line.
Frictionless commerce.
This makes complete sense for Starbucks, which enjoys an affluent customer base and has a limited number of SKUs, and the requirement of personal interaction to deliver the beverage. It will be interesting to see what happens when this same customer expects an equivalent experience at a department store. There are several companies offering technologies like this, but operational issues (including how to tell whether customers are walking out without paying) are still in the works.
“Fast Food” was coined in the 1950s, not because the preparation was fast (which it was), but because it was served fast. There have even been commercials promising speed. The next “fast” was drive through. Now we have mobile. This is a logical evolution made possible by technology. The big challenge of course is the ability to execute. Steve Montgomery outlines those concerns well above. How many times will a customer who pre-orders and pre-pays find it acceptable that their order is not ready?
Will acceptance play a role in easing apprehension over mobile payment overall? Absolutely! The trial bases of the chains listed in the discussion are huge and—more important than that—frequent. The more people use it the more they will want to, here, there and everywhere.
Absolutely appealing to consumers and beneficial to retailers as well. Waiting for your custom-made Starbucks offering to be rung in, paid for and prepared are tasks that most people would like to avoid or minimize. Similarly, this pioneering move will have a positive impact on customers’ use of mobile apps and spur the efforts of other retailers who could benefit from mobile apps.
Initially more of a drive-through play probably—but I can see urban locations with a will-call line for the walk-in customers who pre-order and pay. This is not only going to work, it may well become the QSR standard.
My office shares a wall with Starbucks. I’ve often gone for coffee and left upon seeing the line. If I could pre-order and know I could just walk over—or send an associate—and my drink order would be ready and waiting? WOW!
The only thing better would be the pass-through window we’ve been requesting without much success!
As a consumer I am concerned about their ability to execute and have the beverage ready at the right time. If the beverage isn’t ready when I arrive, or if it has been sitting too long and is cold, I won’t be a happy customer. Also, is the ordering ahead only for beverages? what about bagels, scones, etc. What happens when they run out of those items and you have already paid for them?
While this sounds good and will probably work a majority of the time, how they execute when it doesn’t work will be telling.
I personally will get down and kiss the Starbucks floor when this comes online. Great idea in terms of speed (for those of us who just get coffee vs. the folks that live in the cafe area) AND it still gives you that contact with the barista that makes life just a little more pleasant. At least for me. Love it.
The gold standard of shopping apps should be built around what the shopper deems as valuable. Eliminating the inconvenience of the order line and hopefully downsizing the wait time in the pick-up line is a much improved shopper journey for even die-hard Starbucks fans. Kudos to Starbucks for putting the shopper at the center of the app (universe).
Techs will love it, and that is a growing part of the demographics. It could even be difficult to use, but techs will use it. Just give everyone a reason to justify the cost of their phone and the service they pay for.
Finally! This technology has been available for so long I can’t believe restaurants have taken this long to roll it out. I hope they are also smart enough to put the right “flow” in place at the stores for the pick-up process. It would be a shame if people who ordered in advance were stuck in a line longer than the people ordering.
Given that mobile now represents 15% of all Starbucks transactions, I think this is a feature that a lot of users will embrace. And if executed correctly, it’ll further drive app downloads and usage, not to mention mobile payment adoption.
As for the other line-busting efforts, I think Chipotle is doing a great job in the space. I’m a frequent user of the app and its order-ahead service, and I’ve never had a problem. The Chipotle app is intuitive, and when it comes to “checkout” I can either pay using my phone or at the store. It also lets me indicate an estimated pickup time so when I get to the location, my food is always fresh and hot. And yes, not having to fall in line is a huge benefit.
If Starbucks can implement the same great experience/user-friendliness (which I think it could), then ordering ahead will be a hit.
The devil is in the details. What happens when the customer orders her latte “extra hot” and it arrives 5 minutes late? Do they make it over? Make it only when the customer is standing there? And how does it feel to have preferential treatment for those with a smartphone?
Will be interesting to see this in action.
Until this becomes a widespread service for many businesses, I think it will be a huge differentiator for Starbucks. As opposed to coupons or offers, in terms of loyalty this could have a more meaningful impact for high frequency customers like me, who tend to order the same drink every time, tend to know the local store staff, and really hate long lines with undecided customers ahead of me. Being able to order like this in advance and pick up my order is a great example of focusing customer experience. There should be no payment resistance for existing loyal customers who have a Starbucks card already—which is already used for mobile payment and account reloading.
Consumers will highly value the opportunity to use their phones and wearables to order and pay ahead. Let’s face it, we’re all in the habit of taking these devices wherever we go. They’re secure and they’re more convenient.
Here’s another key reason for the appeal to consumers. The mobile ordering process will include automatic application of reward points. That means no more fumbling through purses and wallets, and most importantly, no more forfeiting points simply because you forgot your card. Less forgetting ultimately means more redemption, which is good for the consumer and the brand. Redemption literally is the moment of “reward” that reminds consumers why they belong to loyalty programs. And LoyaltyOne research shows that spending lift follows soon after redemption.
It will be very appealing if the system works. In other words, if it becomes an efficient tool for saving time, getting the order correctly and the right name written on the cup, it matters to some. Then I anticipate a significant number of early adopters.
Apprehension over mobile payments will not affect the early adopter, just the customers who are not comfortable using their mobile devices for payments.