Starbucks Corp. continues to make mobile commerce a strategic priority. So much so that CEO Howard Schultz is telling Wall Street analysts that Starbucks is able to marry e-commerce, mobile commerce and store-based retailing better than most other merchants. “Starbucks occupies a front-row seat at the intersection of the physical and digital worlds like no other company anywhere in or out of retail,” Schultz told analysts on Starbucks’ recent fiscal 2015 year-end earnings call.
While not disclosing e-commerce or m-commerce sales, Starbucks offered some metrics that give a glimpse into the coffee, tea and beverage seller’s online retailing business. For the fourth quarter ended Sept. 27, Starbucks, No. 456 in the Internet Retailer 2015 Top 500 Guide, mobile payments accounted for about 21%, or $1.03 billion, of the quarter’s total sales of $4.91 billion.
Starbucks didn’t break out similar metrics for Q4 fiscal 2014 but said mobile transactions now account for more than 10% of total sales at many stores, including some of the chain’s most heavily trafficked locations. “Yesterday the store at the World Financial Center in New York City did 150 mobile orders for over 10% of their overall transactions, and at Duke Energy Center in Charlotte, N.C., they did over 234 mobile orders yesterday for 20% of their transaction,” executive vice president and chief digital officer Adam Brotman told analysts.
Starbucks says it attracts 5 million mobile transactions per week and in September completed the rollout of its Mobile Order & Pay program to 7,500 locations in the U.S. The Mobile Order & Pay program enables Starbucks’ customers to use an Android or iPhone app to place a food or drink order in advance, pay in advance via stored credit card information and pick up the order at a nearby Starbucks store they select. “Our unique combination of assets that includes a growing global physical footprint of now over 23,000 stores, deep consumer engagement and trust in our brand, millions of customers every day, and breakthrough mobile and digital technologies are together enabling us to extend our reach and deepen our emotional connection to customers everywhere in ways that were not imaginable even a few years ago,” Schultz told analysts.
Starbucks continues to invest in mobile initiatives because the best customers are adopting an increasingly “mobile first” attitude, Schultz told analysts. “We believe very strongly that we had to seamlessly integrate the Starbucks experience with all things mobile,” he told analysts. “We are living in a mobile-first global economy and we’re witnessing that kind of change.”
Starbucks also continues to invest in other e-commerce and web-based programs, including a new digital music program. Starbucks didn’t give details but said it’s developing a digital music service through a partnership with music streaming service Spotify Ltd. “We’re launching delivery pilots in New York City and Seattle,” Schultz told analysts. “In the coming weeks, we will launch a rich digital music experience, both in-store and out of store, integrated in our mobile app through our partnership with Spotify.
“Many others in the food and beverage industry are now trying to follow in our footsteps by building a mobile app,” he told analysts. “Starbucks has built something that is differentiated from all of the others. Where others are attempting to build a mobile app, Starbucks has built an end-to-end consumer digital platform anchored around loyalty.”
For the 2015 fiscal year Starbucks reported:
- Net revenue of $19.16 billion, an increase of 16.5% from $16.45 billion in fiscal 2014.
- Net earnings of $2.75 billion compared with $2.06 billion in the previous year.