Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Evan Schuman: Can Starbucks get people to use its app to pay for dry cleaning?

Evan Schuman | March 20, 2014
The coffee purveyor has indicated it wants to move in that direction. But so do other companies, and they all have some hurdles to overcome.

But what else is Schultz thinking about when he says "within the marketplace"? Many grocery stores already sell Starbucks products. But few grocers have shown much excitement for mobile payments so far. A more promising aspect of "the marketplace" might be online. Starbucks could leverage the mobile device itself and become a payment option for Starbucks customers who want to shop online. The e-commerce majors (Amazon, Walmart.com, Target.com, eBay, etc.) aren't likely to jump onboard with Starbucks anytime soon, but there are plenty of mom-and-pop online outlets that might find it an interesting option.

Of course, Starbucks would hardly be alone in thinking about leveraging a popular consumer brand into a payment mechanism. Both Amazon and Apple have also let it be known that they might enter the payment field. Which of them has the best shot?

Amazon's case is the weaker one. It has little reason to make it easier for people to shop online anywhere but at Amazon, since it has set out to offer anything and everything online through its virtual storefront. It does have an interest, though, in dipping its digits into brick-and-mortar transactions. There, however, it's the other side that has a problem: Merchants large and small fear Amazon as the ultimate competitor. Why hand over to that behemoth unlimited information about customers and purchase habits?

Apple's situation is closer to Starbucks'. Like PayPal, both have been developing successful payment systems (Apple's iTunes, and Starbucks' payment card-turned-app), so they have experience in the field. Both also have expertise with in-store operations, so brick-and-mortar chiefs would be comfortable that their systems would work. Apple has a stronger competitive case than Amazon, since the wares it peddles are pretty much limited to its own personal electronics, a few accessories and downloadable content. That means that a Macy's, a Foot Locker or a McDonald's could theoretically let customers pay with iTunes with little fear that Apple would later try to steal those customers.

So Starbucks is at least as well positioned as its potential competitors in the payment field. Where it falls short is that question of whether consumers will think to use a Starbucks app when they're buying shoes. Amazon doesn't have that problem, since people are used to buying just about anything from it. Even Apple has more variety in its iTunes offerings than Starbucks does in its stores. What could help Starbucks is a continuation of its brilliant take-it-slow strategy. Starbucks has gradually trained its customers to get used to new systems. First, it slowly moved them away from cash and Visa/MasterCard/Amex to a Starbucks card — just switching one rectangular plastic card for another. Then it eased the move to the mobile app by simply putting the back of the card in customers' phones.

 

Previous Page  1  2  3  Next Page 

Sign up for CIO Asia eNewsletters.