Starbucks touts mobile order and pay, 'e-commerce on steroids'

Starbucks is ahead of the retailing curve with its mobile efforts and is hoping to stay that way with a mobile order and pay service about to launch with delivery next year.
Written by Larry Dignan, Contributor

Starbucks, which conducts nearly 7 million mobile transactions a week, is planning an order and pay service via smartphones in 2015 as well as a delivery.

sbux app

The coffee and tea retailer, which has one of the largest loyalty card programs, has been ahead of the curve on the mobile front with apps that allow customers to pay and even tip. Those apps reduce commerce friction and drive more transactions.

Now CEO Howard Schultz is hoping to up the ante. On Starbucks' fourth quarter earnings conference call, Schultz noted that the company is navigating shifts away from brick-and-mortar sales as well as consumption of food and beverages away from home. The plan is to leverage Starbucks' digital reach.

Previously: Does ordering coffee from your smartphone signal the end of personal interaction? | Starbucks adds digital tipping, shake to pay to iPhone mobile payment app | Starbucks: How social, mobile deliver return on investment

Schultz said Starbucks will continue to utilize its apps to drive traffic and engagement. He also outlined Mobile Order and Pay, which will debut in Portland in December. He outlined the service:

But perhaps the single most important technology innovation we will introduce this year is Mobile Order and Pay, which debuts in Portland in December and will be rolled out nationwide in 2015. And while many people are talking about mobile and pay, what Starbucks is going to do and execute is quite different than anyone else in the marketplace.

Consumers today are no longer willing to accept convenience only around the purchase of readily available or commodity-based products. They want convenience around the purchase of premium products like Starbucks as well. One way we are addressing that need is through accelerated expansion of Starbucks' portfolio of high-profitable, drive-through stores. But our research confirms that we can drive even more traffic and incrementality and offer even more customers more convenience in more locations by allowing them to place orders ahead of time via their mobile devices and pick their orders up without waiting in line.

Starbucks' Mobile Order and Pay is a totally unique technology. It seamlessly integrates mobile ordering and our proprietary loyalty program with point-of-sale and store operations, enable us to enhance our customer experience, exceed our customers' expectations of convenience, and extend customer loyalty. And as we will see in a few weeks, no company in any industry offers any technology remotely like Starbucks' Mobile Order and Pay; plus, we get the added benefit of increased store throughput and speed of service for all our customers.

Meanwhile, Starbucks is aiming for delivery services in key markets in the second half of 2015. "That's our version of e-commerce on steroids," quipped Schultz.

If successful, Starbucks will grow its loyalty card program that has 8 million active members. So far, Starbucks mobile flywheel is working. Starbucks conducts nearly 7 million transactions a week, or 16 percent of all activity in U.S. stores. Schultz promised more innovation in digital payments, but didn't disclose details.

Starbucks reported fourth quarter earnings per share of 77 cents a share on revenue of $4.2 billion, up 10 percent from a year ago. Same store sales were up 5 percent in the quarter. For the year, Starbucks reported earnings per share of $2.71 on revenue of $16.4 billion, up 11 percent from a year ago.

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