Starbucks to put ‘ecommerce on steroids’ with mobile delivery service

Starbucks is to deliver food and beverages to users of its mobile app ordering service in a bid to deliver what it calls “ecommerce on steroids” and maintain its first move advantage in the digital space.

The coffee maker will start delivering food and beverages smartphone orders in selected markets in 2015. Delivery will be made available as part of the revamped Starbucks Rewards loyalty program, which is being introduced through the company’s new Mobile Order and Pay app.

The app lets customers pre-order products they can pick up a later time and is being tested in the US next month. A wider rollout is planned in the second half of 2015 with Starbucks hailing it as the “single most important technology innovation” it will introduce in the year.

It aims to bolster the company’s digital payments system and loyalty program. With 8 million active users and 14% of total transactions on mobile application through the My Starbucks Rewards program, the business hopes to use mobile to drive frequency of in-store traffic. Like-for-like global sales for the business rose 5% in the three months to September, which was below analysts’ forecasts.

Speaking on a conference call to analysts yesterday (30 October) Starbucks chief executive Howard Schultz, said the business was in the midst of navigating consumer shifts away from bricks-and-mortar stores but also higher consumption of food outside of the home.

“Imagine the ability to create a standing order that Starbucks delivered hot or iced to your desk daily, that’s our version of ecommerce on steroids,” said Schultz. “Now what you’re going to see in the years ahead will be a rapid acceleration in mobile device purchases and a continued significant migration away from bricks-and-mortar commerce. There is obviously a huge prize there and that’s why we’re seeing so much activity around the payment space from all kinds of companies.”

It is the latest mobile play from the business, which has already carved out a strong positioning over rivals by leveraging its loyalty program. It claims to have owned a 90% of the mobile payments in in 2013 while bricks-and-mortar sales in the same year totaled more than $4.2tn.