The “Starbucks experience” could be for sale soon.
The Starbucks mobile app is the envy of the retail world.It processes 14% of the company’s transactions, 75% more than a year ago. With 10 million active mobile app users — twice the number of users from a year ago — and 5 million mobile app transactions a week, the Seattle-based coffee giant is head and shoulders above the competition at the mobile point-of-sale.
The competition, of course, has noticed, and some companies have even approached Starbucks about licensing the technology for themselves.
On yesterday’s earnings call, CEO Howard Schultz had this to say about such a proposal:
We’ve been approached by tech companies and national retailers as to whether or not we would consider licensing or white-labeling the Starbucks’ mobile platform. I think you have to ask yourself, why are they asking us to do this? We have such a significant lead. There isn’t a company that we can identify that is processing anything close to a million transactions a week, and we’re now way over 5 million. Most of the national retailers did not invest ahead of the growth curve. They do not have the capability in-house at this point to really execute this and to fully understand it.
Tech companies themselves obviously have the tech background and the insight that they do not have the interface on the physical side with the consumer to execute it. So we are in a very unique position having kind of saw, chicken-and-egg problem of both, the digital technology and obviously the interface with the consumer.
I think we don’t look at it as a risk, we look at it clearly as a very significant upside. And the question we’re asking ourselves and we’re asking it through a very positive lens is we strongly believe that there is an opportunity in creating a monetization here that will be very complementary to the core business, and in a way it could add a flywheel effect of exposing more people to the Starbucks platform.
Starbucks has not determined whether it will go through with the white-labeling of its app. Schultz said:
We have not made the decision as to what we will do, but I can share with you that we are actively pursuing a number of conversations because we probably strongly believe that one is a title wave of consumer adoption and smartphones and mobile commerce, and we are in the sweet spot of being in a position to take advantage of that in a very unique fashion. And I should say domestically and internationally, don’t forget we are doing this now in over 20 countries.
Starbucks has experience with licensing its coffee already. Starbucks has been one of very few bright spots for mobile at the point of sale. Perhaps its mobile experience can lift the rest of the industry, as well.