The “Starbucks experience” is widely envied and imitated in the retail world, but in mobile payments, at least, no one has come close.
No one outside of retail has come close either.
There is no better proof of that than the following astounding figure, tucked into the string of superlatives for the mobile payments efforts of Starbucks Corp: 90% of mobile payments in 2013 took place using the Starbucks mobile app.
That’s what you call owning a space. This figure refers to mobile payments at the point of sale in the U.S. and excludes in-app or on-phone payments, which is a somewhat selective definition, but still, 90%! Starbucks mobile payments now account for 16% of the company’s total sales volume, up from 14% last year and 11% the year prior. By one measure, that year-over-year figure means growth is slowing, but overall volumes are on the rise, and in these relatively early days for mobile payments, it should not be taken to be mean mobile efforts are on the decline.
With Apple Pay on the upswing, Starbucks’s domination of mobile payments should ease somewhat, but it’s worth considering what Starbucks offers that Apple Pay doesn’t at this point, which is a coherent value proposition. Starbucks and its customers materially gain from using the app. Customers get deals and free coffee (though they also get this with the Starbucks card, too) and Starbucks gets customer data and money before the customers enter the store. Apple Pay’s most compelling use case at this point, on the other hand, is security.
Apple Pay is said to be launching a loyalty program in time for the holidays and good things will happen with this eventually, but it will take some time before it can hold a candle to the clear and easy payment offering of Starbucks.