What is the Starbucks customer seismic shift?

Almost two years have gone by since Starbucks Mobile Order and Pay launched nationwide in the United States. For those who don’t know, this is when you use the Starbucks phone app and place your order without standing in line. In most stores, your mobile order item will appear in a staging area near the hand-off bar. In some cases, you’ll need to ask the barista to get you your mobile order and pay food and/or drink item. It works much more effectively (in my opinion) for stores to have an area staged for mobile order and pay versus the customer having to get the attention of a barista, interrupt him or her, and get their drink directly from a barista.

This is a staging area:

IMG_20170822_085529_573 McArthur Main Starbucks Santa Ana Mobile Order Pay

 

Mobile Order and Pay seems to have taken off. Some stores have close to half their morning peak orders come in via Mobile Order and Pay. In March of 2015, the Mobile Order and Pay feature of the Starbucks app was only available in select areas of the United States, primarily the Pacific Northwest. In September 2015, all United States (company operated) Starbucks were using Mobile Order and Pay. Mobile Order and Pay has even given customers the ability to gift a beverage to a person thousands of miles away. You could be talking to a family member and coordinate things like, ‘Stop by your favorite Starbucks at the Starbucks on Katella at Stadium Crossings and an iced coffee will be waiting for you!‘.

The Mobile Order and Pay technology has improved over time. In the very beginning, you could not redeem an earned Starbucks reward on the app, and now you can. You might even now get a text notification that your beverage is ready.

At the same time, Starbucks just announced that they’re closing the online store, StarbucksStore.com. I have to say I’m stunned. It’s been a great way for customers to order rare coffees that are not found in core Starbucks locations everywhere. You can even subscribe to the Roastery subscription and get rare coffees delivered to your doorstep once a month.

Since StarbucksStore.com is closing, there are lots of items on sale. Now is your chance to buy brewing equipment and more on sale!

So what do you think of all this? What is the seismic shift of the Starbucks customer? Is it simply that people love Mobile Order and Pay but don’t shop for other Starbucks things on StarbucksStore.com? Please weigh in!

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22 Comments

  • Hayley Shea

    I’m also stunned they’re closing the online store. It’s so great for ordering Christmas gifts. I personally am not a fan of mobile order but I’ve always liked building a relationship with my local baristas

  • (Ms.) Bobby Xhilone

    I have really, really liked the mobile order, except that it does mean parking my car and walking into the store, which is annoying in bad weather. And sometimes the parking situation is crowded and crazy — you nearly take your life in your hands trying to walk across the parking lot! So, will we ever be able to pick up a mobile order in the drive-thru, or is this already available and I’m just not aware of it?

  • Tex

    Not really surprised they’re closing the online store since most of the drinkware, presses, etc are on Amazon (personal example – I wanted the Stanley portable French press that sells for $35, I ordered the non-Starbucks branded model from Amazon for $18, exact same device just painted a different green). That and most people on this continent can get to a Starbucks core store in 1/2 an hour or less so if I needed to buy (non-Reserve) beans, I could just go get it rather than have to wait for it to ship. Wasn’t like the online store gave you a discount on them. Where people will lose out is, as you point out, if you want Reserve beans, none of your close by core stores carry them, and you don’t want to commit to a subscription.

    Since you’re talking about seismic shifts, here’s another one. It seems Starbucks is gradually splitting off into two distinct “chains” or “business units” or whatever they’ll call them. Core and Reserve. The Reserve side (so that would be your Reserve Bars, future Reserve Stores, and the Roasteries) appeal to the “hipster” third wave coffee fans who want the best, rarest beans and the best technology and skill to roast and brew them. In other words Starbucks is taking dead aim at Intelligentsia/Stumptown/CounterCulture/PT’s customer base, using its billions in the bank to snuff out the competition nationally (no way Intelligentsia can keep up with Reserve Bar expansion). If you want the best COFFEE you go there.

    Then you have the core side, which I’ve often derided as “Dairy Queens” for their heavy focus on Frappuccinos and other sickly-sweet desserts in a cup (hot and cold). That side doesn’t competes with Dairy Queen, Baskin-Robbins, Dunkin Donuts, McCafe, and (here in Canada) Tim Horton’s. If you want a “cup of joe” in the drive-thru on your way to work, or your kids want some kind of milkshake, here’s your place. Maybe they should install Frozen Custard machines in the core stores, that would make Frappy Hour a lot more efficient!

  • Tex

    (oops, I meant that side COMPETES with Dairy Queen et al… remove the “doesn’t”!)

  • Andrew

    Hi Melody!
    Since you know A LOT about Starbucks and perhaps even have some contacts there, perhaps you might know the answers as to why Mobile Order and Pay isn’t available in Quebec yet, and when it might finally get here. It launched everywhere else in Canada over a year ago, and at that time they said it would be coming to Quebec by the end of the year, and then they changed that to “soon” but that was a long time ago. Any info on when it might finally arrive? It’s available in every other province and the employees at the stores say they have all the equipment for Mobile Order and Pay, it’s just not live, and customer service has been entirely useless in trying to get this information. As an anglophone, in Montreal being able to place my order quickly, easily, and accurately without my mangling of the french language would certainly be helpful. Their competitors here in Canada already have apps that allow for mobile ordering. Starbucks launched the feature first, yet somehow everyone else has beat them to finishing the job nationwide.
    Any info you might be able to provide would be very much appreciated!

  • Barb Corbett

    Love the mobile app for ordering on my way to work! Seems I am always running late and having my coffee waiting gets me in and out the door quickly.

  • Melody

    @Tex – If we are honest, the Frappuccino aspect of Starbucks is VERY profitable. I know baristas complaining about making Frappuccinos, but all those Reserve bars and the Roastery are built on the backs of millions of green straws. Yes, it looks like there is a growing separation between the coffee side of Starbucks and core stores.
    What’s sad is that coffee masters in core stores then don’t get to know much about how much amazing Starbucks coffee there is. I’ve also noticed that Starbucks has stopped teaching the stories that go with the coffee. http://www.starbucksmelody.com/2017/05/12/know-stories-go-coffee/ – So much is about human interaction and you can put people to sleep if you just tell them Sumatra is a semi washed coffee, but if you can entertain and delight with a story (“Do you know why the side of the bag says, ‘By the third sip I was hooked’?”) it’s just a very valuable thing to be able to do.
    I was at the South Coast Plaza Starbucks (3333 Bear Street in Costa Mesa) on Sunday (2 days ago) and talked to CM Austin and relayed a few stories about the coffee. And indeed, he smiled hugely and said he didn’t know the coffee history stories… He was very nice and engaged though, and that counts for a lot.

    By the way, for myself, I almost never use MOP. It’s just not my style.

  • Kristin S

    I’m so not a fan of the mobile order. I like interacting with and talking to humans! I feel the same way about ordering on an ipad at a restaurant.
    Call me old-fashioned.

  • Kevin C

    I use mobile order all the time for the convenience of skipping a line and for the occasional free rewards drink. I think the gifting aspect is also very cool. The Siren/Reserve stores I think can take digitalization a few more steps further in how they use content or wallpaper to make the stores transform into artistic wonderlands, and to spread Global Social Impact messaging. The aesthetics of these new premium stores are very strong and I imagine the styles and technologies used in them will change from city to city.
    As for the online store, I didn’t know it existed. I imagine many people didn’t use it.

  • Tex

    Part of the Starbucks “experience” which you pay a premium for is the “handcrafted” aspect and watching your order be made in front of you. McCafe or Tim Horton’s they simply press a button and the drink is made, no skill required, it’s basically a glorified Keurig (yuck) or maybe we’ll give them some credit and say Verismo, it’s certainly not Nespresso. Using MOP or the drive-thru denies yourself that experience (which you’re still paying for). To me it would be a total waste to order a Reserve brew that way; I like to stand close to the Clover while it brews, since the aroma really stands out as the steam wafts up from the brewing chamber.
    My local (core) stores have lost much of my business. I willingly drive 20-30 minutes out of my way in order to have Reserve coffees and Nitro Cold Brew, neither of which have been installed near me. I have absolutely no interest in Frappuccinos; dare I say it here, for the same price as a venti Frapp (upwards of $5) you could buy a pint of Haagen Dazs, Ben and Jerry’s, Tillamook (I wish we had that here!) or any other super-premium ice cream. Sorry, I had to say it. So that really goes with your statement that the Roastery was built by those green straws. Paying $5 for a blended mix of milk, ice, sugar syrups, and coffee out of a pitcher (not freshly pulled ristretto shots), of course that’s easy money for Starbucks, probably $1 in ingredients if that. My local stores have become places where I go to churn the bonus star promos (star dash, menu challenge, etc) and to redeem my stars if I have some expiring soon and I don’t have time to get to a Reserve core or a Nitro location. I know it’s out of their hands but I’ve told them, put a Clover here at the bar and you’ll see me DAILY. Keep pushing Frapps and breakfast sandwiches, you’ll see me less and less.

  • Alistair

    I expect that I’m part of the problem as I order from the online store all the time, but there always seems to be some sort of available discount – so I’m paying less this way than I would at the store, and so that’s hitting their profits directly.

    I was also about to sign up for a roastery subscription. I can’t tell from above, but is that going away now as well?

  • Tex

    Melody,
    Since you mentioned Coffee Masters in core stores, given the direction the company is going, what would be the point of studying to be a CM at a core store, unless there’s a Reserve Bar nearby that you want to transfer to, or unless Starbucks makes CM a minimum requirement to be a manager. There are no CM’s at any of my local stores nor at any of the core stores I frequent that have Reserve.
    As for the stories behind the coffee, I expected that would be part of the product knowledge required to be a CM. Like the stories on the backs of the Reserve collector cards.
    All that being said, they need to seriously ramp up the introduction of Reserve Bars. I live in the Toronto area, whose census metropolitan area has a population of 2.8 million. Surely this area deserves 1 Reserve Store (when they happen) and maybe 3 Reserve Bars. But the first Reserve Bar in Canada went to Ottawa (CMA population 1.2 million).

  • starbuxgal

    So Starbucks is moving forward – by going backward. Closing their online store, all Teavana stores, all the La Boo bakeries, etc. Will their Reserve stores remain?
    Has Starbucks grown and morphed from their core so far that coffee is not at its heart anymore?
    I do hope Starbucks future is not a robotic place where you have to order your drink on your phone. And I just HATE that Starbucks will be selling on Amazon, of which I am not a fan. And the collaborations with “big brands” and “designers” are getting old already.
    I do hope that Starbucks will focus on improved quality. Forget the frills and the low-quality-and-even-lower-quality sub-par merchandise that is more commonplace each year.
    Today we are living in a throw-away plastic-parts nation instead of a place where items used to be made with pride and of decent quality, yes, built to last. Perhaps Starbucks will lead the way back to being the best brewed on the planet again. And if Starbucks must offer merchandise how about just doing their own good-quality stuff? Starbucks does not need the other big boys or flower gals.
    Perhaps Starbucks has learned that new is not necessarily improved, that bigger is not always best. Keep It Simple Starbucks.

  • Tex

    SBUXgal – I don’t think sbux is going backward, they’re simply cutting some weak links in the chain, as any smart business would.

    Teavana closing is a no-brainer. You can already get most (and I’d assume, eventually all) of its product line at existing Starbucks stores and other retailers so what’s the point paying for mall space for a separate tea chain? But more importantly, tea for home brewing use isn’t something that needs bought as frequently. You can buy a big canister or box of loose leaf tea that will last you months. Buy a pound of coffee beans and, if you drink regularly, give it a week or two at most. So Teavana’s product doesn’t lend itself to repeat visits the way coffee does. That and Starbucks dominates coffee (to the chagrin of third wave coffee snobs) but Teavana did not dominate tea. Here in Canada they opened up in a market already dominated by local chain David’s Tea (whose store concept is identical to Teavana and they had a good 7 year head start). Dare I say it, David beat Goliath…

    Selling on Amazon – who isn’t? If your competition is on there, so should you.

    Improved quality – this goes with my “two chains” concept above. What Starbucks is looking like, is if McDonald’s and Shake Shack were owned by the same corporation. One chain serves cheaper product for the masses at a lower price point and wide distribution (Big Mac/Frappuccino), the other serves premium product at a higher price for those who want quality and are willing to travel a distance and pay for it (ShackMeister/Clover-brewed Reserves). They’re still making money hand over fist…

    As for the merchandise, read above about that Stanley mug. Nothing Starbucks sells (in the merch) is unique, you can find identical products elsewhere cheaper but without the markup just for having the Sbux logo/name on it. Why would I pay $35 for a Stanley coffee press when the non-Sbux-logo model sells for $18 on Amazon? There’s nothing special about those overpriced cold cups, pourover kits, and insulated mugs.

  • starbuxgal

    @ Tex: So Starbucks could move forward and be an all-in-one cafe “STaR” (Starbucks, Teavana, and Reserve).
    They plan to close the doors on Teavana stores, will likely settle the suit with Simon, while moving merchandise to Amazon to cut more costs. Yep, I get it. It makes sense biz-wi$e.
    And, perhaps close some Starbucks brick & mortar stores too? However Christmas is coming, so guessing that is at least not until next year, if on the horizon @ all.
    But IMHO still believe “Keep It Simple Starbucks” is a good idea. Move back to their core; focus simply on producing outstanding coffee and serving it with the friendliest service. And of course the sugary calorie-laden whipped drinks can be extremely profitable, so they’ll stay as long as the fluffy-fat-fad is working for them. And as tea is a billionzillion biz, and it caters to those that don’t love a great cup of joe, or even a sprinkled whipped one, it is a logical add-on.
    Personally I don’t want to go there to eat breakfast, lunch or dinner; nor down beer or sip wine there either. If I want a pastry I’d rather trek down to the donut hole where I can see them being freshly made.
    When I go to Starbucks all I really want is the finest cup of coffee on the planet. Maybe I am being a little old-fashioned; perhaps I am missing a place that used to be, and it seems like it has been quite a long while ago. I just liked that place better. No frills or corp lefty politics. A simple menu. For me, it was absolutely the best place.

  • Tex

    Sbuxgal – I wish your suggestion would come true – an all-in-one Starbucks where every store is identical. But realistically it’ll never happen. They will not put Clover machines in every store. Or to take it a step further, they can’t make every store a Roastery or Reserve Bar – those formats need HUGE footprints. Roasteries are the size of small department stores, while Reserve Stores need square footage comparable to Staples and Reserve Bars would be about the size of an Olive Garden. You and I can dream :-)

    If you want “the finest cup of coffee on the planet” you wouldn’t be thinking of Starbucks (sorry Melody)! Coffee houses/roasters that strive to serve the best coffee with the best expertise and the best techniques don’t mask the quality of their rare microlots with heavy use of sugary syrups and whipped cream. If you want the best, go to coffeereview.com and see which roasters have all the 95+ rated beans. That’s where you’d go, not your local Starbucks core store with the lineup 10 deep with kids all ordering the current social media star Frapp (here’s looking at you, Unicorn).

  • Codex

    Mobile spares baristas from my nonsensical pre-caffeinated state and I can take as long as I need to browse and customize. Take that, social anxiety. Anyway, i find it’s brilliant.

  • starbuxgal

    @ CODEX: You have a valid point. Mobile ordering is saving time and hopefully a welcomed blessing for the baristas. There is often one that takes way too long ordering to both the dismay of the barista and those waiting in line. One downside of the mobile ordering is for those that order in-store having to wait for their drink(s) while others “run” in to grab their melting drinks that have been sitting on the counter; or sometimes even they are having to wait too. I have had several experiences where my drink was waiting there only to be told it wasn’t my drink even when I would ask over and over “are you sure?” …then 10 minutes later being told “oh sorry it is yours; here ya go”. I have also ordered several drinks to have 2 made right away then wait at least 15 minutes for the 3rd… all ordered at the same time; guess the 3rd drink got bumped. The baristas have also shared with me that some folks are in a hurry and have taken the wrong drinks. But, all n all, like the drive-up, appears to be a pretty penny that is here to stay.
    @ TEX: Thank you SO MUCH for the http://www.coffeereview.com/ tip (sorry Melody!). With an enormous amount of coffee drinkers downing K-cups @ home these days Starbucks had to pay attention, it just added up to a lot more profit to their bottom line as freshly roasted aroma just isn’t the top demand. Speed matters, airy fluffy layers of sweet corn syrup are cheap to make, and anything that sparkles is a razzle-dazzle leader item. Maybe they’ll offer a glow-in-the-dark drink (or @ least a cup right?) for Halloween. Anything news-worthy seems to really reel ’em in.
    Perhaps this is why the mango green tea I ordered with very little ice tasted like a powdered tea mix; or even the iced macchiato with very little ice tasted like a cup of water with coffee in it. Wasn’t just my opinion; as my friend ordered the same. Other gal loved their Java Chip frapp though. BIG sigh…

  • Tex

    Sbuxgal: The company had to attack the coffee business from all sides including traditional retail. Hence the K-cups, the (semi)proprietary Verismo system, and let’s also not forget the VIA instant line (which for instant coffee and tea is quite good). I don’t fault them for looking for new ways to make a profit, that’s what any successful business will do. But where I feel they failed is by only offering their best coffees to certain customers (like Melody). I enjoy reading her reviews on DiscoverStarbucksReserve but my heart sinks with disappointment when she says “Roastery exclusive” or “Micro lot” or “not for wide release”. I live in such a wasteland where almost every Starbucks near me is a “Dairy Siren” (my new term for the “Dairy Queen” aspect of Starbucks) and even if I drove 1/2 an hour to the nearest store with a Clover, half the time they don’t carry the beans I was hoping to try. I don’t think my options should be limited to 1-buy a subscription 2-fly to Seattle. But that’s what they’re doing and they are quickly losing me as a customer. I guess I’ve been replaced by 100 screaming teenage girls plonking $6 each for venti Unicorn Frapps, call me old…

    I wanted to try “the best” but since Starbucks won’t sell it to me, I have ordered beans from these guys numerous times: http://www.coffeereview.com/review/auromar-camilina-geisha/
    and I would strongly recommend you do too. Light-roasted, natural processed Geisha is unlike anything Starbucks Reserve puts out.
    Starbucks has a reputation (and it’s not a good one) of over-roasting their coffees and ruining beans. What Starbucks (even for Reserves) calls a medium roast would be a medium-dark at any of the places on CoffeeReview. Starbucks trained the world to prefer their coffees dark-roasted (no surprise Tim Horton’s up here offers a dark roast option alongside their regular brew) so they have to stay the course with that. But that isn’t the only way to roast coffee, and dark-roasting Geisha would be a total waste of such a special bean.

  • starbuxgal

    @ TEX: Sadly, “Dairy Siren” is so true! Thanks for the tip on Geisha, very much appreciated :)
    As far as the mobile app is going; I heard that there is a “challenge” when a bunch order their drinks around the same time nearby the store.
    The baristas suddenly get a ton of drink orders on top of those already ordering in line and at the drive-up.
    Then those in the drive-up that haven’t ordered yet are having to wait longer when this happens, sometimes a LOT longer, while their cars fumes sift in the open drive-up window.
    Those waiting inside see folks back-to-back rushing in to the take-out counter, and often choose to leave rather than having to wait “forever”.
    And if they already ordered after the mobile guys orders flew in, they are probably not going to be a happy camper as they wait and wait and wait…
    Of course peeps in line inside and @ drive-up too may order by mobile, and evidently if they want to be assured of a more timely drink like they used to get, they’ll have to.

  • Tex

    SBUXgal et al: Consider the situation before MOP, at Starbucks and other fast food places like McDonald’s. The drive-thru gets priority service over the walk-up counter inside. So everybody lined up inside the store are standing around fuming as they see the cars whizz on by the DT window getting their orders and leaving. Now let’s add MOP to the mix. It sounds like MOP gets priority over DT, which in turn gets priority over the walk-up counter. So this just makes a bad situation worse. Maybe the best solution is to follow the lead of the pizza places. No matter how you order (walk-up, phone, or online), your pizza is ready in 30 minutes. So in the case of SBUX, knock that down to about 10, because in a worst case scenario (ignoring dairy siren frappy hour which is ridiculous in and of itself) the longest you’ll wait for your drink if you walk in is 10 minutes. So when you place an MOP order, it gets inserted into the queue where you would have been had you come in person and not to the front of the line as done now. What rubs me the wrong way about MOP is how somebody could arrive at a store, see a lineup going out the door, place his order on his phone from the parking lot, then waltz in 3 minutes later past 15 people, and his drink is waiting for him. That really disrespects the customers who came inside, almost like how the airlines really coddle the frequent fliers/business class fliers but raise a middle finger at anybody who’s in coach. Sorry, unless that MOP customer paid triple the price for his order he shouldn’t be able to do that.

  • Ryan

    I have a theory that Starbucks closed it’s online store to get out of a bad partnership. Starbucks online store operates much like a license store (say like a SBUX at Target) and if you’ve ever interacted with the employees (no, they’re not partners) who work for the licensee of store.Starbucks.com, you’d probably have a bitter trip down memory lane to an experience you had at one of Starbucks license stores back in the early 2000’s. (anyone else remember how bad of a reputation those stores used to have?) Starbucks has come a long way with regards to elevating their licensed stores, but trying to mimic that in an ecommerce enviornment, which contributes minimally to your balance sheet, was not worth Starbucks time. That said, don’t be fooled, Starbucks online sales aren’t going away, in fact Starbucks visability on major ecommerce sites Amazon, Jet.com, etc. has grown 10 fold over the last 6 months. Basically all Starbucks is doing is setting up its CPG team to hammer out another year or 2 of double digit year over year growth.

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