Starbucks Corp., which now handles 16% of its U.S. sales through its mobile app, revealed today just how dominant its position has become even as it plots new features such as preordering.
In 2013, $1.3 billion in payments were made over mobile devices throughout the U.S., and over 90% of those purchases took place in Starbucks stores, said Howard Schultz, the Seattle company’s chief executive, in an Oct. 31 conference call to discuss the company’s fourth-quarter and full-year earnings (its fiscal year ended Sept. 28).
Today, Starbucks handles nearly seven million mobile payments per week. “No company and no retail store, domestically or internationally, even comes close,” Schultz said. “The real growth is yet to come.”
But the mobile-payment market is still in its infancy, and Starbucks is going to be selective about how it advances technology and with which companies it partners, he said. “We will play our hand wisely with a long-term view.”
Starbucks’s next mobile innovation will be the addition of order-ahead capability to its mobile app, Shultz said. The company plans a December test and a 2015 nationwide rollout of the new feature, which allows patrons to place orders ahead of time from a mobile device and pick up orders in a Starbucks store without waiting in line, Schultz said.
Starbucks also plans to deliver food and beverages to mobile app users in some markets in the second half of 2015. “That’s our version of e-commerce on steroids,” Schultz said.
The company also plans a major push in gift cards, where Starbucks benefits heavily during the holiday season. Roughly one in eight Americans received a Starbucks gift card last holiday season, and the cards had $1.4 billion in loads in the company’s fiscal first quarter (which included the 2013 holiday season).
Starbucks plans to supercharge its gift card marketing this year, with 100 card designs sold in stores and heavy promotion over social media, Schultz said. As part of the company’s promotional efforts, it will offer “Starbucks for Life” to 13 North American gift card users. Schultz emphasized that it is not possible to buy “Starbucks for Life.”
Starbucks also plans to enhance its rewards program, which is closely tied to its mobile and gift card offerings, in 2015.
“From my point of view and from everyone involved at Starbucks, we are just getting started,” Schultz said.