Starbucks Unveils Its Web3-Based Rewards Program Next Month – TechCrunch

Starbucks Unveils Its Web3-Based Rewards Program Next Month – TechCrunch
Starbucks Unveils Its Web3-Based Rewards Program Next Month – TechCrunch

Starbucks will unveil its web3 initiative, which includes coffee-themed NFTs, at next month’s Investor Day event. The company announced earlier this year its plans to enter the web3 space, noting that the NFTs would not only serve as digital collectibles, but would give their owners access to exclusive content and other benefits.

At the time, Starbucks was light on details about what its debut set of NFTs would look like, specific features they would offer or even what blockchain it was built on. It said the plan would likely be multi-chain or chain-agnostic, hinting at plans that had not yet been finalized.

Overall, the coffee retailer kept the web3 news pretty high, simply explaining that they believed digital collectibles could create a growing business to adapt to their stores, and that more would be revealed later in 2022.

While some companies jumped on the NFT bandwagon without much thought to how their investments would fit with their larger business goals, Starbucks seems to be trying a different approach. It sees the collectibles as an extension of customer loyalty. The company brought in Adam Brotman, the architect of the mobile ordering and payment system and the Starbucks app, to help serve as a special advisor on the project.

Mobile Order & Pay has been one of Starbucks’ biggest successes in terms of technological innovation. The company was one of the first to introduce the concept of a digital wallet, even before Apple Pay became ubiquitous. And as wider use of mobile payments has grown, so has Starbucks mobile ordering. In the most recent quarter – Starbucks’ fiscal Q3 – mobile ordering, delivery and drive-thru combined accounted for 72% of Starbucks’ US revenue. In addition, the sales mix for mobile orders grew to a record 47%, up 13% year-over-year, following COVID-driven changes in consumer behavior, the company said.

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Starbucks founder and now interim CEO Howard Schultz, who returned to the company in April, teased the upcoming web3 initiative during this week’s earnings call with investors.

“We’ve been working on a very exciting new digital initiative that builds on our existing industry-leading digital platform in innovative new ways, all centered around coffee and most importantly, loyalty, which we will unveil at Investor Day,” said Schultz.

The company had previously announced its plans to host its 2022 Investor Day in Seattle on September 13, 2022.

Schultz continued, “we believe this new digital web3-enabled initiative will allow us to build on the current Starbucks Rewards engagement model with its powerful approach to earning stars, while introducing new methods to engage customers emotionally, expand our digital third-place community, offering a broader set of rewards, including unique experiences you can’t get anywhere else, by integrating our digital Starbucks Rewards ecosystem with Starbucks-branded digital collectibles as both a reward and a community-building element.

“This will create a whole new set of digital network effects that will attract new customers and be active for existing customers in our core stores,” he added.

Although the details are yet to be fleshed out, the approach here sounds potentially interesting – at least compared to some other NFT projects (an admittedly low bar). The company had not previously clarified that the NFTs would be linked directly to Starbucks Rewards.

Currently, customers earn stars for in-app purchases or in Starbucks stores, which can then be translated into tangible rewards – like free drinks. It appears that the new NFTs will now be incorporated into part of this loyalty program, one way or another. If customers were to “earn” the collectibles through daily purchases, it could potentially bring more people into the web3 ecosystem. This is one of the challenges the space faces today, where the purchase of digital art and collectibles often comes at a high cost and with significant fees. Also, the digital program could give customers a reason to care about NFTs, if the rewards and so-called “one-of-a-kind” experiences end up being something actually worth earning. (Of course, that remains to be seen.)

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However, there are indications that consumers are interested in easier ways to access the web3 site. For example, crypto rewards app Sweatcoin has become a breakout hit thanks to how it rewards users with “Sweatcoins” for every 1,000 steps they walk. The app in the last quarter was No. 4 by global downloads and No. 6 by monthly active users on data.ai’s list of “Top Breakout Apps” – meaning those that saw the biggest absolute growth in downloads in the quarter. There are also now a good handful of games that offer play-to-earn models, which aim to link a fun activity like gaming to cryptocurrencies or NFTs. These have seen more mixed success as some players oppose the idea.

During the conversation, Schultz also emphasized the value of catering to the younger consumer. Although his comments were more a reflection of Gen Z’s demand for Starbucks’ cold drinks and iced roasted espresso – which drove sales in the quarter – a web3-based loyalty program could serve as another way to attract younger consumers to the brand.

“We don’t want to be in a business where our customer base is aging and we have a less relevant situation with younger people,” Schultz said, before claiming the company “has never been, in our history, more relevant than we are today to Gen Z.”

“To me, this group is so powerful and the level of connection we have with them and the loyalty is just building,” he added.

Starbucks delivered strong earnings in the quarter, beating Wall Street’s expectations despite the economic challenges. The company reported revenue of $8.15 billion versus $8.11 expected, and earnings per share of 84 cents adjusted versus 75 cents expected.

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