At next month's Investor Day event, Starbucks will reveal its web3 initiative, which includes coffee themed NFTs. The company earlier this year announced its plans to enter the web3 space, saying its NFTs wouldn't just serve as digital collectibles, but would provide their owners with access to exclusive content and other perks.
Starbucks didn't have much to say about what its debut set of NFTs would look like, what features they'd provide or what they were building on. It indicated that the plan was likely to be multichain or chain-agnostic.
The coffee retailer kept its web3 news fairly high level, explaining that it believed digital collectibles could create an accretion business and that more would be revealed later in the year.
Starbucks to launch NFTs this year, offering access to ‘unique experiences and benefits’
While some companies jumped on the NFT bandwagon without thinking about how their investments would fit in with their larger business goals, Starbucks seems to be trying a different approach. The collectibles are seen as extensions of customer loyalty. The architect of the Mobile Order & Pay system and the Starbucks app was brought in by the company to help with the project.
Starbucks has made a lot of tech innovations. One of the first companies to introduce a digital wallet was the company. As the adoption of mobile payment has grown, Starbucks has as well. In the past quarter, Starbucks saw mobile orders, delivery and drive-throughs drive most of its U.S. revenue. The company said that the mobile ordering sales mix grew to a record high of 47% due to changing consumer behavior.
Howard Shultz, who returned to the company in April, teased the upcoming web3 initiative during this week's earnings call.
A new digital initiative that builds on our existing industry-leading digital platform in innovative new ways all centered around coffee will be revealed at Investor Day.
The investor day will be held in Seattle on September 13, 2022.
This new digital web 3-enabled initiative will allow us to build on the current Starbucks Rewards engagement model with its powerful spend to earn stars approach while also introducing new methods of emotionally engaging customers, expanding our digital third place community, and offering a broader set of rewards, including
He said that this will create a new set of digital network effects that will attract new customers and be good for existing customers.
The approach here sounds intriguing, at least compared to some other corporate NFT projects. The company had previously stated that the NFTs would be linked to Starbucks rewards.
Stars can be earned with purchases in the app or at Starbucks stores, which can translate into free drinks. The loyalty program will now include the new NFTs. If customers were to earn the collectibles through everyday purchases, that could potentially lead to more people joining the web3 platform. Digital art and collectibles can come with high costs and large fees, which is one of the challenges the space faces today. If the rewards and so-called "one-of-a-kind" experiences end up being something worth earning, the digital program could give customers a reason to care about NFTs. That is still to be seen.
Consumers may be interested in simpler ways to enter the web3 space. Sweatcoin has become a hit due to how it rewards users withSweat coins for every 1000 steps they walk. The app was the 4th most downloaded app in the world and the 6th most downloaded app in the country. There are a lot of games that aim to tie a fun activity like gaming to Cryptocurrencies or NFTs. Some people are opposed to the idea.
Catering to the younger consumer was emphasized by Schultz during the call. A web3-based loyalty program could serve as another way to attract younger consumers to the brand, even though his comments were more of a reflection of Gen Z's demand for Starbucks' cold drinks and iced shaken espresso.
"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"
The attachment rate that we have with them is just building, he said.
The economic challenges did not deter Starbucks from posting strong earnings in the quarter. The company had revenue of $8.15 billion and earnings per share of 84 cents.
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