What does the success of Starbucks mobile payment bring us?

Mobile payment has become a battleground and represents a future development direction. Recently, Business Insider published an analysis article on Starbucks' mobile payment. We believe that the success of the mobile client is related to Starbucks' own customer loyalty, and also depends on the efforts Starbucks has made on the mobile client.

A few days ago, in our review of overseas markets during the National Day Golden Week, we mentioned the trends of multiple companies regarding mobile payments. Recently, Business Insider published an analysis of Starbucks’ mobile payments, and we also made some relevant summaries and analyses on this, and would like to share them with you.

According to BI Intelligence, in the second quarter of 2014, Starbucks completed a total of $1.5 billion in transactions through the mobile client payment platform. At the same time, the transaction volume of mobile clients in the second quarter accounted for 15% of the total transaction volume of Starbucks' own stores, which means that on average, customers completed 6 million transactions through Starbucks' mobile payment terminals each week. In the 2013 fiscal year, the transaction amount completed through the mobile client payment platform was $1 billion, and the average number of transactions completed per week was 5 million. In just two quarters, the growth rate of Starbucks' mobile payment transaction amount reached 50%. Since Starbucks mobile payment is part of its "Loyalty Program", as the customer experience gets better and better, loyalty will continue to increase, and this number will continue to grow rapidly in the future.

On the one hand, the success of the mobile client is related to Starbucks’ own customer loyalty. On the other hand, we have to talk about the effort Starbucks has put into the mobile client.

Starbucks began to provide smartphone applications in 2009 and began to provide mobile client payment functions in 2011. From simply providing QR code payment (RFID radio frequency identification technology) at the beginning, to upgrading to support adding to passbook and the latest version of shake to pay, and providing value-added services such as direct payment tips through the APP and free APP game or music downloads, Starbucks has put a lot of effort into mobile applications, greatly improving the user experience.

Another point worth noting is that when LBS (Location Based Service) began to combine with the B2C business model in 2010, Starbucks soon followed suit and added this function to its APP, which is to find the nearest store based on the customer's location and provide navigation, so that customers can conveniently order a cup of their favorite coffee at the nearest location.

Starbucks' ambition for mobile clients is not limited to this. In 2013, Starbucks specially added a CEO (its former CFO Troy Alstead) in order to allow the then current CEO Howard Schultz to focus on continuously improving Starbucks' payment business. In addition, Starbucks proposed in July this year that in the future, when customers consume in other stores, they can also complete payments through Starbucks' mobile client. Let's imagine that when a customer takes a taxi on Uber (a taxi-hailing app), he also orders a cup of Starbucks latte online. The driver will take the customer to the nearest Starbucks store to pick up the cup (without waiting in line), and then the driver will take the customer to the destination. All the above consumption can be paid through Starbucks' mobile client, breaking the barriers between different mobile client payment platforms and providing great convenience for customers.

As mentioned above, Starbucks' own growth in mobile payments is indeed very amazing, so let's take a look at some interesting changes in the industry. According to Business Insider, in 2013, the transaction amount reached by mobile payment in the US market was 30 billion US dollars, of which Starbucks accounted for 4%, becoming the APP with the largest mobile payment amount in the US market. However, this optimistic trend was broken by the latecomer Venmo (held by Paypal) in the second quarter of 2014. It can be clearly seen that Venmo began to surpass Starbucks at an annual growth rate of 347%.

Of course, this set of data is not very comparable, because Venmo is based on SNS (social services) and supports more merchant payments, while Starbucks is just a company's payment platform. But what I want to emphasize here is that in the mobile payment platform, not only the original leading companies (such as Paypal, Google Wallet) are constantly innovating and improving customer satisfaction, but even the major companies themselves are trying their best to get a share of the mobile payment platform. The two payment modes are also based on different payment scenarios (SNS social services and LBS location-based services). In the future, the two will continue to coexist and compete fiercely. Even overseas, a new concept of mobile payment, Service Based Situation (providing services based on scenario models), has been proposed. But in any case, mobile payment has become a battleground for major Internet companies, financial companies and consumer goods companies such as Starbucks.

Appendix: Starbucks stock price and total US market revenue (quarterly) trend chart (2009-2014)