Exactly. They are mid-range. They aren’t “cheap and available”, like Dunkin or the place whose radio ad touts the low price. They aren’t boutique. They sell a reliable coffee that never tastes sour, and they do coffee drinks with endless personalization, and do them accurately.
I just checked Peets, the best coffee shop in town (for coffee quality), and somewhat to my surprise, they do have an on-line shop. They tell you what day your choice will be roasted, and promise to ship later that day.
That’s it, in a nutshell (bolding mine).
I live in DD land where there is a DD (almost) on every street corner. We have a good number of Starbucks too. I don’t know of anyone who singles out “Oh, I MUST go to Starbucks!” That’s what everyone does with DD. I have an extended family member who drinks their house blend exclusively, which, like Starbucks, can be found in nearly every supermarket here.
Here’s a tidbit about “Starbucks experience”: They are nice areas in which to hang out and sip your coffee. It’s the ambiance. Our local Starbucks has an outdoor area with benches and tables-with-umbrellas. You see more people sitting there chatting while sipping their ultra fancy coffee-based drinks, sometimes with a dog in tow, than you do at any local DD’s where the interior is strictly utilitarian.
I’ve never been a Starbucks fan. I find their coffee very bitter.
DD’s makes better breakfast sandwiches. Starbucks has fancier pastry offerings. People here tend to measure donut quality between DD and other places (the experts I know claim DD’s donut quality has gone down in recent years, but I take that with a grain of salt because people tend to say that about nearly everything). DD’s offerings are nowhere near as broad but they’re consistent.
DD must be feeling the heat too. Out in CA (I think) they’re tinkering with a “Dunkin” concept where coffee-and-donuts aren’t the focus. The fact that it’s moving into other areas leads me to believe that competition in the coffee shop category has hit a wall and players like Starbucks will eventually have to expand its offerings to stay in the game. For now, though, it seems that Starbucks is happy right where it is.
Well, you say that… I mean yeah, the section of the marketing team responsible for making Starbucks a premium brand, and the employees who identified with it?
They’re probably grousing and updating their resumes and slowly being replaced by a team more amenable to the current reality. That’s what happens when brands drift.
And though I mock their beverage product, I don’t mean to suggest it’s a low-prestige product. I feel like they have hit a sweet spot of presenting a commodity product with some exclusivity and prestige. It’s the Dunkin Donuts of soccer mom assistant-marketing-VPs on the go. It’s coffee that people are still paying 6 bucks for, and not because it’s an especially rare roast.
I think this gets at the heart of it. As a tea fan, you are engaging with variety. That is somewhat true of premium coffee fans, but they are engaging more with quality, freshness, supplier integrity, and maybe some sensory shopping experience as well.
Perhaps Starbucks thought they could indefinitely maintain that premium-roaster prestige while they simultaneously expanded into being a beverage chain serving every suburban interstate offramp. Or perhaps they knew they’d always have to grow past it in some fashion. I see this as consistent with a recognition that the brand is drifting. It’s also possible that they’re making a bad strategic analysis or decision, but it would take data to make that call.
Dunkin’s donut quality plummeted when they stopped making them on-site, and started shipping them from a giant factory somewhere. But that was decades ago.
OK, everyone is getting into the discussion, and I appreciate it. I think we are largely going to agree on the positioning issue, but that doesn’t mean that I agree that the “kill ecommerce” decision followed logically from that. Further, agreeing that Starbucks has MOR positioning doesn’t mean I think that the internal narrative at the company would agree that it’s MOR or even should agree that it’s MOR. I think it’s almost kinda necessary for Starbucks to lie to itself and pretend it’s premium to itself and its customers, lest it slide down into DD territory.
Another data point (or set of points) that would be extremely interesting to know is: Who was advocating for the online store in the first place? How much was it emphasized internally? Was there any resistance to eliminating it? Why or why not?
As a general aside about corporate competence, I never assume it! And I think there is a vague assumption at work in this thread that “Starbucks certainly knew what it was doing.” I have worked for huge companies (US and Japanese) and seen extreme idiocy at work, and I’ve translated for really really big Japanese companies since 2002, and I get some unique behind-the-scenes peeks into their thinking or lack thereof. As a general rule, any large organization run by humans is a mix of competence and incompetence. There are always things falling through the cracks, being missed, being done for irrational or personal reasons instead of metrics, etc. Pick the supposedly best, most prestigious, most competent companies in the world–Apple, Amazon, whoever–and that kind of thing is happening right now.
Reserve was/is only sold at special Starbucks stores and online. There was no middleman in that case. Also, one thing we haven’t talked about is merch, which the store also sold online. I don’t really see a good case for not selling those two things online, even granting the positioning we basically agree upon. Had they said, “We’re focusing our online store on two areas where demand is widespread but product quantities are limited: our premium Reserve coffees and our Starbucks brand merchandise,” or something like that, I would not have written the OP (even if I had disagreed, it at least would not have been an obviously [to me] odd/stupid decision).
Yes, good summary.
Well… the boutique market is not something unified, so what does “competition” mean in that sense? One could argue that Starbucks has the scale and core competencies to dominate the ultra-premium space, in which case online would seem to be necessary. But they don’t appear to have a real strategy in this area.
As an interesting data point: I ordered a regular cappuccino once at the Starbucks at the Fashion Mall in Indy, which is about as upscale as retail gets in this city. That order led to a conversation with the barista, who observed that people almost never order an unflavored espresso drink. It was really rare.
So the Starbucks “beverage” has become sui generis, not really coffee at all. And I’m just going to throw out a speculation that that category of “bev” could actually be a fad that dies. 100 years from now, I’m pretty sure that people will be using joe to wake up in the morning, but I’m not equally sure that they will want to spend $30 (accounting for inflation) on the double-pump breve hazelnut lattes and whatnot in such numbers as to support a sprawling international chain. Just a thought.
Agree 100% And I’ll add that it’s the best place to go to the bathroom when on the road. When I drive from Indy to NW IN, I always stop at the Starbucks in Lafayette. It’s a genuinely “nice” environment. And usually some hot young chicks are working there too who smile and don’t seem to hate life.
Now, does all that translate into the “Starbucks experience” as envisioned by the suits? I doubt it. Because those guys/gals are always spinning a tale in which people become more or more engaged and spend more and more and so on to infinity. They are not imagining people thinking, “Meh, it’s OK.” They are telling a much prettier lie to themselves.
I’ve never been a Starbucks fan. I find their coffee very bitter.
I agree about the wall, but I don’t gather from what I read that Starbucks is “happy” either. Stagnant same store sales is pretty much the bete noire of retail.
Merch is pretty widely available. And Reserve is something that even at a premium price point I’d guess has a relatively low margin. The point of offering it is more a marketing bit than to generate much profit. And in fact likely yes, to get some who are interested in that luxury product in the store where they may also buy some higher margin items. The foot traffic bit is likely actually a real part of the equation as it is the beverages that have huge margins.
Note also that while there may not be a Pete’s close to almost everyone (thus a need for an online presence) few do not live near a brick and mortar Starbucks, and many pass by several on their way to and from work each day. It is trivially easy for them to stop in and get beans, and may on impulse a Grande Latte.
Competition means that within many cities (not all) the coffee snob/geek has choices than Starbucks with a variety that Starbucks cannot offer in the consistent manner that is their core competency. They simply do not have what it takes to dominate that space any more than AmBev can dominate the craft beer market.
Well garsh, how am I going to buy my Starbucks Reserve coffee now?
Not that I ever did before, but now the option is gone. :mad::smack:
We get a variety of coffees as grist for the Mr. Coffee machine, which often includes Starbucks Giant Rat of Sumatra and Expresso types, available at the local supermart. I agree that Starbucks shutting down a source of online sales to “drive customers to their stores” runs counter to the nationwide trend and seems as bizarre as Victoria’s Secret dumping their mailed catalogs :(, but if it’s a doomed strategy we’ll find out soon enough.
It will not affect my very occasional order of a regular coffee and decent pastry at one of their bookstore outlets.
We know it is some point < 8% of revenue from the above cite. Do you know if they were running it themselves or outsourcing it to someone like shoprunner? Were profits less than revenue? If revenue is small & profits even smaller it may be easier to just shut it & not deal with the amount of effort that minuscule revenue/profit generate.
romanperson, by his definition lives so far out in the sticks that he can’t easily get to a Starsucks to get that “experience”. He can get their home product when he goes into town for provisions once/twice a month or buy it online from Amazon, which is both easier for the consumer (one website instead of multiple ones) & less of them being in competition with their retailers; again, for minimum profit.
I think of them at the premier fast food location. They have numerous locations that are all fast, cheap, & similar. I know what’s available & (almost) the exact cost at any one of their myriad locations in this country before pulling in. I don’t put them in the same category as the higher end, custom cooked & topped burger joints (which take longer) let alone a nice steakhouse.
How many people are viewing their website, for something like locations &/or corporate info vs the sales portal? I’m not alone in this thread in not even knowing you could buy products directly from them online before you started this thread.
“And the portions are too small!”
If for some reason you need to purchase their shitty coffee online: Hey, look!
There are so many things in the world right now that are actually “batshit insane” that whinging about Starbucks electing to not sell coffee direct to consumers via the Internet–and all of the cost and hassle of maintaining an online point-of-sale infrastructure–is like complaining about the lack of hot water in a concentration camp.
Stranger
There isn’t a huge differentiation between buying Starbucks coffee from starbucks.com and buying it from Amazon.com or a thousand other online retailers. And there are costs and risks associated with running an ecommerce website. eCommerce isn’t a core competency for Starbucks, it doesn’t make sense for them to do it. They could outsource the ecommerce thing, but then they have to manage the supplier - or they can just sell their goods through Amazon. As more and more of the ecommerce sales get consolidated into the major sites, there isn’t an ROI in Starbucks maintaining a ecommerce presence - there is, as has been pointed out - value in getting you to swing through their stores for their beans, because you are likely to buy a $6 cup of coffee while you are there. PCI isn’t cheap - and while you can outsource that bit, you are still paying someone to do it. And if the data gets stolen, it won’t be the name of your payment processing partner on the front page of CNN - it will be “Starbucks looses a million credit card numbers.”
As to why Starbucks doesn’t tell you that you can buy their coffee online though other retailers, perhaps its because understanding how to do a basic google search or shop at Amazon is considered common knowledge in 2017.
You keep talking about these “suits” and what they’re thinking and doing. Is this based on any actual knowledge or is it just speculation?
Do you actually know anybody who works for Starbucks HQ?
The people I know who work and have worked there don’t claim the coffee or “experience” is anything glamorous or special. They’re neither dishonest nor stupid. Starbucks embodies a solid combination of factors that work well to get the customers coming back over and over. That’s all.