When I think about running a business I know can achieve a competitive advantage by differentiation, cost, or response. We all know Starbucks Coffee Company doesn’t really compete with cost. Instead, they have decided to gain a competitive advantage through differentiation, not in their product, but in the way you can pay. An article from the Wall Street Journal stated, “Starbucks mobile payment app was different from other retailers because it combined paying on the go with the reward program already in place” (http://online.wsj.com/article/SB10000872396390444423704577575803898185594.html).
Starbucks Coffee Company has decided to invest $25 million in Square as an effort to stay ahead of everyone in respect to the mobile payment apps. With this investment, Starbucks will be able to give their customers what no other coffee shop does.
Customers will be able to walk into a store and up to the register, say their name to the employee, and receive their beverage without even taking their wallets out. Of course in order for this to happen the customer must have one of two apps: the Starbucks mobile app, which will allow a customer to pay with their Starbucks cards on their phones or the Pay with square app, which will allow customers to use their credit or debit cards on their phone. They must also be in a store that is using the square technology.
Eventually, Starbucks will use Square’s technology to process all of the credit and debit transactions in 7,000 of their U.S. stores. This partnership looks great and it could definitely help Starbucks stay ahead in the mobile payment area. I am sure most people have been in a Starbucks recently, and you can tell how hectic it gets. Right now, you can walk into any coffee shop, wait in line for your coffee, and pay for it like everyone else. Can you imagine, a year from now, you’re standing in line at Starbucks, you get to the register, and you can order your coffee without even taking out your phone or wallet.
Starbucks has decided to give their customer a new way to pay and are leading the front on mobile pay technology. What are some of the pros and cons of this decision and how do you think mobile pay technology will effect the way companies plan their operation strategies?