Starbucks Leading the Way With Their Gift Card Strategy

Starbucks are leading the way with their gift card initiatives, attracting many new customers since their introduction. The Starbucks e Gift cards can be sent for Valentine’s Day, weddings, the Lunar New Years and more. They can be sent via email, text or with a physical card. These gift cards which have a certain amount of credit will encourage people who may not usually be customers to visit a Starbucks store to redeem. From there these customers often just find it convenient to simply top up the cards for easier and quicker future purchases.

Many of these gift card users have then gone on to sign up for Starbucks ‘My Starbucks Reward’ program. The program allows members early access to new products, free drink or food rewards and easy payments with the online app. In Q1 alone there has been 0.9 million new MSR members, bring the total number of members to a staggering 9 million. These numbers show the huge success that the scheme has had due to the customer being able to have a quicker and more efficient experience. The other advantage of having so many people sign up for schemes such as MSR program keeps a loyal base of customers that know they will keep coming back as it is in the customer’s interest to buy from Starbucks as it helps their reward points.

However in a study carried out in January of 2014, only 3% of retailers said that gift card strategies were its main priority in their retail plan. Only 17% of retailers said that gift card purchase or redemption were a priority at all in their future strategies. Most were more focused on their online platform, making sure that was a tool that keeps customers coming back. The Starbucks online app has managed to incorporate their gift card redemption scheme into it as well as being able to order coffee and manage your Rewards Program. There is soon to be a delivery service as well in the second half of 2015.

Understandably many of the smaller retailers do not have the financial power to have such a large all-encompassing online service, however Starbucks can be used as an example that is leading the way in terms of omnichannel retail as they are constantly striving to provide a service that not only makes the customers life easier but gives them rewards for their loyalty.

APEX is where merchants rule. As new companies create new iterations of payments that combine mobile capabilities, loyalty, closed-loop currencies, wallets, acceptance devices and lower transaction costs, it is the retailer that decides what is successful and what is an also-ran. At APEX, retailers can view the latest technology alongside their peers and discuss the challenges and feasibility of implementation that are unique to this industry.

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Sources:
Forbes - http://www.forbes.com/sites/greatspeculations/2015/01/26/starbucks-gift-cards-initiative-and-mobile-commerce-drive-customer-traffic-in-q1-2015/
Accenture - http://www.accenture.com/us-en/landing-pages/Documents/Seamless/Accenture-hybris-Forrester-new_2014.pdf

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Square Inks Payments Partnership with Whole Foods

Via Mashable
 
Early this morning, Square and Whole Foods announced a partnership to process payments at select locations.

This is Square’s first partnership with a major grocery chain – this Whole Foods partnership is Square's most prominent retail partner since Starbucks agreed to use the startup's digital payment products in 2012.

“Whole Foods Market and Square share a focus on supporting local sellers and creating amazing shopping experiences,” Jack Dorsey, cofounder and CEO of Square, said in a statement. “With Square, Whole Foods Market will enable commerce in more parts of their stores with easy, accessible tools that showcase the best of what’s achievable in the service of retailers and customers.”

Square's point-of-sale system – The Square Stand – is currently being used at seven different Whole Foods locations and will be at more stores this year. However, Square is not being used for Whole Foods' main checkout lines - rather, the payment tool is being used at "in-store venues," including sandwich counters, juice bars and pizzerias.

As Square has been rumored to be prepping for an IPO, this partnership between Square and Whole Foods comes at a perfect time. Square reportedly generated more than $100 million in revenue last year and major partnerships like this one could help boost that number even higher.

All Payments Expo is where payments partnerships get started. The annual meeting place for payments professionals focused on areas of growth and convergence in payments. Our mission is to catalyze the partnerships necessary to build the next generation of payments, from the mobile environment to the brick-and-mortar POS.

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Mobile Payment Adoption

Mobile payment adoption has become a pressing matter in the retail industry with everyone looking to successfully integrate new technology with the payment systems already in place. KFC is the latest retailer to make a splash with its AIRTAG partnership announcement to launch the chain’s first ever mobile and web app designed for ordering and paying, titled “KFC Fast Track”. This seamless ordering experience includes; geolocation, mobile and web ordering/payment capabilities, a mobile check in feature for in-store order recall. Plus, customer accounts so users can store details for one click payments.

IT Director of KFC UK & Ireland, Paul Borrett said, “Our customers lead increasingly busy lives and KFC Fast Track is focused on helping them order, pay for and collect their food faster than ever before.”

The same themes continue driving today’s innovation – accessibility and simplicity,  Many key players in the retail industry are testing products similar to KFC’s, such as Starbucks with their Square Wallet. As mobile payment solutions are becoming increasingly popular, who will win the race to mobile payment supremacy?

In just one week, hundreds of prepaid and payments leaders in Europe will converge to discuss the latest innovations that are posing the biggest opportunities for banks, merchants, mobile players and programme managers. If you want to capitalize on the evolving landscape, this is where you’ll find new partners, sharpen your strategy and dive into thought-provoking discussions on how the payments landscape continues to evolve across Europe.

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Cashless Squares Up At Starbucks

(Photo: BetaNews.com)

A typical encounter at the cash register consists of either fumbling with cash and change, or pulling out your credit card, swipe it, wait for an authorization, followed by a signing of a console or receipt. An alternative payment method has been emerging in small, and micro, businesses. 

These alternative payment methods will be more apparent in coming months as a big deal has been struck by caffeine distribution giant, Starbucks, and mobile payment startup, Square.

In early August, Starbucks has struck a deal and will be investing $25 million to outfit a network of 7000 participating stores with the mobile payment system, Square. Howard Schultz, CEO of Starbucks, notes that, “the smartphone is the primary device in our lives.” This deal will provide Starbucks with a significant discount on credit card processing fees. Traditional credit card processing methods required businesses to pay the credit card company 2.5-5% plus equipment rental and usage charges. Square on the other hand charges a flat 2.75% with free equipment, in the form of a dongle that attaches via headphone jack on any smartphone or tablet.

In 2009, Jack Dorsey, founder of Twitter, took a leap in to innovating the mobile payment space. With a simple philosophy, “everyone should be able to accept credit cards. It should be easy and free to get set up, it should use simple technology people already own, and, most importantly, it should instantly adapt to any size business”.

Square consists of four major components: a card reader, Pay With Square app, Square Register, and a Square Card Reader. The card reader is a plastic device which plugs into the audio jack of an iPhone, iPod Touch, iPad and Android based mobile phones. This allows any smartphone to be used as a credit card swiping machine. Pay With Square is an app which allows customers check in a Square enabled business and set up tabs and pay with their names. It also enables them to receive electronic receipts. The Square Register is available for the iPad and transforms it into a credit card management system. Square Card Reader is another app available free of cost for iOS and Android, and is the actual interface that is utilized by the business to manage payments made via the card reader or Pay With Square app.

Previously focused around aiding small and micro businesses, with this $25 million investment from Starbucks, Square has raked in $200 million in new funding, positioning Square with a $3.25 billion valuation. As of March, Square has processed $4 billion a year in mobile payments transactions in this year alone through its 1 million registered merchants. 

With well-established companies, such as PayPal, Google Wallet, Intuit, LevelUp, and dozens others, fighting to gain market share in the space of mobile payments, the addition to the 7000 stores that have been added through the Starbucks deal, Square has taken a huge lead ahead of their growing field of competition.

The exposure provided through Starbucks to spotlight an seamless alternative payment method will greatly expand the emerging cashless zeitgeist. Expect to see more alternative payment methods at an ever growing number businesses, from your corner store to one of the thousands of Starbucks coffee shops.

About the Author


Phil Ng is a Social Media Analyst at IIR USA with a specialized focus on technology and technology culture. He may be reached at PNg@iirusa.com.

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The Booming Gift Card Business

The gift card business is expected to reach $100 billion in sales this year; companies are trying to find new and exciting ways to expand their businesses with the options of gift cards. The new theme is multi-branding according to this article at Manage Smarter.

"People don't want to carry around five different gift cards they received as spot rewards in their wallets. They want one card that can be used in a variety of ways, even at a variety of merchants. For example, they could have a Starbucks/Apple card or a gas card attached to a McDonald's card. Right now, our company is piloting a couple of merchants to offer a card that can be redeemed at any of their stores."

The article gives credit to Starbucks for beginning the creative segment in gift cards. According to the article, the 2004 gift card with doubled as a Visa and an in store transaction card got the creative juices flowing. Another significant trend is that many gift cards are coming with loyalty plans, or points systems to earn rewards.

While some people believe that multi-branding gift cards save space in the wallet, as well as provide incentive to shop in many stores, there are still some skeptics. Timothy Rossi explains why:

“Many may think they are a 'cure-all' for recognition and incentive rewards. We have to be careful with the concept," he cautions. "If 'multipurpose' gift cards can be used to purchase everyday sundries such as milk, eggs or gas, then the intrinsic value of the recognition experience is lost."

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