Starbucks to Test Delivery Service This Year in Seattle, New York

Seattle and New York’s Empire State Building will be the twin proving grounds for Starbucks’ latest bid to break down the barriers between people and their coffee: delivery.

The delivery service, to be tested in the two cities in the second half of 2015, is the next frontier for Starbucks’ rapidly growing mobile ecosystem, which is tightly tied to its loyalty program.

Starbucks says members of the rewards program buy more Starbucks goodies more often than the rest of its customers. People have to join the program in order to use Starbucks’ mobile-payment app, which experts say is the most successful of its kind.

As of Tuesday, the app also allows ordering by smartphone or tablet all over the Pacific Northwest, allowing customers to skip the long lines that often form at the Starbucks counter. Wednesday’s delivery announcement coincides with the Starbucks shareholders meeting, an annual extravaganza at which executives reiterated the company’s ambitious target of nearly doubling revenue by 2019.

With Starbucks shares hovering near record highs, Wall Street seems to be buying the promise. But such breackneck growth can be hard for a mature company like Starbucks — hence the importance of new initiatives like mobile delivery.

In Seattle, Starbucks’ beverages and pastries will be delivered by Postmates, a San Francisco startup that specializes in on-demand delivery. Like Uber, Postmates relies on technology and part-time workers with their own bikes and cars to deliver food and merchandise.

Customers using the Starbucks app will be able to monitor their delivery’s progress. Starbucks chief digital officer Adam Brotman said the service is a logical extension of the mobile ordering and pickup feature that debuted in Seattle Tuesday.

Postmates CEO Bastian Lehmann said in an interview that there’s going to be a fixed delivery fee, but the details are still being worked out. Currently, Postmates delivery fees for other merchants start at $5, but can add up pretty quickly depending on the distance. There’s also an additional 9 percent fee applied to the purchase price.

Lehmann doesn’t foresee Seattle’s semi-permanent traffic gridlock to be a huge issue. With Starbucks locations everywhere, there will be very short distances between pick-up and drop-off, he said. About 1,000 people in Seattle have signed up for Postmates’ delivery army, he said.

In super-dense New York, Starbucks will try a different approach, which it calls “green apron delivery.” That’s employees of a Starbucks inside an office building, delivering just within the building itself. The first test will take place inside the Empire State Building.

The already-busy store will have a separate area dedicated to preparing the orders for delivery “so we don’t slow down” the rest of the operation, Brotman said.

Brotman also said Starbucks will launch mobile ordering in Canada and the U.K. before the end of the year.

Starbucks released new numbers that show how its mobile initiative is having a growing impact on its brick-and-mortar empire.

Brotman said Starbucks processes about 8 million weekly mobile-payment transactions, representing over 18 percent of the revenue collected at its U.S. stores. The last time the company gave out a number it was 16 percent.

This article appeared in print in the March 19th, 2015 edition of Hamodia.