2014.17 | starbucks pre-ordering

660-Denver_Drive_ThruRecent news indicates that Starbucks will add order ahead capability to their mobile solution. I’m a daily user of the mobile payment app and even use Pebblebucks, but Starbucks may find mobile pre-ordering a more challenging system to implement.

Pre-ordering sounds great on paper and I think it can work in some environments but coffee represents some challenges.  Here are a few details that would need to be clarified:

  • What is fulfilment process? Order printer, kitchen display, other?
  • How are orders prioritized? If there is a line of customers in the store waiting, does the barista make the coffee for the absentees first?
  • When are ordered drinks made in relation to pickup time? Ice melts in cold drinks and hot drinks can cool quickly.  That’s a complicated equation for a barista with a long list of drinks to make from the till in the store.
  • How will queues be arranged in stores? Many stores are already short of real estate. Is there a separate queue or do they enter the same as everyone?
  • How do customers validate their order and take it away?
  • What happens if customers miss their pickup time?
  • How will customers and store staff be notified of the process change?  Will it require alterations to the store?  To current standardized processes that have been in place for years?

Starbucks are certainly working through the details but it will require a serious assessment of their current in store fulfilment processes. The questions above only scratch the surface.  Adding pre-ordering is a significant change to the system which will require the acceptance of new processes by both store staff and customers.

Panera Bread’s Founder and CEO Ron Shaich is embarking on just such a process and is doing the necessary legwork to change the business at the operational level. This is the right approach of Starbucks is committed to pre-orders. The right setup will require significant testing and adjustment.  Tacking a mobile ordering tool on the app is just the tip of the iceberg.  It’s the behind the scenes work that will have this system sink or swim.

From my perspective, there are too any places where pre-ordering can go wrong.

At a grocer I worked with, a kiosk was installed by the deli counter for ordering sliced cheese and meats. The concept was to enter your order and then complete your shopping through the rest of the market and return later with a ticket to pick up the order.  Instead of waiting in line, shoppers could shop while their order was assembled and pick up their deli order just prior to checkout.

What happened in reality is that shoppers saw a queue at the deli counter, walked over to the kiosk, entered an order, printed a ticket, and then walked to the deli counter and demanded their order from staff that were already slammed and getting order requests from two separate systems. This ended up displeasing staff, the kiosk users and shoppers who had waited in the ‘traditional’ line. Beyond these concerns, there was no obvious ROI from such a solution.  They didn’t buy more meat.

There was and is nothing wrong with the technology.  The technology is the easy part.  The system just didn’t fit the store without changing processes and customer expectations and making that plain to all parties.   Without complete commitment to a new paradigm by all parties, the result will be failure.

Imagine you walk into a Starbucks that is slammed with customers.  There is a long line and a 10 minute wait.  With this new system, how many people are going to see the queue, pull out their mobile and try to order with that to skip the queue? With the number of users Starbucks have for their mobile app, many people will certainly attempt this. If it works, it’s unfair to those in line. If it doesn’t, they may place a second order, putting strain on an already overloaded system.  Either way, it now adds thought to the process. Do I order ahead on the morning commute or just go in the store.

For any new system to flourish, there must be value to the retailer and to the customer. Whether there is value to both here remains to be seen. Customers may get their coffee faster, but if the process falters it could slow the whole store system. Will Starbucks sell more coffee? I’m not sure that pre-ordering will drive more sales.  Pre-ordering complicates the store system with what could be little upside to stores or customers.

photo-2-250x375If Starbucks wants to improve the process for stores and clients, they should consider ways of speeding transactions without making major changes to its fulfillment process which works fine as far as I have seen.  Ordering and order entry at Starbucks can range from the simple to the complex. Some customer get a Tall Pike Place.  Done.  Some customers ask for coffees with 6 adjectives and it takes baristas many keystrokes to enter.  Even simple orders require many keystrokes.  I order a very simple drink and always need to wait while the barista enters my order – though the staff at my store even have my order memorized.  It takes 10-15 touches to enter the order.  I’ve watched.

Consider an alternative to pre-ordering to kill the line.

  • If orders require many keystrokes and many users order the same thing again and again, why not automate the order entry?  Starbucks has more than 10 million users for their mobile app.  Users are trained to use the app to pay.
  • Why not build a drink builder that allows users to configure and save drinks within the app?
  • Use the Starbucks app to configure a drink as it used to do.
  • The app generates a unique id barcode that repesents that drink order.  The code is saved on the phone for repeated use.
  • Customer scans their mobile at the POS on currently installed scanner to order.
  • The barcode can be a string that the register recognizes as the full drink with all foams, soys, non-fats, whatever.
  • The point of sale system is populated with the drink details and the barista can confirm with the customer instead of tapping 15 times.
  • Avoiding entry would save precious seconds off of many transactions, and increase throughput.
  • Avoiding entry by barista could also enable consumers to order something different than their usual without having to figure out how to order it and go through the translation discussion with the barista.
  • Users could share their codes with friends and save them in their own apps so that we can order for them correctly.
  • Don’t these guys know my name?  With a bit of customization the customers name can show on the screen so we don’t see any more of those cups with the crazy names on them, speeding the pickup process.

Pre-ordering could work, and I am hopeful that Starbucks will find the magic formula to make it so, but I’m not yet convinced that this will make lines shorter.  It doesn’t look like a simple path, but kudos for trying something new!

Simple is good.  Even if something isn’t simple on the back end, it must appear that way to clients.

2013.10 | Customs Kiosk | Starbucks Square Issues

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Canada Customs Self Service – After traveling out of the country recently, I had the opportunity to use Canada Border Services Automated Border Clearance solution in place at Pearson Airport and Vancouver Airports.

The system works very similarly to the original method used in speaking to an agent.    Canadians coming home to Canada fill in the customs form by hand on the plane as usual, and proceed to the customs area at the airport.   Instead of proceeding to an agent, the handlers in the area will ask you if you wish to leverage self service.   If you opt to use the kiosks, you approach, select your language, and follow the instructions on the screen.  Users insert a completed customs form in the slot below the screen, and then scan your passport(s).  The kiosk will categorize travelers with a code indicating whether you may proceed, or speak to an agent.  Then a printed copy of the populated form with the code as a watermark over the form is produced.  In my case, I had indicated I had nuts with me, which required intervention, and had to speak to an agent who passed me through quickly on my way.

While having to speak to the agent after using the kiosk was a bit frustrating, the vast majority of the times I cross the border I would have had no issue at all.  The kiosks are very simple to use, they have a huge green light at the top indicating availability and instructions are shown simply and on screen.  About the only criticism I can make is that it’s a waste of paper to print out a copy of the form which is already a waste of paper.  Moving towards electronic interfaces in these situations will take time, and this is a wonderful step towards simplifying this much loved process.

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Starbucks Square Issues – Fast Company recently reported on issues that Starbucks has experienced around implementing the acceptance of payments via Square Wallet.  The fundamental issue appears to be a challenge with communicating the ability to accept Square Wallet at Starbucks at their outlets.  I read this article with a great deal of interest.  I’ve been part of numerous deployments in retail and there are so many opportunities for a deployment with a great concept to go awry.

In order to justify a change to a retail solution, there have to be benefits:

First, there must be a benefit to the retailers’ customers.  At first glance, that appears to be missing.  At present, the benefit of using Square over the standard Starbucks mobile app is a bit of a puzzler.  If they use Square Wallet, customers don’t get to count purchases toward future free beverages as part of the Starbucks loyalty program.  That is actually a DIS-incentive to use Square Wallet.  If Starbucks want to drive usage, they should change that.

Second, there must also be a benefit to the retailer.  I don’t see a real benefit to Starbucks beyond the ability to accept another payment method.  It would seem that drawing additional traffic with additional payment options would not be a key driver at stores with long lines in place most of the time.  In fact, throughput would be more of an issue, and the acceptance of Square as portrayed in the article is actually a hindrance to throughput.

Hopefully there is more to this solution than meets the eye.  It would seem logical to assume that getting the Square Wallet in place at Starbucks is to lay the foundation for the geolocation version of Square Wallet which would allow tendering without presenting a mobile device at all.  That would provide benefits for both the Starbucks and their customers.

2012.27 | Starbucks and Square

Starbucks has already blazed a trail with their current iPhone and Android mobile payments app.  Yesterday’s NYT article indicating that Starbucks will be moving to Square for payments processing puts them even further along the curve of mobile payments.  This is a watershed change in the way that payments are processed in a national retail chain environment.

The article in the Times indicates that Square will process payments for Starbucks in the US, and the description of the implementation indicates that the Pay with Square (previously known as Card Case) application will be implemented as a future phase of this solution.

For the uninitiated, here is how Pay with Square works today:

To use the solution, customers have to have an iOS or Android mobile device with a Pay with Square App installed and be a registered Square User.  That registration includes the users personal details, including a photo, and a credit card connected to the account.  Customers then register with certain vendors where they wish to be recognized.  (Like having a tab at your local establishment)

When the customer goes into a store that uses Pay with Square, their proximity to the store causes the mobile app of the user to register that customer with the point of sale device in use at the store.   A customer would place their order, and at the point of tendering, the cashier can see a list of customers registered in the store based on their proximity.  The customer identifies themselves by name, and that person is selected by the cashier based on validation of their image on the screen of the point of sale register.  The payment is placed on the users card and a notification of purchase is sent to the customers mobile app.

The customer has paid by name and not pulled a wallet or a phone out of their pocket.  They simply walked into the store, asked for a Latte and said, put it on my tab, my name is Pete.  No cash, no card, no mobile, no PIN, no signature, no paper.

Starbucks may use the Pay with Square mobile apps and operate in the same way indicated above, or they may link this functionality to the Starbucks app.

Either way, consider the impacts of this partnership:

  • Square will obtain access to millions of payments every day.  Starbucks already processed 42 million payments over 15 months with their mobile app.
  • This no scan solution is a perfect fit for Starbucks clientele, product mix, and transaction types.
  • The no scan solution is a logical extension of the current mobile app and users accustomed to scanning their phones will easily transition to this payment method.
  • Non-technical users no longer have to be concerned about anything beyond registration.  They can get help with that and proceed with confidence where they may not have paid with mobiles.
  • No cards, no phone scanning, no pins, no signatures could speed transaction times.
  • eReceipts may finally mean the end of treat receipts and postcards in the mail for the free  beverage after every 15 purchases.
  • Millions of users could transfer to this mode of business, driving demand from consumers to simplify payments at other similar establishments.

Of course, the implementation of this solution opens up some other questions:

  • Pay with Square’s Retailer Solution is currently an iPad based app solution.  Will there be an API ported to the current POS HW/SW solution?  Moving to an all iPad solution seems unlikely given the sophistication, customization and inter connectivity to other systems of a POS solution in place at a Starbucks.  Moving from a POS for order taking to another device for payments would be sub-optimal. Current MSRs could potentially be used.
  • Will Square look to integrate with pinpads in future?   For EMV payments, hardware isolated pinpads are required.  Current design uses only an MSR.
  • What if someone doesn’t put a valid photo on Pay with Square?  Will the barista have to turn them down?
  • What if there are too many people in the store with the app.  Does the app have a sort function by name?  If the list is too long, it may make life difficult.
  • How will this interface with Apple Passbook expected in iOS 6?
  • What sort of fraud can we expect?  For a coffee purchase it doesn’t seem worth it or likely.  If you were selling HDTVs, this would be more concerning.

No matter what happens, this mode of payment acceptance is moving beyond experiment now, and we’ll soon see if it is fully accepted by the public.  Expect others to watch this closely.  This is a significant departure from the current paradigm.

2011.43 | Starbucks Mobile Payment in Canada

While our friends to the south have been able to pay with their mobile phones at Starbucks for some months now, that functionality was just activated in Canada last night. I was finally able to use the app to pay on my trip to Starbucks this morning.

For those who need a refresher on how this mobile payment solution works, Starbucks connects your stored value card to a barcode within their mobile apps.  While at the store, the user opens the mobile app on their device and pulls up their virtual Starbucks card on the mobile device’s screen.  When they tender at the point of sale, the cashier scans a barcode from the mobile device with an imager at point of sale instead of swiping a physical card through the MSR.

This solution does not make use of NFC.   This solution does not require your mobile device to be online or connected from a data perspective in any way.  All you need is this barcode on your screen.  Effectively, you could print this same barcode and scan it at the point of sale to pay in the same manner as you would with the phone.

Setting up the app is simplified by the fact that users just enter a login and password for starbucks,ca and the system automatically uploads their card number, card image and balance.  This is exactly what technology is for – to make life simpler – not to make users enter in meaningless numbers.

This simple solution is a terrific fit for Starbucks specifically for reasons I explained when the app was originally released in the US.

Like many excellent solutions, it leverages proven technologies in a combination that fits the users, the retail environment and the business.   For the user, all they need to do is install or update a mobile app, open it, and log-in.  For the store, a new scanner/imager was required at the point of sale terminal, and a new tender option in the point of sale software was required.  Some training to know how to read a barcode from a phone and you are good to go.

Now you have an application with a reason for users to open it.  Well done.  Of course, this now opens suggestions for future capabilities to highlight and increase that usage.

  • Keep standard orders on the mobile device.  Customer scans customer facing scanner at point of sale, and the order is populated on the cashier’s screen.  Speeds order entry and minimized screen touches for cashiers.  Order comes up on screen for validation.  This would be amazing at the drive thru.  No more crackling voices.
  • Upselling on screen based on usual customer orders.  It would have to be opt in, but if the customer is standing in line and they pull up the app to pay it can highlight a good add-on to their order that is specific to them, right when they are ordering.  Provides consistent upsell.
  • In the US it is possible to add funds to the cards of other users as a gift.  Great option.

Whatever retailers do, they should ensure that their app has a reason for existing.  This one has that.  Would this work everywhere?  Certainly not.  Every business is different, and that is the fundamental challenge – building an app that solves a problem and improves something  for customers and stores.

2011.29 | Mobile Retail Apps

In order to get the attention of today’s consumer, retailers need to provide the best possible experience from any channel where customers wish to interface with them.  Michael’s – home to the crafty types – has put together their own mobile app with a spin towards functionality that they feel that their following would enjoy – things like video examples and mobile versions of datasheets, as well as the usual coupons and offers.  Sounds terrific.

Here are a few thoughts about following in their footsteps with an iPhone app:

1.  Ensure your target market are iPhone users.  I’m sure Michael’s checked that and decided that the development was worthwhile.  Mobile apps are inexpensive compared to many enterprise level retail software development efforts, so it probably wasn’t a difficult decision.  Because Michael’s already had a library of web based resources anyway, the only addition was probably the iPhone interface.

Fundamentally, with web services in place they can all be leveraged to build an app for another platform.  More practically, I recommend a mobile web based interface for the retailer’s website that will work on any platform.  There are platforms that will automatically re-format the screens to fit any size device – Blackberry, iPhone, Android, Windows and more – based on the browser and screen resolution of the device accessing the page.  This is more a function of practicality than design.  Why provide functionality to users on one platform, when for a similar cost, you could provide it to all smartphone users?

Examples of mobile web instead of apps click on theses links with your mobile: LLBean and Sears. For lots of examples of apps, check out my page on Canadian retailers with links to social media and apps.  A recent article indicates that retailers are starting to follow this web format instead of iPhone apps.

2.  Make sure the mobile app has functions that are practical and add to the customer experience you want to provide.  Just because an advertising company will throw in an app for free as part of a contract, or your head of marketing wants to have an app to see your logo in the apple store doesn’t necessarily make it worthwhile to the consumer.  In fact, if the app doesn’t add anything new to the arrangement, the consumer may feel you have been wasting their time.    A standard store finder isn’t enough – I can just do that on the maps application.  However, one that shows via a coloured icon that the store is currently open, as is used on Starbucks Canada or McDonalds Canada, is a pretty good idea.  The Home Depot Canada app has a function to measure screws and various other items.  All of these are examples of trying to do something different that is helpful, and can enhance the customer experience for their specific clientele.  I can’t tell you the idea that will make your app or web based store, but your customers might!  Ask them.

3.  Ensure the app can identify the user in a way that the customer can opt in or opt out.  Most retailers have a loyalty program in place.  What better way to identify the customers than leveraging this same infrastructure?  Be certain that opting in works flawlessly and simply and that nobody is forced to identify themselves.  In fact, if there is an additional benefit to the customer to identifying themselves on the app, all the better.  If there is extra functionality for loyalty users, they are more likely to identify themselves and be happy about it.

Why identify customers?  There are benefits to customers and retailer alike.  First, if the customer is identified, it is possible to provide a unique experience for that customer.  Whether it is default languages or remembering shopping lists, having that identification allows the retailer to provide additional benefits to the consumer, and they in turn may have the opportunity to opt in to the experience that they wish to have across mobile, POS and web interfaces.  A customized experience can drive loyalty, which drives bigger baskets and more sales.

Secondly, having the identification in place allows retailers the ability to identify what channels and functionality are used and by whom.  Considering the myriad opportunities for IT investment, knowing who is using what in what way provides a validation of customer usage against customer sales.  If only 200 customers are using your iPhone app, that may seem like a bad investment, but if 90% of them are in your top segment for sales, that may not be the case.  Just looking at downloads of an app is not good enough anymore.  This also turns around for the customers.  Seeing what customers are using ensures that the best channels and functionality are available to them for their retailer.

2011.05 | Novel Implementations in Retail

A few implementations in consumer facing situations with some unique properties observed in recent news:

  • Royal Bank debuted their first branch with the new branch concept using solutions like Microsoft Surface – for more details on the solution elements and some video check out my prior post.
  • Couche Tard is piloting a bluetooth mobile coupon solution tied to digital signage solutions for Red Bull.  Here’s hoping it doesn’t become mobile spam!
  • Starbucks Canada has placed interactive screens in the front window of one site in both Toronto and Vancouver as part of their Tazo Loose Leaf Tea campaign.  Visit them prior to February 26 to try them out.
  • London Luton Airport in the UK debuted ‘holographic’ hosts to assist airport travellers in navigating the security process.  They are rear-projections of real people onto full size human shaped screens.
  • Walgreens is now providing the capability for customers to renew their prescriptions via their mobile device by taking an image of the barcode on the bottle.
  • Kraft has a new kiosk that they showed off at NRF’s big show in New York last month that recommends recipes based on users’ appearance.   There’s something of the old carnival weight guesser about this one.  It makes you wonder if vegans look a mite greener, perhaps.  Next up, drive through kiosks that guess your order based on your car.

2011.03 | Why Starbucks’ Mobile Payment System Works

Last week Starbucks announced that the mobile payment scheme it has been piloting for some time will be available for all 6,800 Starbucks stores and Target locations across the US.  The solution is not yet in place in Canada.

For the uninitiated, the solution works as follows.  Consumers download the Starbucks Card Mobile App to their mobile phone; be it iPhone or BlackBerry. Customers with a Starbucks stored value card (effectively a gift card) that is registered on the Starbucks website, enter the card number into their phone when the obtain the app, and that card number is stored.  When consumers visit a store, they place their coffee order as usual, and indicate their desire to tender with their mobile.  Consumers start the Starbucks Card Mobile App on their mobile and navigate to the payment screen so that a 2d barcode representing the consumers’ Starbucks card is displayed.  The Starbucks associate, selects mobile as the tender in the POS, and prompts the consumer to use the customer facing imager (the same as those used in airports to read boarding passes).  The consumer places their mobile device under the imager, the 2d barcode is read, and the POS treats the tender like a gift card, following the usual payment verification procedure.  Once tender is complete, the customer obtains their coffee as usual.

The discussion on electronic wallet is an industry favourite, and this development will certainly encourage more discussion on the subject and provide some much need experience.  I’m fully behind this initiative, but at present, this solution is very much a Starbucks specific solution, and it is not easily translatable to other retailers.  While retailers can learn a great deal from the obvious careful thought that has gone into the solution, and we can look forward to others moving down this road as well.  To clarify for consumers (and non-technical retail executives) who ask why other retailers don’t have mobile payment schemes as yet, consider the following unique characteristics of the Starbucks situation that make a solution like this pay off.

Use of Stored Value Card – Very few retailers have a stored value card with the massive following and ongoing usage that Starbucks have.  Effectively consumers are giving Starbucks their funds in advance in exchange for some very small benefits (free drink on your birthday, free pump of flavouring in your drink).  Starbucks gets loyalty data on customers, and a nice balance of cash on hand.  More relevant to the mobile payment solution, the Starbucks mobile phone application allows consumers to make a payment onto their stored value card, and the application’s 2d barcode payment system is connected to that card.  Connecting the mobile payment system to the stored value card means that Starbucks can take the risk of a payment system internally.  Stored value are not subject to the same roadblocks, legislation, and scrutiny that building a mobile payment system that would access a credit card or a debit card would have.  Using the stored value card simplifies implementation and sidesteps many complexities of payment systems like EMV and PCI.

Cross Platform – While Starbucks are very keen on the iPhone, they have not limited themselves to an iPhone app, but also provided an app for the other key smart phone users via the Blackberry App.  Considering the corporate core of Blackberry users and how often meetings now take place in Starbucks stores, this is a wise move to maximize potential users.  Given the number of Android Users and the recent release and growing use of Windows 7 Phone platforms, it would not be surprising to see the Starbucks Card App ported to those platforms as well, ensuring maximum potential usage.

Valuable App – With over 400,000 apps on iTunes, retailers need to make their app unique and useful.  Ideally it pulls together the mobile and in store experience in some way.  Starbucks has managed both.  Any successful retailer’s mobile app needs something unique to it to encourage download, and having it on a consumers screen on a permanent basis.

Customer Demographic – Based on my experience, and what I have read in the media over the past few years, the average Starbucks consumer is more likely than average to be a tech-savvy iPhone or Blackberry user, and beyond that, the kind of user who would be comfortable with technology and placing a payment with their mobile.  It is important that any solution put in front of a consumer by a retailer fit their target market.  A savvy comfortable customer is more likely to use the app, and use it well, to speed transactions and drive convenience for them, and speed throughput for the retailer.

Infrastructure – Most Starbucks locations have 2 terminals.  In order to leverage 2d barcodes, special imagers are required, and this means hardware investment.  2 lanes means only a $300-$400 investment per store for imaging hardware.  Considering the potential value of transactions per store, this is a very low cost.   The ROI would be far less attractive for a lower margin retailer with dozens of lanes in a store to deploy, as it would be key to have the imagers in every lane to simplify the process for consumers.

Transaction Type – The slowest portion of any retail transaction, and the most difficult to trim time from, is the tendering process.  Given that in Starbucks transactions generally include a small basket size and the ordering time is relatively short, the value of an alternative payment is increased, as it is a greater proportion of the transaction.   This value is increased further by the incredible traffic at Starbucks sites.  Having many small transactions provides a boost to the ROI of the solution.

No Mobile Device Handling – In order for any sort of mobile payment solution to increase throughput and minimize operational complications, it is key to streamline the process of scanning the mobile device.  Starbucks has done this via a customer facing scanner with very simple signage.  This allows the consumer to place their phone in the scanning area with no need to pass the mobile device to a cashier.  This simplifies the process by providing a consistent process, not only increasing the scan speed, but also avoiding the potential of store staff dropping or otherwise damaging a customer’s mobile device.  Consumers are also more likely to use the mobile payment solution if they do not have to pass their mobile phone to a cashier, given how consumers increasingly consider the mobile device as a personal item.

As with all solutions implemented by consumer facing organizations, ROI is key.  Looking at the Starbucks solution, the costs of entry are probably not that high.  A mobile app is relatively inexpensive and standalone compared to other point of sale solution implementations.  Using the stored value card leverages electronic processes and databases already in place.  The crucial part is operationalizing the solution, and that can be put in place for hundreds or low thousands per site.  All in all, this is a relatively low cost solution with the potential for a high ROI in both funds, and in good will from consumers.  Other retailers looking to implement such a solution would do well to observe what Starbucks have done, but note well that this is not a one size fits all solution.  Any future implementers should be sure that the app suits their customer demographic, their transaction model, and has a way of dealing with the complexities of payment.  Other solutions will arise, and it will be fascinating to see what comes next.

2010.44 | Using the Consumer’s Device

As the dynamic for retailers shifts from a B2C model (where where the business dictates how consumers will interface to a retailer) to a C2B model (where consumers can use any number of platforms do business with a retailer), there are some very interesting technology applications coming to the fore that attempt to take advantage of the changes. 

This video from the shop.org annual summit highlights this vision of the future for retailing with every potential touchpoint as an opportunity to sell.

Some examples of retailers leveraging :

Starbucks Wifi Portal – When you login to the free wifi at Starbucks in the US, the new Starbucks Digital Network is rolling out that provides users access to specially selected content, including six channels around News, Entertainment, Wellness, Business and Careers, My Neighbourhood, and Starbucks.  Understanding that half of their customers are using mobile devices in the store, Starbucks are optimizing this experience for those users.  Starbucks provides another reason to visit their sites, while providing other potential revenue opportunities through media sales/fees/commissions.  This seems like a real win for everyone – consumers, content providers and Starbucks. 

Concierge Service in Apple Stores – Apple appears to be upgrading their Genius bar system whereby customers arriving at Apple Stores can register, be placed in a queue for assistance, and even see the name and a picture of  their Genius.  Given the increasingly crowded and crazy environment at an Apple store, this is a great use of a device the client is likely to own, while providing a valuable service and re-inforcing the Apple brand.

Store Scanning – Unlike my previous post where retailers are scanning mobile devices, there are a wide array of solutions for consumers to use their mobiles to scan items in stores.  Two particular interesting examples are the upgrade to the Tesco iPhone app that allows for barcode reading capability to add to orders, and Aislebuyer, a standalone system that lets customers scan in stores and check out on their own.

iPad Apps – Companies like Gap, Victoria’s Secret, Amazon Windowshop, and more are releasing iPad apps that provide a unique interaction point that is special to their brand, provides an interface that the customer is asking for, and leverages a consumer device as opposed to having to invest in their own networks.

Mobile Payment and Couponing – Starbucks has been accepting mobile payments through their mobile apps and a 2d barcode scanner since late last year, but are now rolling it out in New York – where solutions like this can start to enter the mainstream.  Target has been doing the same with coupons since the spring.  People notice that they lose their wallet after a day – their mobile phone they notice missing in an hour.  What’s more important?  These organizations are leveraging an area of demand, and smartly sidestepping all of the logistical nightmares of mobile phone payments to give themselves an early adopter advantage.

All of these examples are clever efforts to turn the C2B model to a business advantage for these organizations, and a glimpse into how Consumers will interact with retailers in the future – wherever they want – but more so.



2009.50 | Gift Card Ubiquity

Gift cards become very visible at Christmas during the time of giving.  What’s driving the deluge of cards in Canada?  As always, there have be benefits to all parties to give a phenomenon momentum.  For consumers:

  • the elimination of gift card expiry dates in Ontario by law (and other provinces moving forward) has increased interest
  • they can be purchased outside of the issuing stores via programs like Blackhawk Gift Card Mall, providing a very convenient mall in a kiosk
  • their small size makes them portable for shipment anywhere around the world – no taxes, no duties, no problems
  • the prevelance of chain and big box stores often makes them usable close to most recipients, wherever they may be
  • they can be purchased online and sent to a recipient, avoiding a store visit and providing a personalized gift
  • while they are effectively cash, they indicate a level of thought based on where the card comes from (music lover = iTunes gift card)
  • they provide a simple way to gift without knowing sizes of the recipient for clothing purchases (avoids embarassing size gaffes)
  • there is no charge for MOST of the programs

At the same time, this provides the issuing organization a number of benefits:

  • for regional players, it brings in purchases from outside their normal geographical limits
  • they obtain funds up front – drives year end results
  • many cards are not redeemed or only partially redeemed resulting in income with little cost
  • there can be upsell to holders of cards – those with $100 cards will purchase an item over $100 and pay the balance
  • outside programs like Blackhawk can extend the reach of issuers with very little investment needed
  • assists consumers with fickle recipients and driving a sale
  • organizations can track the usage of cards to understand consumer behaviour of both purchaser and recipient
  • certain organizations can drive the cards to be used as an ongoing tender, locking in customers and revenue streams
  • drives revenue to stores in ways cash gifts cannot

Increased usage means increased competition for dollars spent on gift cards.  More usage can be expected for organizations that can get creative about the processes and features of gift cards, and there are so many ways to deal with this very simple concept.   There are a number of areas of potential, and examples around these:

Marketing – Differentiating one card from another will depend on the needs of the organizations constituents.  Examples of approaches include customized gift cards, buy 2 cards, get one free, and unique sizes and shapes.

Initial Purchase – Options will need to suit the target market for the cards.  In general, the ideal is allowing consumers the potential to purchase via the three key channels: point of service, via the internet, and mobile, and many cover at least two of these, with the third on the way.  As a twist on point of service, retailers and vendors are providing kiosks that print custom cards with unique images and names of givers and recipients.  The technology is proving itself and coming down in cost, so we can expect to see more of these in the future in higher volume initiatives.

Transfer to Recipients – Being able to provide the gift in a novel, simple and creative manner that suits the giver and the recipient.  Apple has provided the capability to provide a gift card via Facebook.  Amazon provides gift cards via email.  It won’t be long until we can purchase gift cards in Twitter.

Validating Balances and Adding Value to Cards – if this is simple and convenient with no costs, it can drive more usage of the card and more business to the card issueing organization. The Starbucks iPhone app (available in US only) allows users to register their cards on their iPhone, shows the actual image of the card they have, and add value to the card at the click of a button.  Toys R Us allows consumers to scan their gift cards at store price verifiers to validate the balance on the cards.

Redemption –  Simplicity and convenience can drive more usage of gift cards.  Starbucks iPhone app is providing gift card redemption via 2d barcodes on a trial basis.   Online stores like iTunes allow gift cards to be connected to an account and used against purchases until the amount is used up.

Given the increasing market of gift cards, expect the level of ingenuity to increase over the next year as everyone scrambles to get a piece of the market.

2009.47 | Paper Free Offers Please

Given the state of the global economy, special offers have become the new normal in retail.  Retailers are increasingly able to offer relevant offers on products and services desired by individual consumers.  Consumers who are loyal in these fickle times are rewarded with great deals. 

A technology decision such as requiring a barcoded coupon can have a heavy influence on the closure of a sale.  If a physical coupon is required and forgotten, there can be disasterous concequences.  The consumer may make a special trip to a location, spend sigificant time and energy to fill a basket, and then discover that the offer can not be redeemed. 

The end result is an abandoned basket, at best.  At worst, a customer will feel cheated by the retailer for forgetting a slip of paper.  This sort of small annoyance finds its way to places like Consumerist, or onto Twitter.  While these small annoyances were not worth addressing in the past – with no facility for consumers to vent such a small issue, these items could be ignored.  These new media provide instant response, and the potential for massive backlashes never before possible.

The opportunity to bring a consumer closer to a retailer – to make them more loyal – has been transformed into a pain point for the consumer.  And why the pain point?  Why is it necessary that we all kill trees and feed toner onto paper so that a barcode can be scanned?   The reasons are myriad, and include:

  • Limiting the offer – Perhaps retailers don’t want to provide the offer to the general population, but to a select audience.  Perhaps they are limiting the stock for a BOGO or free item.  While this is sometimes the case, many offers generally encourage you to send them to friends and family and use them over and over again. 
  • Sweethearting – Retailers want to reign in associates who give discounts to people on their whim – they could give it to everyone.  Using a barcode provides an audit trail with the paper coupon and the scanning requirement that will minimize the impact of a dishonest cashier providing discounts to unqualified individuals.
  • Tracking – Any campaign requires measurement, and some campaigns may want to track where the consumer found the offer, so they can understand their multi-channel mix.  There may be different barcodes for e-mail, flyers, newspaper ads, for whatever medium was used to validate the offer source.

There has to be some way to meet these very reasonable retailer needs in some manner without the handicap of a paper coupon – a 19th century innovation.  Unfortunately, barcodes can’t be scanned directly from most mobile devices, so this problem may take some time to be resolved with technology.  While there are some amazing opportunities using 2d barcodes or coupon apps to bridge this divide that are wholeheartedly encouraged, an interim measure that works for all consumers – not just mobile users – is key to avoid the bad press on line that can sink brand capital – particularly in the online world where bad press spreads so quickly.

As always the best route is to make the technology as invisible to the consumer as possible.  Why not make the unique barcode something that can be entered manually if the client reads it off their device to the cashier?  If there are concerns about limiting or sweethearting, why not have a code that the cashiers can enter manually if a customer mentions the offer, and a different code if it is scanned?  If the coupon is fundamentally required, offer a lesser discount without it. 

No matter the answer, it’s important to consider the desired end state, and not get caught in technology for it’s own sake – be it a barcode or a mobile device.  The solution has to be simple for the consumer.

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