From the onset of the pandemic two years ago, almost every facet of our lives has had a digital component to it. One company that is intending to take full advantage of this new dawn is none other than Starbucks. The coffee giant recently revealed Starbucks Odyssey, a new experience powered by Web 3.0 technology that will offer Starbucks Rewards members and employees in the United States the opportunity to earn and purchase non-fungible tokens (NFTs). The initiative will allow users to unlock ac
ock access to new benefits and immersive coffee experiences, and will make Starbucks the first company to integrate NFTs with an industry-leading loyalty program at scale. Customers and employees can join a waitlist for a chance to be among the first to receive access to the new program, which is slated for a launch later this year. The third place Associate professor of marketing education at Singapore Management University Dr Seshan Ramaswami sees Starbucks Odyssey as the latest example of the brand’s pioneering vision. “Starbucks pioneered the idea of the coffee shop as the ‘third place’ in the customer’s life. This initiative is one that attempts to extend that into cyberspace – the third space in many customers’ lives,” he told Inside Retail. Ramaswami believes that customers will eventually interact, learn, get entertained, shop, make payments and even consume digital products in this third space. He feels that the metaverse and blockchain technologies are poised to make further inroads into consumers’ everyday lives. “Starbucks’s Odyssey program is positioned to be a pioneer again, to make the Starbucks experience a part of that emerging space,” he added. Is success guaranteed? But even Ramaswami believes Starbucks must overcome some significant obstacles to make its foray into Web 3.0 a success. At its heart, Starbucks is an experiential product: the coffee, the care with which it is sourced, roasted, blended and brewed, as well as the interactions with the barista. “The variety of other foods and beverages and the in-store ambience and conveniences together define the brand. It is going to be very difficult to replicate all of that online,” he noted. He feels that as a mere extension of the rewards program, the new functionalities offered by blockchain technology and NFT stamps will add a 21st century sheen to what is still a fairly traditional product and service. “That said, these new initiatives are perhaps not as good a fit for a coffee shop as for a bank, or a gaming or entertainment company where the fundamental experience itself is a digitised one,” he added. The bigger picture As with every new technology – the internet, mobile technology, social media, Web 2.0 – marketers will be looking to gain a competitive edge by embracing Web 3.0 and using it to enhance their customer experience. “With Web 3.0, again, we can expect a lot of other companies to crowd in – as a pioneering effort in the coffee shop industry, Starbucks may have gained a small edge over competitors,” Ramaswami said. But as more and more companies try to edge into the space, consumers will be spoilt for choice with various places to hang out in this third space – and it is not clear that just being first will give Starbucks an edge in the long run. “Indeed, as the experience online is in many ways easier to imitate or improve, Starbucks may well lose their real advantage, which has to remain a superior coffee shop experience, and efficient takeaway and delivery experience,” he said. Thinking long term Like everything in life, sometimes it’s about dipping a toe into the water to test it out before jumping in, and to most interested observers, this latest initiative by Starbucks is more of an experiment. There will probably be a few iterations to finetune it in the future. “The benefits to both Starbucks and its consumers of extra rewards, of events and unlocking of NFTs are not going to be critical in the long run. If it becomes a distraction for Starbucks, it might well find that the advantages of its more basic franchise are diminished a bit,” Ramaswami said. Starbucks Odyssey may ultimately prove to be an experiment that competitors learn from, and perhaps improve on. “One of the ways this can indeed work well, is through partnerships with the digital brands that will be able to make much better use of Web 3.0 – the banks, gaming companies, media companies, and shopping and social media platforms,” he said. The endgame Companies like Starbucks are always laser-focused on their target audiences, and this new initiative is certainly aimed at Generation Z and Millennials. “Gen Z is fairly at ease in experimenting with and also leveraging these emerging technologies to gain unique and authentic experiences, and a sense of ownership as well as entitlement,” Sandeep Sharma, an analyst at IDC, told Inside Retail. He feels that NFTs are still emerging as a technology, and over the next few years, multiple newer avenues with real-world use cases will come into being. For example, NFTs being linked to physical assets could enhance their applicability in the future. Another big blindspot for Starbucks could be that the wider customer base may be completely unfamiliar with Web 3.0 technology and NFTs in particular. Sharma is of the opinion that this general lack of awareness of the technology and the real utility might slow down adoption. “Starbucks needs to have a widespread education and awareness campaign and link the Odyssey program to real benefits that the customers can access and enjoy deepening experiences and engagement,” he concluded.