Starbucks CEO Calls Overwhelming Mobile Orders a "Great Problem to Have," Launches Voice Ordering

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Starbucks CEO Calls Overwhelming Mobile Orders a "Great Problem to Have," Launches Voice Ordering

By Jamie Grill-Goodman - 01/31/2017

For some coffee customers, ordering their morning caffeine fix will now be as simple as using their voice. That may sound obvious, but it won't be a human listening.  Starbucks is launching voice ordering capabilities within the Starbucks mobile iOS app and the Amazon Alexa platform, as an extension of Starbucks Mobile Order & Pay.
 
One thousand select customers across the country can order coffee “on command” using My Starbucks barista, powered by Artificial Intelligence, as part of an initial feature rollout integrated into the Starbucks mobile app for iOS. The messaging interface allows customers to speak or text just as if they were talking to a barista in-store, including modifying their beverage to meet their personal preference.  The roll-out will occur in phases.
 
"For the pilot, we’ve invited customers who we believe will adopt the technology and allow us to gather learnings to strengthen the feature ahead of broader roll-outs," a Starbucks spokesperson told RIS News. "We anticipate the rollout to be complete among iOS devices before the end of the year, and to kick-off for Android devices this summer."
 
The company has also launched Starbucks Reorder Skill on the Amazon Alexa platform, which leverages Starbucks Mobile Order & Pay technology, allowing customers to order their “usual” Starbucks food and beverage items as they move throughout their day. Customers say “Alexa, order my Starbucks,” giving them the ability to order their usual items from their store wherever they have an Alexa device.  To use the Starbucks Reorder Skill, U.S. customers must have a registered Starbucks account with a Starbucks Card linked to that account and at least one previous Mobile Order & Pay transaction in the last 45 days. 
 
This news comes after Starbucks cited growing mobile pay and ordering as a factor for weaker Q1 FY17 numbers than Wall Street analysts had projected. U.S. comparable store sales increased 3% comprised of a 5% increase in average ticket and a 2% decrease in transactions. Average ticket grew 3% with transactions flat to prior year.
 
The decrease in transactions was attributed to a bottleneck in stores, from the surging popularity in mobile orders. This congestion resulted in customers entering the store, seeing the crowd, and exiting without completing a transaction.
 
Mobile Order & Pay represented more than 7% of total transactions in the quarter, double the figure from Q1 last year. Nearly 1,200 stores have 20% or more Mobile Order & Pay transactions at peak, compared to only 13 stores one year ago. While this may sound like a success story, the rapid customer adoption contributed to stores being challenged to keep up with the increased volume demands and introduced an operational challenge.

"When we introduced this, I don't think we had any idea that we would get the kind of response that we have gotten so fast," said CEO Howard Schultz. He continued, "this is a great problem to have, and a problem that we know how to solve. This is not rocket science."

Schultz said the company had its designers and architects in Seattle from the U.S. and around the world speaking about the success of Mobile Order & Pay and the impact it's had on the morning ritual. In existing stores Starbucks discovered that managers "on their own" have created best practices in order to solve the problem, creating a mobile kiosk that they can move around. Schultz said the company will redesign new stores and existing remodels to "reflect the fact that Mobile Order & Pay, although it's in its nascent stage, is obviously going to be a significant part of the morning business."

After analyzing the stores that developed practices and systems for alleviating mobile congestion, the company rolled the solutions together and started rolling them out to the 1,200 stores doing the most mobile business. The solutions include two new barista roles and a new ticket station, and the testing of new digital enhancements, including text message notifications when a mobile order is ready for pickup.

The company is also experimenting with what it calls recommendations, rolling out this month. As customers are in the process of ordering in the app, Starbucks will be doing suggestive selling.

"There's a long roadmap in front of us with personalization," said Matthew Ryan, EVP global chief strategy officer. "We've only just begun that journey, and we're very, very optimistic about the contribution it's already making to the spend per member that we're seeing."

According to Scott Maw, EVP and CFO, currently the total check on Mobile Order & Pay transactions is equal to other Starbucks Rewards transactions before suggestive selling.