Starting Today, Starbucks Delivers (To One Building)
There’s a new Starbucks in the lobby of the Empire State Building. Not to be confused with the newly minted Starbucks express store that faces 33rd Street, outside, this one is only visible once you’re inside, standing near the building’s Art Deco elevator bank. Like the Starbucks outside, this one has La Marzocco espresso machines and employees in aprons whirring around inside. Unlike the Starbucks outside—or any other Starbucks anywhere, for that matter—you can’t go inside.
This is the pilot location for the coffee company’s much-anticipated Green Apron Delivery service. It launches today, almost a year to the day after CEO Howard Schultz announced in an earnings call that Starbucks would be looking into a delivery option, calling it their “version of e-commerce on steroids.” It only caters to customers in the building (Observation Deck not included), but will likely serve as the proving ground for future delivery kitchens.
Green Apron Delivery works simply enough, if you’re the customer. Log in to the new delivery site with your My Starbucks Reward account (the same account that customers use for the Mobile Order & Pay app), select your beverage of choice, add it to your cart, and check out. Within 30 minutes, a Starbucks runner will be handing you coffee.
For Starbucks, however, getting this system ready to pilot required the design of a brand new logistics system. “We really set out within the last year to figure out how to operationalize a completely new business channel,” says Alecia Craft, director of global innovation and testing. For starters, that meant designing a new kitchen. The one in the Empire State Building is pretty, with shiny new machinery and moss-colored subway tiles. Instead of everything facing the customer, this one is designed around the consolidation station in the middle, so orders can move in and out quickly. It also meant adding new positions. At a Green Apron Delivery kitchen, there aren’t baristas; there’s an order manager, a consolidator, and runners. The order manager is “the conductor,” Craft says. He or she is responsible for watching orders as they come in and choosing the most efficient ways to get them delivered on time. The consolidator watches over tickets and groups the right beverages with the right food orders.
Once the orders are ready, they go in black, rectangular delivery bags, designed specifically by and for the runners. (The original bags were square shaped, held four coffee drinks, and were found to be too unwieldy; so they upgraded to these larger,
Starbucks is hustling to cover every corner of the coffee market. Green Apron Delivery is the company’s latest move toward its “kill-the-line” concept, following this spring’s introduction of express formats and last year’s launch of Mobile Order & Pay. To many, Starbucks delivery seems like a logical, even obvious, next step. People are clamoring for it: Search for “Starbucks delivery” on Twitter and a river of wishful tweets will flow through.
It’s still not clear whether delivery—which doesn’t allow for walk-ins, or impulse purchases at the register—makes sense for Starbucks, from a business standpoint. “Starbucks is about transactions per hour. There’s certain hours where they have more customers than they have capacity for, and then the rest of the day where they don’t have as much business,” says Jason Goldberg, SVP of commerce at Razorfish. “Delivery doesn’t change that dynamic and it takes longer.” Starbucks will be charging a $2 delivery fee for Green Apron orders, but there’s also the question of how much reach a single-building delivery service can have. “Is it facilitating extra coffee purchases that wouldn’t happen?” Goldberg asks. “Was I too late to work and in the old world I wouldn’t have had coffee, or is it just replacing what I would have got in a store?”
If the new express format store on Wall Street in New York City is in any indication, the delivery service might not cannibalize other sales. Starbucks won’t disclose specifics, but says that its new, tinier, location hasn’t infringed on sales at a nearby café-sized store. Like those express formats, Green Apron is rolling out under the expectation that there is much to observe and iterate on along the way. Indeed, every Green Apron kitchen that opens will be a pilot of its own,
The uniqueness of each Green Apron kitchen highlights another challenge for Starbucks: When every delivery outlet serves a niche, the system can be hard to scale. “The question for Starbucks is can they do that profitably, for .0001 percent of their customers? Or for 10 percent?” Goldberg says. “If they can do it profitably for 10 percent that’s an altogether different impressive thing, and can meaningfully change consumer behavior.”
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