Starbucks is closing its e-Commerce site on Oct. 1, 2017, a rarely seen move in today’s retail landscape. The site sells coffee and coffee products, tea, syrups, drinkware and brewing accessories, and is currently operating a clearance sale until it closes, offering up to 50% discounts on select items. Products available on the site will continue to be sold at third-party sites such as Amazon and the company’s grocery partners.
The move seems counterintuitive for a company that has made significant investments in digital initiatives in recent years. Currently, mobile payments make up 30% of Starbucks orders in the U.S. Early in 2017, the company added an AI platform, My Starbucks Barista, to its mobile app, enabling customers to place their orders via voice command or a messaging interface.
Additionally, Starbucks is modernizing its tech stack to replace its legacy rewards and ordering functionality with a cloud-based platform. The platform is designed to improve customer data organization and tighten integration with store-based operating systems such as inventory and production management.
However, the closing is in line with the company’s decision to shutter all 379 Teavana cafés, a move indicating the company is losing patience with underperforming properties.
The Starbucks grocery partners have helped the coffee giant push some of its products further out to consumers. In a Q3 earnings call, Starbucks CFO Scott Maw noted that the company’s K-Cup category share increased 1.4% to 16.6%, while its roast and ground share expanded from 1% to 13%.
“This is a numbers decision — Starbucks’ online store isn’t necessary given the many grocery relationships (including Amazon) the retailer has to drive its CPG business,” said Ricardo Belmar, Senior Director of Worldwide Enterprise Product Marketing at InfoVista, in a RetailWire discussion. “Plus, Starbucks is truly a destination where they can sell their CPG products in their own stores. With the success of their mobile app, customers would be more inclined to order through the app and pick up their items along with a latte rather than wait for it to be shipped from Starbucks.”
Former Sam’s Club Chief To Take COO Role
The online store will close a day before Rosalind Brewer officially begins her tenure as Starbucks’ Group President and COO. Brewer stepped down as the CEO of Sam’s Club on Feb. 1, 2017 before joining the Starbucks Board of Directors in March.
Brewer will lead the company’s operating businesses across the U.S., Canada and Latin America, as well as the global functions of supply chain, product innovation and store development organizations.
As Starbucks aims to optimize its digital and mobile offerings, the company is bringing in an exec with plenty of operational experience on that front. Under Brewer’s watch, Sam’s Club rolled out its scan-and-go mobile checkout service in all 645 U.S. stores.