Wednesday, April 2, 2003

Starbucks Innovates Payment System (again)

Starbucks innovates again by offering a dual use Visa. The card boasts the reloadable stored-value feature of its successful Starbucks Card, but also works like a credit card. When using the credit card the customer gains reward points that can then be redeemed at Starbucks retail locations. Expect to see many other retailers copy Starbucks and introduce dual-use cards of their own over the coming months.

What a cool idea. Starbucks continues to impress me as a company that is answering the question “What business are you in?” in ways that the average customer wouldn’t necessarily anticipate. Starbucks isn’t a coffee store – it’s an “experience retailer”. Between the synergistic launch of Cranium (inspired by, and considerably helped by, Starbucks locations throughout Seattle), the integration of WiFi hotspots into their retail store chain, and their alternative payment methods (pioneered by their use of the Starbucks card, a reloadable cash card that you can “fill up” online), Starbucks is developing revenue streams (in some cases, considerable revenue streams) that have nothing to do with their coffee. And each of these ancillary efforts increase the likelihood that you’ll pay $4 for a cup of coffee.

Other businesses that are in a similar position who I admire:

  • Cisco. It’s not a router company. Its business is the acquisition and integration of technology companies.

  • It’s not a bookstore. It’s an e-commerce fulfillment engine, powering everything from to to (Go figure!)

And after searching around, I found an interesting article at Optimize Magazine that talks about all three of these companies, and adds several others to the mix: Charles Schwab, Harley Davidson, Wal-Mart. The article is already over a year old, but worth a look.

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