Starbucks ventures into Web3, which is not just a simple attempt, but a determination of the founder. If 25 million members switch to Web3 seamlessly, it will directly increase the number of NFT users by tenfold, marking the next milestone in the NFT industry.
Let’s speculate why Starbucks is doing member NFTs at this point in time. How will Starbucks approach NFTs? What impact will Starbucks have on the NFT industry?
01 Why Launch a Membership NFT at This Time?
Perhaps the answer is that it has to be done.
Starbucks is currently facing the challenges of aging branding and a sharp decline in offline business due to the pandemic. The beverage industry has always been competitive, and for young people, Starbucks is no longer cool. In the United States, there is Blue Bottle, and in China, there is Hey Tea; at the same time, in the Q3 financial report, same-store sales in China decreased by 44%. The stock price has fallen by 20% within a year, and there must be a way to break the deadlock, innovate the brand, and enhance online business.
At the same time, we see that Starbucks’ entry into web3 is a determination of the founder, and they have also found the strongest partners. Founder Howard Schultz revealed his upcoming web3 plan for the first time in a financial report conference call with investors this week.
To develop this project, Starbucks has brought in Adam Brotman to serve as a special advisor. Adam is a former Chief Digital Officer at Starbucks, where he led the development of the company’s app, reaching 50 million users worldwide and making it the second-largest mobile payment app in the US market (31 million users), just behind Apple Pay (43 million).
Adam is now the co-founder of Forum3, a Web3 loyalty startup, whose business is to support brand loyalty programs with Web3 technology. Forum3 will work closely with Starbucks’ team to create the Starbucks Web3 initiative.
02 How Would Starbucks Approach NFTs?
There is a certain probability that it would involve: membership cards + metaverse + digital goods + community branding
Many people felt a bit disappointed after reading the official announcement, as most of the content corresponds to the current membership benefits, which are not innovative enough; however, there is a specific section in the announcement that talks about “reinventing the digital third space”, where members and employees come together out of their love for coffee. Isn’t this the metaverse?
Starbucks has always been known for the third space, where customers are not just drinking a cup of coffee, but enjoying a moment in this space. Many of the current industry standards were innovations made by Starbucks at the time, such as freshly ground coffee beans that fill the entire store with fragrance, comfortable sofas, and good internet that allows you to stay for a whole day. However, in the post-pandemic era, users cannot go offline for active or passive reasons, and Starbucks must create a digital version of the third space to cope.
In the metaverse, users can socialize and interact with cooler digital identities. There are already some cases, if you hold the NFT of Brew by Intern, you can showcase this cup of coffee in Oncyber, which is also your unique identity.
Based on the metaverse, digital goods will also be easier to create and sell. Starbucks itself has a strong IP, on the one hand, digital goods can enhance and spread, on the other hand, they can also bring more revenue, supplementing the decrease in revenue from offline due to the epidemic and labor costs.
Community brands are also a characteristic of web3, especially suitable for brands like Starbucks that need to rejuvenate. The holder is also the IP owner, and creating a community brand not only helps to establish a derivative community and brand but also expands the original brand ecosystem. The original brand and the derivative brand can also achieve a win-win situation through investment and profit sharing.
Finally, let’s talk about membership cards. Although it may seem that there is not enough innovation at present, with the above-mentioned metaverse, digital goods, and community brands, member benefits will also be correspondingly expanded, becoming more competitive. In addition, NFTs will be more environmentally friendly than physical cards, which is also in line with Starbucks’ brand philosophy.
03 What impact will it have on the NFT industry?
Let’s make a bold assumption that there may be the following impacts:
Lowering the threshold for users to use NFTs, leading to a 10-fold increase in NFT industry users:
In Starbucks’ press release, it can be seen that its deployment on Polygon reduces gas fees; at the same time, it supports the purchase with credit or debit cards, which is the encapsulation of the cryptocurrency wallet behind the scenes. The combination of these two can allow users to obtain a simpler payment experience similar to web2, instead of having to understand a series of new concepts and steps such as cryptocurrency wallets, mnemonic phrases, ETH, and gas fees from the very beginning. We all know that for every additional step, the number of users will decrease by 80%. Through a minimalist experience and the reduction of the threshold, on the one hand, it facilitates the seamless transition of existing members (nearly 25 million active members in the United States) to web3, directly increasing the number of NFT users by 10 times, marking the next milestone of the NFT industry; on the other hand, it also facilitates the entry of subsequent new users.
Collaborate with existing web3 brands to enhance the rights and interests of NFT holders:
Of course, it is not an easy task to transform these 25 million members into web3 users overnight. It is essential to establish co-branding partnerships with existing web3 brands. On one hand, this will help Starbucks expand its influence in the web3 space. On the other hand, it will also bring benefits to the current NFT holders, creating a win-win situation for both parties.
Establishing benchmarks for innovation in various aspects and encouraging more web2 brands to enter web3:
Starbucks itself has a strong innovative gene, although it has slowed down in recent years. The most famous examples are Frappuccino and VIA instant coffee, as well as the “third place” concept mentioned earlier. In the four directions of membership cards, metaverse, digital goods, and community brands, all current players are still in the exploration process, and there are no best practices yet. It is expected that Starbucks + Forum3, a combination of industry veterans and former innovation leaders, can establish benchmarks for innovation in various aspects and encourage more web2 brands to enter web3. If another 9 Starbucks enter web3, the user base can easily exceed 100 million, and NFTs will enter a more mature and prosperous stage.
Starbucks is currently facing challenges such as aging brand and a sharp decline in offline business due to the pandemic. It is expected that the determination of the founder and experienced veterans can lead to breakthrough innovations in the web3 field, which will not only bring growth to themselves but also promote the prosperity of the industry.
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