Is This Starbucks Move a Sign of Things to Come?

The company has a new way to order, but it’s not being offered in the United States.

| More on:
The road to the future

Image source: Getty Images

Imagine being able to ask Alexa, Cortana, or Siri to order you a grande cold foam, cold brew from Starbucks (NASDAQ: SBUX) simply by talking to your voice-controlled digital assistant. That’s something the chain is doing in China, but not with any of the digital assistants named above.

Instead, the chain has partnered with Alibaba (NYSE: BABA) to offer voice ordering and delivery through Alibaba’s smart speaker, Tmall Genie — but only in China. Customers can order whatever beverage or food items they want simply by talking to their phone, tablet, or computer for delivery within 30 minutes.

Why is Starbucks doing this?

In the United States, Starbucks has been a technology leader. Its app pioneered mobile ordering and payment — something its chief rivals have copied — and it has generally been ahead of the competition.

The U.S. market, it should be noted, is still rooted in customers going to a store and picking up their order. Some of those consumers order first via the app and pick up their items without waiting in line, but many still order from a barista and pay via cash or credit card instead of having a card scanned in the app as they check out.

Delivery has not been a big part of the offering in the U.S. Starbucks does deliver — especially in larger cities where it has a partnership with Uber Eats. But the chain has done little to market delivery as an option to much of its customer base.

In China, however, the coffee giant faces Luckin Coffee (NASDAQ: LK), a digitally driven competitor that’s rapidly expanding. Most Luckin stores offer limited seating and are built around a mobile order-and-pay model. In fact, all transactions at the Starbucks rival, which currently has a slight lead in total store count, must take place through its app.

Luckin does not offer voice ordering, and adding it may give Starbucks a convenience edge. That may be needed, as Luckin has been very aggressive when it comes to pricing, using heavy discounts to gain customers.

For both companies, it’s important to become the ingrained favorite for customers. Consumers pick their favorites based on taste, price, and, of course, convenience. Being able to ask your digital assistant to get you a cup of coffee — much like you might ask a human assistant to do — is very convenient.

A sign of things to come?

While about one-third of Americans utilize a voice-controlled digital assistant in an average month, it’s fair to say that such technology has not really been used to its full potential. Siri might play music for us and Cortana may offer directions, but few people use either one to order food (even though a few chains offer that capability).

If this works in China, it’s logical to expect Starbucks to bring the technology (or at least something similar) to the U.S. The company has been working to optimize its stores to improve the customer experience. Allowing people to order using their voice and a digital assistant furthers that mission as long as Starbucks can figure out how to make it easy (and not frustrating).

Getting the experience right in China first makes sense. Once that happens, it seems inevitable that this type of integration will be added in at least the parts of the U.S. where Starbucks offers delivery.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool owns shares of Luckin Coffee Inc. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

More on Tech Stocks

question marks written reminders tickets
Tech Stocks

Nvidia’s Historic Stock Split: Will Investors See Bigger Gains?

Nvidia's (NASDAQ:NVDA) record 10:1 stock split entices many investors in several important ways. But some myths aren't technically correct.

Read more »

A worker drinks out of a mug in an office.
Tech Stocks

Want $1 Million in Retirement? 3 Stocks to Buy Now and Hold for Decades

Growth stocks such as Docebo and Celsius Holdings should help you generate outsized gains in the upcoming decade.

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

Missed Out on NVIDIA? My Best Growth Stock Pick to Buy and Hold

A TSX growth stock is a top pick and profitable investment choice if you missed out on the ascent of…

Read more »

grow dividends
Tech Stocks

3 Tech Stocks That Could Make You a Millionaire

Given their long-term growth potential, these three tech stocks could deliver oversized returns in the long run.

Read more »

Businessman holding AI cloud
Tech Stocks

Ready to Invest in Artificial Intelligence (AI)? 2 Stocks That Are Solid Bets

These two AI stocks provide investors with strong future opportunities as AI continues to become a part of our everyday…

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Is Lightspeed Stock a Buy, Sell, or Hold?

Down 88% from all-time highs, is Lightspeed stock a good buy in May 2024 and can the TSX tech stock…

Read more »

Overhead shot of young adults using technology at a table
Tech Stocks

Forget NVIDIA: 1 Tech Stock to Buy Instead

Here’s why Shopify (TSX:SHOP) stock could be a smart long-term buy for investors willing to look beyond NVIDIA’s impressive growth.

Read more »

Lights glow in a cityscape at night.
Tech Stocks

2 Artificial Intelligence Stocks to Buy and Hold for the Next Decade

Qualcomm (NASDAQ:QCOM) and another well-placed AI stock could drive substantial capital gains over the next decade. Here's how.

Read more »