Updated: Oct 3, 2022
The world's most famous coffee shop, Starbucks, has announced the launch of Starbucks Odyssey, its new loyalty and rewards experience which leverages NFTs on the Polygon Blockchain directly into the existing Starbucks App experience for their customers. In the announcement, Starbucks shares that they see Web3 as a means to grant access to "experiences and ownership" to their users and evolve their loyalty program by providing digital experiences such as community and NFTs which can unlock experiential and physical experiences such as taste testings, free coffees, or visiting their "Hacienda Alsacia coffee farm in Costa Rica." Read the full announcement from Starbucks here.
Starbucks as a Tech Company
While Starbucks has long been a coffee business, the company has been a leading payments and loyalty technology company for many years, though only building their tech for themselves. According to a 2021 report by eMarketer, "Starbucks app is the second most used mobile payment app for point-of-sale transactions in the US, right after Apple Pay." As of March 2021, Starbucks has 31.2 million users, while Apple Pay and Google Pay had 43.9 million and 25 million users respectively.
Starbucks has become the example for loyalty and rewards in the retail and restaurant verticals, introducing the Starbucks Card in November of 2001, turning into Starbucks Cards Rewards in 2008, and Gold loyalty shortly after which combined turned into the My Starbucks Rewards inside the mobile app, laying the groundwork for in 2011 the first Starbucks loyalty program. On their recent earnings call in August 2022, Starbucks Founder and Interim CEO Howard Schultz stated that "active Starbucks Rewards Memberships in Q3 totaled 27.4 million members" and that "members drove a record 53% of US company-operated revenue."
Starbucks has long been a pioneer in advancing retail technology to its millions of users and creating customer experiences accessible to the average consumer. With this same approach, Starbucks will help drive the adoption of Web3 and NFTs simply by building products for their loyal consumer base.
Brands exploring NFTs: Good and Bad
While Starbucks is not the first Brand to launch an NFT or Web3 program, they have a strong chance to be one of the most successful due to the primary reason of being focused on building a program that serves its core customer base and most loyal customers. The Brands that use NFTs as an extension of their brand, products, and lines while focusing on their core customer base rather than the crypto audience will find the most success with NFTs.
Nike has found success in its recent venture into NFTs, acquiring RTFKT in December of 2021, releasing several NFTs under their "CloneX" collection of avatars and derivatives, and NFT shoes and merchandise, which all led to $185 million in revenue. So far, Nike has done the best job with introducing NFTs into their community and customer base, creating products and experiences that resonate with their use base. Nike's core demographic is adjacent to the crypto NFT demographic, skewing to Millennial and GenZ.
Tiffany's sold out of their 250 NFTs which they sold at 30TH each or roughly $50,000 at the time, each serving as certificates for Crypto Punk holders to be able to get a custom pendant of their 8-bit PFP. While selling $50K priced items may sound like a win for a Brand getting into NFTs, this was no different than a group of friends, community, sports team, etc. agreeing to purchase merch together. Buy selling these NFTs Tiffany's was not focused on its core demographic or serving its existing user base, but instead attempting to acquire a niche crypto customer, while attracting media and press. This strategy is not scaleable and will not be successful long term.
Last year, Pepsi issued NFTs attempting to follow the path of Bored Apes and other avatar collectibles by launching their Mic Drop NFT, a collection of 1,893 NFTs that were only available through a Web3 minting experience via a custom site with instructions to set up a crypto-wallet, purchase ETH, and transfer ETH to the crypto-wallet. The primary purchaser of Pepsi's NFTs were crypto speculators hoping to flip and make a profit, not customers and fans wanting to own the NFT because they love the Brand which ended up being a big miss.
There are several fashion Brands that have explored NFTs including Kiss Beauty with their Masterpiece Eyelash NFT, DKNY turning their logo into an NFT, Dolce & Gabbana setting a then record with $6 million in Fashion NFTs, and others like Addidas and Gucci collaborating with Bore Ape Yacht Club.
How Brands should think of NFTs
The top Brands we admire would not be who they are today if they did not make products, experiences, and ultimately Brands that people want to showcase and purchase from. When Brands consider creating their own NFTs, the customer experience and integrating the NFT into the brand's existing workflow is of most importance, as opposed to forcing cryptocurrency and crypto-wallet workflow for the sake of Web3 as shared in the Pepsi example above, while Nike has found early success by staying true to its Brand.
The average consumer is not aware of Web3 and is not asking for NFTs. As of March of 2022, there are only 30 million MetaMask users (popular crypto wallet). Starbucks alone has 27.4 million members in its loyalty program. It doesn't make sense for Starbucks to focus on a crypto user when instead they can focus on bringing Web3 experiences to their current customer base. In Starbucks' case, their customers want the NFT because they love and are loyal to the Brand, not because they are trying to re-sale or flip the NFT.
Brands have had an easier time grasping NFTs as opposed to cryptocurrency or Blockchain as they can simply think of NFTs as digital products that can be seen, used, or experienced. NFTs become an extension of the Brand and growth into digital product sales. Consumers want products from the Brands they love based on the perceived brand value.
Commerce has become more and more digital from the internet, to social, and to smartphones. NFTs are the greatest innovation in Retail Technology since the smartphone. Younger Millenials and GenZ, have grown up with a smartphone in their pockets, having digital experiences daily. Regardless of NFTs and cryptocurrency, Brands are selling more and more digital products every day. If you believe Brands will be selling more digital products in the future than they do today, you likely are a believer in NFTs.
NFTs are Digital Wrappers for Digital Inventory, essentially content files (JPEG, PNG, Video) wrapped in code. NFTs are programable content files, programable Digital Inventory. The simple act of being a programmable content file means NFTs are better than JPEGs, PNGs, and Video Files. NFTs provide an authenticated digital closet for consumers to share the products they own and love.
Brands are the ultimate use case for NFT adoption as they will make digital products their consumers love and want to acquire. If NFTs are to go mainstream, customers need to be able to interact with them in the ways they are accustomed to interacting with other products they love. This is why at Niftmint we introduce NFTs into a Brand's eCommerce site and allow users to purchase in the Brand's store, the same way they do any other product.
At Niftmint we make it simple for the brands to get involved with Web3 and NFTs by integrating them into the Brand eCommerce Platform so they can Mint, Sell, and Custody the NFT, while abstracting the crypto and crypto wallets from the Brand and their Shopper.
This article is written by Jonathan G. Blanco, Founder and CEO of Niftmint, an NFT Commerce Infrastructure company allowing Brands to Mint, Sell, and Custody NFTs directly on their existing eCommerce Platform, while abstracting cryptocurrency and crypto-wallets from Brands and their Shoppers. The company Kiss Beauty is a customer of Niftmint. Learn more about Niftmint here.