Starbucks Blazes New Trails With Coffee Delivery Service

Starbucks recently announced they will be offering delivery services for their food and beverage items in select locations. To date, details about where products can be delivered, its costs, and how it is going to function have been withheld. Experts are confused as to how any company could offer low cost personalized differences. They do seem to agree that if it works Starbucks will be blazing some new trails in logistics that will be adopted by others.

I congratulate Starbucks on creating buzz in the market because there will be a lot of companies watching how they are effectively going to do this on low value purchases.  The media is ablaze about the development and its implications on e-commerce. Uniquely Starbucks is taking sales and delivery down to a micro level not yet seen on a large scale. 

Starbucks is trend setting by not only offering deliveries, but also providing pre-order cellphone applications that customers can pick up later. No one wants to wait in a long Starbucks line when they know they can grab and go with a pre-order application. Approximately 15% of all their customers’ purchases are being made through mobile devices. 

The great innovations have some theorists wondering. Some have argued that the minimum purchase price needs to be over $20 dollars to make it economically feasible. Certainly this is one possibility. The other possibility is they will require a purchase minimum like $7 and have three deliveries in the same area. Instead of one delivery you are making three within a short distance with each other. 

This would require delivery in high concentrated areas to make a return even possible. There is no doubt technology is lowering costs but to do so on a $2.25 cup of coffee is unprecedented. The only item to effectively beat economy of scale margins would be many small purchases or combining multiple services and benefits together. 

An additional benefit is that more loyalty through habit is being developed with every purchase. The consistent use of technology and applications fits within the tech savvy and trendy markets that create an image that others in society are likely to emulate. Getting customers to make the coffee as part of their working lives certainly makes a difference in longer term sales.

What Starbucks is doing is being a market leader in personalized logistics where members of society can order products and create consumer culture right from their phone. Today you may be limited to a cup of coffee from Starbucks or a bag of groceries from Amazon Fresh but tomorrow you may be having someone deliver your healthy meals three times a day. Wait…you can already sign up for this through a local service. Times have changed and so has the expectation of service.

Designing Websites to Capture Global Customers

Designing and developing websites that reach out and spark the interest of multiple cultures is difficult. Because a website is the online “face” of an organization and regularly conducts e-commerce activities it is important to build sites that are both functional and effective. Research by Dr. Kirk St. Amant examines culture, website design and the international spread of online access for businesses that want to polish their global business designs. 

Cultures have an impact on how users frequent and interact with website elements. It is often beneficial to use local administers with key cultural knowledge to evaluate websites (Esselink, 2000). Providing materials, information, e-commerce, and page navigation through the eyes of the target culture can raise overall conversion rates and sales. 

According to World Internet Stats in 2012 there were approximately 2.4 billion Internet users with a market penetration of 34.3% (Internet Users in the World, 2012). Growth between 2000 and 2012 is 566% showing the market is growing at a significant rate. The large market highlights how businesses can have profound impact if they develop their systems appropriately.

The author discusses how symbols and pictures impact how viewers understand web sites. For example, electrical plugs may look different in some countries leading to a rejection of the product.  Different cultures also have diversified understandings of visual information that impact product impressions (Del Galdo, 1996). 

Cultures use different prototypes to understand information. In prototype theory customers scan information to find similarities to the ideal (prototype) image in their heads to determine how to understand and categorize information (Aitchison, 1994). When pictures and information are mentally categorized on a site it is better understood and acted on by customers. 

The author concludes that by using simple analysis mechanisms it is possible to improve the global appeal of websites. The report acknowledges that this is just a first step and additional research into visual perception and understanding issues will have a significant impact on sites in the future. Businesses can consider the following website features in their evaluations:

Menu Bar: Where, How many, Linked vs. Image

Buttons: Where, Shape, Text vs. Image

Color: Background and Foreground Color

Hyperlinks: How Many, Where, Visual Space, Design

Text: How Much, Size, Capitalization, Consistency, Formatting

Search Engine: Where, Color

Pictures: How Many, Where, Size, Resolution, Color Scheme, Pictures vs. Artistic Impressions, Human Pictures, Logos

Aitchison, J.  (1994). Bad birds and better birds: prototype theory. Language: introductory readings. Ed. Virginia P. Clark, Paul A. Eschholz and Alfred F. Rosa (4^th ed). NY: St. Martins.

Del Galdo, E. (1996). Culture and design. International User Interfaces. NY: Wiley

Esselink, B. (2000) A practical guid to localization. PA: John Benjamins.

Internet Users in the World (2012). World Internet States. Retrieved June 30^th, 2013 from http://www.internetworldstats.com/stats.htm

Call for Papers: The Center for Innovations in Business & Management Practice

Date: May 27, 2014 – May 28, 2014

UK: London

The annual conference on Innovations in Business and Management will take place at the Univeristy of Greenwich, London, UK from May 27-28, 2014. The conference is dedicated to research and best practice within the business and management areas.  The call for papers is now open.  The conference offers researchers a chance to present their work in all areas of business and management.

The annual conference is a place for researchers, academics, and practitioners alike to come together and share their knowledge, research and best practices.  The conference is open to all areas of business and management, including but not limited to:  Business, Management, Accounting, Marketing, Finance, Human Resource Management, Information Technology Management, Operations Management, Information Systems, Economics, Electronic Commerce, etc.

Website

E-Satisfaction and Social Interaction Create E-Loyalty

Retailers and service providers are moving online in an attempt to raise their financial performance. The online world has some different methods of marketing that help to retain customers. In the online world where there are low switching costs companies will need to spend a greater portion of their efforts on customer retention.  A study by Christodoulides and Michaelidou (2011) helps better understand what companies must do to create e-satisfaction and e-loyalty. 

Companies spend nearly double the amount of their budgets on new customer acquisition while spending half that amount retaining existing customers (Forrester Research, 2008). As a general rule, the cost of gaining new customers is about five times the cost of retaining current customers (Strauss, et. al. 2006).  The existing customers have long tail value and should receive greater emphasis in future strategic considerations. 

How e-companies retain their customers is an important consideration for boosting revenue.  Previous research has indicated that trust, customer service, website and technology, customization, switching barriers, e-satisfaction, and image are key components to successful customer retention. When companies can effectively carry a strong brand, matched with technology, and offer customizable products/services they are more likely to keep their customers coming back. 

Through the analysis of 797 the authors found that e-satisfaction was positively associated with e-loyalty. They also found that convenience, variety and social interaction help create e-satisfaction and slowly encourage e-loyalty. The more convenient the shopping experience the more likely e-satisfaction will rise. When shopping motives are strong and e-satisfaction is high there will likely be more loyalty to e-retailers.  E-satisfaction has some of the highest levels of association with e-loyalty.

Christodoulides, G. & Michaelidou, G. (2011). Shopping motives as antecedents of e-satisfaction and e-loyalty. The Journal of Marketing Management, 27 (1/2).

Forrester Research (2008). The state of retailing online: Marketing report Forrester Research. Inc. Cambridge, MA.

Strauss, J., El-Ansary, A., & Frost, R. (2006). E-marketing. Upper Saddle River, NJ.