Why Starbucks continues to be investing in Web3 regardless of the crypto crash

Nevertheless, that doesn’t look like the case, particularly amongst massive retail manufacturers. Prior to now couple of months, manufacturers like Puma, Alo Yoga and Lacoste launched their very own Metaverse-ready Web3 collaborations. And this week, Starbucks formally introduced its new Web3 enterprise — known as Starbucks Odyssey — as the subsequent part of its loyalty program. 

In keeping with Starbucks, “the Odyssey expertise will provide members the flexibility to earn and purchase digital collectible stamps (NFTs) that can unlock entry to new, immersive espresso experiences.” Though the announcement was quick on particulars, the press launch acknowledged that Odyssey will likely be an extension of the corporate’s present rewards program. By the brand new interface, members can take part in a number of actions, resembling interactive video games and challenges that check and educate them on espresso. As of now, customers can apply to be on the waitlist, and obtain entry to Odyssey when it launches later this yr.

This announcement comes as your complete crypto market faces a significant cooling. In August, Bitcoin plunged to under $19,000, a far drop from its all-time excessive valuation of $68,000 in November 2021. In the meantime, NFT gross sales have additionally steadily dropped this yr – after experiencing a sizzling streak in 2021. In keeping with The JPG NFT Index, the valuation of a handful of so-called blue chip NFT tasks fell about 70% between April and June.

The brand new Starbucks program sounds just like its present gamification-focused rewards technique. Over time, the corporate has rolled out real-time video games and challenges to encourage customers to earn and redeem factors. Starbucks’ present program has over 25 million members, who account for about 53% of in-store spending.

Lots of the manufacturers which might be coming into the NFT area for the primary time look like rewarding sure behaviors with entry to as many real-life services as attainable. Alo Yoga’s Web3-based NFTs will reward loyal customers with real-life perks like customized procuring classes and entry to Alo’s unique wellness golf equipment.

For Starbucks, particularly, aiming to develop its already-popular rewards program via Web3 gaming and rewards might stand to be a long-term profit. 

Matt Kates, senior vp of loyalty program supplier Clarus Commerce, stated that the brand new know-how might assist manufacturers like Starbucks higher perceive the type of perks prospects are searching for. By Odyssey, prospects might both work to earn NFTs that unlock free drinks and meals, or earn extra unique experiences, resembling a Starbucks Reserve Roastery go to. 

“Whereas it’s true that crypto, NFTs and Web3 are dangerous investments, they symbolize new and evolving alternatives for manufacturers to have interaction with their customers,” Kates stated. “Starbucks has one of the fashionable loyalty applications of all time, and a part of that success is due to its experimentation to maintain up with altering shopper pursuits.”

With that, Starbucks must determine the best way to make its program extra palatable to on a regular basis customers. In contrast to different manufacturers creating shopper perks constructed on Web3, Kates famous that Starbucks has averted calling its rewards NFTs, and is as a substitute referring to them as “digital stamps” — making it extra approachable for present and new rewards members. 

Kates added that there are already many NFT and crypto advertising campaigns that provide customers quite a lot of collectibles, however their real-life worth continues to be complicated to a piece of the inhabitants. 

“Whereas Gen Z is extra accustomed to the performance of NFTs, we discovered that about 43% of customers – principally older generations – aren’t that fascinated with digital property but,” Kates defined, noting that lots of this disinterest and confusion is probably going because of the know-how continues to be being its infancy.

Billy Huang, co-founder of Web3 promoting and know-how firm Insomnia Labs, stated that the advantages of constructing out a Web3-based program are case by case, he stated. “With a lot funding getting in and comparatively little shopper traction, it stays to be seen who will execute Web3 effectively,” Huang stated. 

It’s value noting that Web3 tasks take a while to construct out earlier than they’re rolled out to the general public’s use. This makes it tougher for retail firms to foretell demand for digital tendencies like NFTs in the long term, Huang stated. Starbucks Odyssey, as an illustration, has been within the works for a number of months, with Starbucks teasing it again in Could.

“Starbucks is considering a bit of bit bigger and long run, utilizing the blockchain to create a conveyable rewards system that may be extra simply transported into different applications sooner or later,” Huang defined. Which means as know-how evolves, Starbucks Rewards members may have extra flexibility on how and the place they retailer their factors and perks. 

However that’s prone to be down the road. “Proper now, it’s enjoyable from a shopper perspective but it surely stays to be seen how profitable these applications will likely be,” Huang stated.