Future of mobile commerce, in a skinny vanilla latte?

Thanks CNET for this on an iphone app that's actually useful:

Your decaf caramel macchiatos and no-whip pumpkin spice lattes are going mobile.

In a double-shot launch (sorry), coffee giant Starbucks unveiled late Tuesday its first two iPhone apps. The first one, called MyStarbucks, is a no-brainer: you can use the phone's GPS capability to find nearby stores (previously, this was available via text message), search ingredient and calorie information for Starbucks beverages, study coffee bean varieties, and build virtual drinks to see what exactly would be in one if you ordered it.

But it's the second app, called Starbucks Card Mobile, that could be worth a double-take. The app allows for balance check and refilling of Starbucks gift cards, which the company has expanded into a customer loyalty program by offering discounts, free refills, and two hours of free Wi-Fi to cardholders. And in two experimental test markets, the Starbucks Card Mobile application can use a barcode to replace the plastic gift card altogether.

As far as mobile e-commerce is concerned, this could be a big deal.

Mobile retail promotions, from text-message codes to redeem for free drinks to the nascent pop-up deals in geolocation app Foursquare, are nothing new. And mobile payments are commonplace in countries like Japan and South Korea. In the U.S., they haven't caught on yet. But having a ubiquitous national retailer like Starbucks in the game could change this.

The barcode-based electronic gift card from the new Starbucks iPhone app.

(Credit: Starbucks)

"We're really venturing into new waters in terms of mobile payment," Stephen Gillett, senior vice president of digital ventures at Starbucks, said regarding the Starbucks Card Mobile app.

"The mobile app is really the powering of some of our most frequently used functions on (the Starbucks card's Web site) and our in-store activity in terms of balance and payment and favorite orders," Gillett said. The app was developed internally with some help from third-party companies like mobile billing start-up mFoundry, he said.

Unless you're geographically very lucky, you won't be able to pay for a venti frappuccino with your iPhone just yet. Only 16 Starbucks outlets, eight in its home turf of Seattle and eight in Silicon Valley, can currently handle the barcode-based gift cards. These are stores already internally designated as test spots for new Starbucks technology, Gillett said.

"In some of these Seattle stores we've tested store manager laptops, allowing them to get instant messaging, full access to e-mail, and conferencing," he said. "These are some of the stores that got the new AT&T Wi-Fi earlier."

As a result, that means the integration process may be smoother for the test stores than it would be for a random Starbucks elsewhere in the country. "The store employees are used to getting new kinds of technology, new kinds of services earlier than most markets," Gillett said.

Estimates vary on just how big the U.S. gift card industry is, but according to the Federal Reserve, it's certainly well into the billions and continues to grow. As for Starbucks, already one in seven transactions at the coffee chain involves its array of gift and loyalty cards, Gillett says. "We see a significant amount of our traffic represented by loyalty cards of some sort," he said.

And eliminating that need for a physical gift card is a pretty obvious next step, especially if you've ever spent any time fishing around for one in a handbag.

The question is whether a new concept like barcode-based gift cards can easily scale to a chain as widespread as Starbucks. Mobile barcode systems have typically been rolled out in far smaller contexts--short-term advertising campaigns, for example, or companies with far smaller reach such as Equinox, a high-end gym in a handful of U.S. cities that recently began letting members check in with an iPhone-based barcode. And while Starbucks has been battered by the recession and has closed several hundred stores in the U.S., it still operates or licenses over 10,000 outlets in the U.S. and thousands more overseas.

So Starbucks is taking a slow approach to mobile payment testing, which means that customers outside of Silicon Valley and Seattle might not be seeing it any time soon.

"We're really working on getting that (customer) feedback before we put any long-term plans in future markets," Gillett said. "This really is a consumer-driven app in so many ways. This is an app that we need the customer experience to have a very strong influence on."

He was equally mum om whether Starbucks Card Mobile will offer advance mobile ordering options or other potential features. "Again, we're really looking to this app hitting the real world before we lock in future functionalities," Gillett said.

The same goes for taking the app beyond Apple's handset. Apple and Starbucks have a years-long and complicated history encompassing both iTunes and AT&T wireless service, but a mobile payment option ideally wouldn't be restricted to the iPhone.

"We are definitely interested in non-iPhone based platforms, particularly Windows and Android and BlackBerry," Gillett said. "But at this point we're just really focused on the launch for this."

Digital consumers more loyal to brands

Thanks WARC for this post... and thanks Gerry for passing it on

NEW YORK: "Digital consumers", defined as people who have previously used the internet to buy products or research specific categories, exhibit a greater degree of brand loyalty than the average shopper, Millward Brown says.

Based on over 100,000 consumer interviews in 24 countries, and 8,000 brand assessments, the research firm found that digital consumers have brand loyalty scores that are 15% higher than their "non-digital" counterparts, as well as forming "strong relationships" with more specific properties.

While digital consumers display heightened loyalty across all sectors, the difference between this segment and the typical consumer peaked at 93% for the airline category, a figure falling to 48% for IT hardware, and 45% for IT software.

Other areas where this difference was particularly pronounced included fragrances, on 29%, with apparel posting an uptick of 27% among women and 20% among men, while body care recorded an overall improvement of 22%.

Beer brands also saw an upturn of 12% compared with the norm, with mobile phone handset manufacturers, mineral water and banking brands all on 9%, haircare products on 8%, grocery stores on 7%, and soft drinks on 5%.

Overall, Millward Brown argues that digital consumers are "simply more interested in brands", a trend that is reinforced as they "develop brand knowledge" through conducting online research.

As evidence of this, the company reports that "the average difference is higher in categories where there are more digital consumers."

In terms of individual countries, Japan and Taiwan saw the greatest degree of difference between digital and non-digital consumers, with loyalty levels among the former group some 36% higher than those for the latter.

Hong Kong, the US and UK were also strong performers, with loyalty scores rising by around 30% among the digital demographic, with Germany, Sweden, Denmark and Korea also up by over 20%.

Among the lowest performers were Mexico, Russia, Thailand and Hungary, all seeing improvements of less than 10%, falling to a low of just 2% in China.

Internet penetration levels seem to have little influence on the overall situation, as, for example, India and Canada both posted improvements of almost 15%, despite the fact web access rates stand at 10% and 80% in these markets respectively.

While the profile of the average digital consumer varies by category, they are typically "younger, male, affluent and creative types who like excitement."

Overall, members of this group of web users are also twice as likely to be "transmitters", defined as "knowledgeable category consumers who influence others with their opinions."

Data sourced from Millward Brown; additional content by WARC staff, 08 June 2009