Starbucks bucks trend, closes online store

Global coffee giant Starbucks has closed its online store in the US, bucking the broader trend in retail to invest in the growing e-commerce industry.

Starbucks announced the decision to customers in late August and officially closed the online store on 1 October.

The coffee chain is operated in Australia by the Withers Group, which also runs 7-Eleven. The local website provides information about various Starbucks products, but does not sell any items.

Starbucks initially launched its online store in the US in 2011 as an additional sales channel for its coffee, syrups and sauces, mugs, coffee machines and other coffee-related products. It also offered a subscription service for customers to receive regular coffee orders through the website. This service was discontinued on 1 September.

While customers can still buy Starbucks coffee and other merchandise in the company’s coffee shops and at certain grocery stores, the company’s syrups and sauces are no longer available for purchase.

“We cannot guarantee availability of any product in stores, but we know you will find many choices to enjoy. You can purchase your favorite coffee and Starbucks merchandise in your local Starbucks,” the company wrote in a note to customers.

“You can also purchase coffee on the Starbucks App for in-store pickup. And you can find Starbucks coffee to enjoy at home in your local grocery aisle. Syrups and sauces will no longer be available for retail purchase.”

The online store closure comes as major retailers in the US, like Walmart, are ramping up their investment in e-commerce.

But the move should not be seen as a wholesale repudiation of digital retail. If anything, Starbucks is more focused than ever on getting customers to make purchases through its mobile app.

The company has implemented a ‘digital flywheel strategy’, involving customer acquisitions, spend-based rewards, personalised offers and convenient ordering, to make the app more sticky.

At the same time, the company’s leadership has previously spoken about the need for retailers to create unique in-store experiences to survive.

As the New York Times noted, Starbucks CEO Kevin Johnson referred to a “seismic shift” in retailing in the company’s most recent earnings call, and chairman Howard Schultz indicated a few months earlier that he had soured on digital sales.

“Every retailer that is going to win in this new environment must become an experiential destination,” Schultz told investors in April. “Your product and services, for the most part, cannot be available online and cannot be available on Amazon.”

* This article was first published on our sister site Internet Retailing.

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