Is This Starbucks Move a Sign of Things to Come?

The company has a new way to order, but it’s not being offered in the United States.

| More on:

Imagine being able to ask Alexa, Cortana, or Siri to order you a grande cold foam, cold brew from Starbucks (NASDAQ: SBUX) simply by talking to your voice-controlled digital assistant. That’s something the chain is doing in China, but not with any of the digital assistants named above.

Instead, the chain has partnered with Alibaba (NYSE: BABA) to offer voice ordering and delivery through Alibaba’s smart speaker, Tmall Genie — but only in China. Customers can order whatever beverage or food items they want simply by talking to their phone, tablet, or computer for delivery within 30 minutes.

Why is Starbucks doing this?

In the United States, Starbucks has been a technology leader. Its app pioneered mobile ordering and payment — something its chief rivals have copied — and it has generally been ahead of the competition.

The U.S. market, it should be noted, is still rooted in customers going to a store and picking up their order. Some of those consumers order first via the app and pick up their items without waiting in line, but many still order from a barista and pay via cash or credit card instead of having a card scanned in the app as they check out.

Delivery has not been a big part of the offering in the U.S. Starbucks does deliver — especially in larger cities where it has a partnership with Uber Eats. But the chain has done little to market delivery as an option to much of its customer base.

In China, however, the coffee giant faces Luckin Coffee (NASDAQ: LK), a digitally driven competitor that’s rapidly expanding. Most Luckin stores offer limited seating and are built around a mobile order-and-pay model. In fact, all transactions at the Starbucks rival, which currently has a slight lead in total store count, must take place through its app.

Luckin does not offer voice ordering, and adding it may give Starbucks a convenience edge. That may be needed, as Luckin has been very aggressive when it comes to pricing, using heavy discounts to gain customers.

For both companies, it’s important to become the ingrained favorite for customers. Consumers pick their favorites based on taste, price, and, of course, convenience. Being able to ask your digital assistant to get you a cup of coffee — much like you might ask a human assistant to do — is very convenient.

A sign of things to come?

While about one-third of Americans utilize a voice-controlled digital assistant in an average month, it’s fair to say that such technology has not really been used to its full potential. Siri might play music for us and Cortana may offer directions, but few people use either one to order food (even though a few chains offer that capability).

If this works in China, it’s logical to expect Starbucks to bring the technology (or at least something similar) to the U.S. The company has been working to optimize its stores to improve the customer experience. Allowing people to order using their voice and a digital assistant furthers that mission as long as Starbucks can figure out how to make it easy (and not frustrating).

Getting the experience right in China first makes sense. Once that happens, it seems inevitable that this type of integration will be added in at least the parts of the U.S. where Starbucks offers delivery.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool owns shares of Luckin Coffee Inc. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

More on Tech Stocks

think thought consider
Tech Stocks

Is CGI Stock a Buy Even With No Dividend Yield?

CGI stock may not have a dividend to speak of. But does that necessarily mean you should ignore this top…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Why Now Is the Time to Invest in Canadian AI Stocks

Are you looking for one of the most solid Canadian AI stocks out there? This one is probably your best…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Why AI Stocks Should Be in Every Canadian Investor’s Portfolio

AI stocks continue to be one of the best options out there for long-term investing, especially when considering Canadian options.

Read more »

money goes up and down in balance
Tech Stocks

1 “Magnificent 7” Stock I’d Buy Over Nvidia Right Now

Here's why Meta Platforms stock is a better choice for Canadian investors compared to Nvidia in November 2024.

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »