Starbucks unveils voice ordering (SBUX)

January 31, 2017

Starbucks unveils voice ordering (SBUX)

Voice Activated Personal Assistants

This story was delivered to BI Intelligence Apps and Platforms Briefing subscribers. To learn more and subscribe, please click here.

Starbucks is trialing voice ordering for some iOS users in the US, the company said during an investor relations announcement last week.

The feature, called My Starbucks Barista, will live in the Starbucks app and let customers make orders via voice command or text.

The company is also releasing a skill (voice app) for the Amazon Alexa platform that will let customers order on any Alexa-compatible device. My Starbucks Barista will be available to 1,000 US customers before a wider rollout later in 2017 for both iOS and Android users. The feature adds to Starbucks’ already impressive digital portfolio, and could help boost personal engagement digitally and anticipate customer behaviors.

Starbucks consistently pushes the envelope in terms of its mobile and digital strategy. Digital offerings have been shown to increase ticket size, traffic, and engagement with consumers. The new feature is yet another point of contact that gives the company an opportunity to further engage its consumers, making the whole process of ordering more convenient for consumers. The coffee company’s digital offerings, including its app, account for 27% of total in-store purchases at US stores.

The launch of My Starbucks Barista comes amid the growing usage and adoption of voice-first devices.

Voice usage is growing. In Q1 2016, 55% of US voice assistant users used their assistants regularly (daily or weekly), according to MindMeld. That’s up from 49% of users the previous quarter.
Voice-first device shipments are increasing. Shipments of voice-first devices, such as the Amazon Echo and Google Home, will reach 24.5 million units in 2017, according to VoiceLabs' recent State of the Industry report. That’s up from 6.5 million devices shipped in 2016.

Still, apps and devices that rely on voice face an uphill battle. While the use of voice assistants is increasing, many users are still uncomfortable speaking to their assistant. Thirty-four percent of millennial respondents in an exclusive BI Intelligence survey were either unaware of voice assistants, or unwilling to use them freely. And 18% said they would use Amazon's Echo only if they weren't around other people.

Quick-service restaurants (QSRs) — also known as fast-casual restaurants — such as Starbucks have been turning to mobile order-ahead apps to extract higher sales, intensify customer loyalty, and heighten foot traffic. And this voice assistant integration could be the next evolution of this approach.

Mobile order-ahead refers to a consumer-facing mobile payment platform that allows customers to order food remotely, pay for the items on their phone, and pick up their order at a specific restaurant location.

Leading QSRs in the U.S. are beginning to adopt these platforms at an accelerated pace and are benefiting from them. Taco Bell sees 30% higher average order values on mobile compared to in-store, and Starbucks' Mobile Order & Pay already represents 10% of total transactions at high-volume stores, directly contributing to increased company sales.

Mobile order-ahead is still in its early days, but will be a $38 billion industry by 2020, accounting for 10.7% of total QSR industry sales. This will be driven by full adoption among the top QSRs in the US, the growth of mobile commerce, QSR adoption through aggregators like Grubhub, loyalty programs, higher average order values, and new buy buttons.

BI Intelligence, Business Insider's premium research service, has compiled a detailed Mobile Order-Ahead Report that profiles the companies that have proved the mobile order-ahead concept and analyzes the trends contributing to this new industry's growth.

Here are some key takeaways from the report:

Mobile order-ahead apps — platforms that enable consumers to remotely purchase menu items for in-store restaurant pickup — are on the rise among quick-service restaurants (QSRs). We expect sales on these platforms to reach $38 billion by 2020, representing a five-year compound annual growth rate (CAGR) of 57%.
Mobile order-ahead will ultimately have an additive effect on the QSR industry. Mobile ordering platforms have been proven to intensify customer loyalty, increase purchase frequency, and lift average ticket sizes through order customization and easier checkout options. This means that mobile ordering is not a simple substitution for in-store purchasing, but a channel that can enhance the lifetime value of QSR customers. This makes mobile order-ahead a critical channel contributing to the growth of the QSR industry.
Alternative commerce solutions will help propel mobile ordering. Aggregators like Grubhub will onboard smaller fast-casual restaurants into the mobile ecosystem by offering them an existing app to integrate into, lowering the upfront costs of creating a mobile channel of their own. And in-store self-service kiosks will help popularize remote ordering and accustom users to less traditional forms of payment that don't require a cash register.

In full, the report:

Forecasts the growth of the mobile order-ahead industry in the US from 2015 to 2020, including its share of total QSR sales.
Profiles brands that are leading the migration to mobile ordering.
Examines the alternative commerce solutions that could help popularize mobile order-ahead.
Explains the risks and drawbacks to launching a mobile commerce platform.
Assesses the ways both large and small brands can create a mobile order-ahead platform.
Determines which types of fast-casual chains are in the best position to benefit from mobile order-ahead.

To get your copy of this invaluable guide, choose one of these options:

Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of mobile order-ahead.

Join the conversation about this story »