Can Seattle Delivery Boost Starbucks Corporation (SBUX) Stock?

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Starbucks (SBUX) made an important announcement yesterday when it revealed it will be rolling out delivery service in parts of Seattle. Right off the bat, it’s important to note that the Seattle initiative in and of itself won’t be much of a factor in driving SBUX stock.

Can Seattle Delivery Boost Starbucks Corporation (SBUX) Stock?But looking at the longer-term, this is an undoubtedly bullish sign. CEO Howard Schultz has a record of excellence when it comes to execution, and he’s helped SBUX stay at the forefront of mobile commerce.

The Starbucks mobile app is incredibly popular, and its My Starbucks Rewards loyalty program has proven valuable in retaining repeat customers.

Let’s take a look at a few details about the new Starbucks program, and why I think this is a definite bullish indicator for SBUX stock in the long-term.

First New York, Now Seattle

It’s encouraging that SBUX continues to test delivery options, which the company first began testing in October with a specialty delivery-only store location based in the Empire State Building in NYC.

At the time, I noted that the Empire State location was a guinea pig that would ultimately help to prove or disprove the viability of the model.

Starbucks delivery in Seattle will function a little differently. Instead of SBUX setting up a delivery-only store location, customers will simply be able to go into the Starbucks mobile app, place their order and enter their location. The delivery service will be run by delivery startup Postmates, which will send a courier to the closest Starbucks to fetch your beverage. The delivery fee comes out to $5.99, plus the tip.

As Re/code noted, this sort of service doesn’t make sense for the average, cost-conscious individual. It’s likely only economical for offices or large groups. The corporation acknowledges that in its press release, saying:

“…customers aren’t just in office buildings – they’re at soccer games with their kids, at home with family, or gathering at the park with friends.”

That said, there probably will be a high number of office deliveries in its Seattle rollout. South Lake Union, one of the five neighborhoods in Seattle where SBUX delivery will be available, is also the site of Amazon‘s (AMZN) sprawling campus.

So just how does this impact SBUX stock and its long-term prospects?

First and foremost, Starbucks is cementing its dominant presence in mobile payments by requiring deliveries to be placed through its mobile app. With Mobile Order & Pay already accounting for five million transactions per month, Starbucks is light years ahead of peers in the food & restaurant industry.

That’s a savvy strategy; this Cyber Monday Walmart (WMT) saw 70% of its site traffic and almost half its sales come from mobile, the highest percentage ever for the company. Customers are changing their purchasing behavior from traditional stores to mobile e-commerce.

And with Howard Schultz excitedly describing the Starbucks delivery plans last year as “e-commerce on steroids,” its clear SBUX won’t be missing out on this paradigm shift in retail and consumption. Plus, prioritizing customer convenience has never been known to hurt sales, so this should help to increase its customer base, and hopefully sales per customer as well.

It’ll be interesting to hear updates on how the Seattle delivery program goes, but in the meantime, SBUX remains on track to be a best-in-class consumer services stock.

As of this writing, John Divine was long AMZN stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/12/starbucks-stock-sbux-delivery/.

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