Mobile Wallet Systems May Not be as Simple as Starbucks Makes Them See

Starbucks’ success in the mobile payments arena has been nothing short of astonishing.

Some may have looked at Starbucks’ mobile practices and thought these worthy of emulation, but new reports suggest that trying to put a Starbucks-style mobile system in place may not be possible, let alone simple.

Starbucks, by most reports, has done mobile right, and done it right in a very big way. Sufficiently right that several other firms are getting branded mobile wallet systems together, including some major names like Target, Walmart, and Kohl’s.

Starbucks has actually ramped up its mobile payment facilities to the point where 21 percent of all its transactions go through this system, and 16 million consumers turn to the app for its benefits.

Great success, to be sure, but there are some reasons for that success fairly unique to Starbucks that may not be repeatable by, say, Kohl’s or even Walmart. One, Starbucks has an impressive loyalty program. That’s a point fairly easily replicated with simple policy matters, but the nature of Starbucks itself gives it an edge.

It sells a mildly addictive product in caffeinated drinks, and it also has customers who routinely show up, often on a daily basis, to purchase its products. That’s a point many big box stores can’t claim to their credit.

Knowing that most customers can stomach about three mobile apps before getting fed up with the sheer overload and returning to cards for most of the rest, it’s worth wondering if Walmart and Kohls and Target and the rest can actually hold on to a user base.

While it’s not out of line to suggest as much—especially given as such users would only be occasional shoppers—could happen here, it’s worth noting that there will be routine absences. Walmart, and Target to a lesser extent, might have an edge as both companies offer grocery shopping to at least some degree, but it’s still not a daily stop for even the most diehard shoppers.

Walmart has been doing well in terms of loyalty; around 22 million users are already using the app for payment and similar systems, which suggests an independent user base who’d already be shopping Walmart and are just taking advantage of the convenience the app offers.

Target and Kohl’s might well see similar benefits, but making a Starbucks-style splash in mobile may not work out so well.

Nor does it particularly need to, in all honesty. The market is already deeply competitive, and none of these companies is just competing with Starbucks. It’s also trying to compete with more generalized services like Apple Pay and Samsung Pay.

It’s trying to compete with Android Pay—which has moved into in-app purchases and may well have that market locked up in a fairly rapid fashion—and a host of others that are still coming into the field. It’s always worthwhile to consider the actions of competitors in business—those who don’t are doomed to fall prey to those same actions—but it’s not always feasible to have the same kinds of success.

Just because shoppers aren’t using the mobile payment app that comes with a business doesn’t mean the shopping has decreased any.

That’s good news, worth keeping in mind. We’re already getting close to a point of market saturation, and as the market matures still further, more and more apps will end up removed for lack of use. Some payment apps will always see some business, and those for individual stores will likely not be those shuttered as they represent an extra benefit for shoppers.