M-Commerce in Singapore

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In addition, in Singapore, a report published by Infocomm Development Authority (IDA) asserts that the highest mobile penetration was observed amongst 15 to 34 year olds with 96-97% of this segment owning smartphones followed by the 35 to 49 year olds with 87% of this segment owning smartphones (2013,p.35). These age groups also tend to contain the biggest spenders with strong purchasing power and this parallels that of Starbucks’ target consumers.

Hence, this booming smartphone ownership and usage reveal opportunities on the mobile platform to engage customers better in the form of mobile marketing and m-commerce. The above also suggest that consumer engagements via smartphones will be well-received.

Lifestyle of Singaporeans and features of m-commerce that deem it favorable

More Singaporeans use smartphones to make purchases especially for food and beverages, according to a Weber Shandwick Report(2014,p.9). This can be explained through the features of m-commerce that deem it favorable. As research by Ozok & Wei (2010) reveals, consumers increasingly prefer m-commerce due to the wide mobile penetration, mobility, ubiquity due to wide availability of mobile shopping apps and ease of use (p.114). These properties of m-commerce conveniently allow consumers to use smartphones as part of their purchase process.

Before inception of m-commerce, consumers were already viewing smartphones as their “in-store companions” by using them to locate stores, make price comparisons and obtain information that facilitate better purchase decisions while in-store (Chung et al,2012,p.225;MasterCard,2015,para_4). These functions provide timely access to information about products and services, and thus enable customers to better validate each purchase. Therefore, m-commerce takes the use of smartphones a step further by allowing customers to make purchases on the mobile platform even while out-of-store.

Additionally, Singaporean’s hectic lifestyles which leaves them with little time to shop in-store further supports increased consumer preference for m-commerce. In a MasterCard survey (2015), Singaporeans cited convenience and on-the-go mobility as top reasons why they favor m-commerce(para_2). This is because m-commerce allows them to make purchases with the “click of a button” and they favor services that are offered quicker, easier and available remotely. This means that they will be receptive to “click and collect” services(e.g.m-commerce features) if it facilitated the same purchasing experience as traditional means but more conveniently (The Nielsen Company,2015,p.6-7).

However, even while consumers lead hectic lifestyles, traditional purchase means are expected to remain popular as consumers seek cafes to relax and enjoy the chilled ambience (The_Euromonitor_International,2014,p.1). However, cafés cater to both types of consumers, including those who visit for enjoying the café ambience and those who are constantly on-the-move. Starbucks’ most profitable consumers tend to be the working population; consumers who purchase before going to work and during work. These consumers often visit Starbucks during peak periods in the day and have little patience for waiting in queues. Starbucks should not disregard these consumers, and should continue catering to their demand for convenience.

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Proposed Recommendation and Implementation

Incorporate m-commerce features onto Starbucks App

Firstly, Starbucks should incorporate a pre-order feature onto existing app where consumers can find the nearest store with existing GPS technology, submit their food and beverage orders to the nearest store and collect them upon reaching. While making the order, the app should also require customers to input an approximate time of collection for timely preparation of orders. During collection, payment can be made via cash, credit card, NETs or using in-app loyalty card.

Secondly, the app should include an option where customers can choose to have orders delivered to them from the nearest store. To facilitate payments while out-of-store, Starbucks should also allow for payments within Starbucks app via linking to mobile banking apps. Starbucks can leverage on existing relationship with Citibank to instill a feature on Starbucks app such that customers can use Citibank mobile banking app to make payment on Starbucks app. This will significantly entice frequent usage of Starbucks mobile app and the new features.

Finally, Starbucks should adapt its loyalty programmes to reward usage of new features for a certain time-frame to entice customers. The new reward programme should allow customers to accumulate loyalty points as they are using new features and ensure that seasonal discounts apply to customers who make purchases out of store.

Implementation and Feasibility

For operation of the new service, Starbucks needs to invest in technology that will utilize existing in-app GPS technology to allow the customer to send his/her order to the nearest store. This also includes investment into in-store equipment(e.g. tablets, desktop etc.) and software that receives and records new orders made by customers.

The recommendation will reduce labour serving the queue but may require more labour for tending to the orders made both in-store and out-store via app. Hence, more labor costs can be anticipated. Additional training costs may also be incurred to ensure that staff are trained to use new equipment and prepare orders timely. As app uses customer’s personal information while processing transactions between banking app and retail app, more cost may be incurred to upgrade cybersecurity framework to secure m-commerce transactions so that the company can assure customers that their personal information is guarded safely and will not be compromised by security breaches.

Despite costs involved, the long-term benefits that Starbucks can gain from instituting m-commerce includes sustained customer loyalty, increased consumers base and improved customer satisfaction. These all outweigh the costs involved, hence rendering the recommendation feasible.

Implication for the company

As explained above, customers highly value convenience, accessibility and freedom of choice. By addressing the customers’ demand, Starbucks can improve its relationship with customers. In delivering convenience through m-commerce, Starbucks can better facilitate purchase intentions, enable greater customer satisfaction and foster customer loyalty (Wang et al,2015,p.218).