Eye on AI - August 12th, 2022
Welcome to Aigora's "Eye on AI" series, where we round up exciting news at the intersection of consumer science and artificial intelligence!
This week, we’ll be looking at Starbucks’ recent push into NFTs and web3, and what impact it might have on loyalty programs and the food and beverage industry as a whole.
Starbucks Seems to Be Betting Big on NFTs and Web3
According to the article “Starbuck’s First NFT Collection and Web 3.0 Experience,” Starbucks founder and interim CEO Howard Schultz recently announced that Starbucks had been working on a new digital initiative, including its first collection of NFTs, which is set to be released at next month’s investor day event.
“At the investors day event, Starbucks will begin its first NFT collection, membership, and community,” writes TheNewsCrypto contributor Nayazunissa. “The inaugural collection will serve as the foundation for Starbucks’ future collections and collaborations on the same digital platform.”
Starbucks NFT owners will get access to unique material and other perks that revolve around coffee. In addition, Starbucks will be creating something called “Third Place” in the metaverse, which refers to its new web3 experience and acts as a virtual location where individuals can gather over coffee and converse.
This is all big news for the coffee behemoth. Such a large player entering the NFT and web3 spaces could mark the beginning of a trend for similar food and beverage brands. Furthermore, these new digital developments could mark big changes and opportunities for Starbucks loyalists.
How NFTs Could Supercharge Starbucks’ Massive Loyalty Program
One of the most striking things about this announcement is how it might affect Starbucks’ wildly successful loyalty program. Starbucks Rewards, the name of its loyalty program, is already perhaps the most popular in the industry, accounting for over $1B through the Starbucks app in 2018 alone. Much of this has to do with the company’s early embrace of technology. And, according to the article “Starbucks Appears Set to Add NFTs to Its Loyalty Program,” the move to add NFTs and web3 into the mix will only bolster its stronghold on the industry by extending its reach into more technologically advanced platforms, popular among younger rewards members.
“We plan to create a series of branded NFT collections, the ownership of which initiates community membership, and allows for access to exclusive experiences and perks,” announced Starbucks CMO Brady Brewer and advisor Adam Brotman. “The themes of these collections will be born of Starbucks artistic expressions, both heritage and newly created, as well as through world-class collaborations with other innovators and like-minded brands.”
The real novelty of the program is that loyalty members, by purchasing NFTs and engaging in web3 events, will earn more rewards points. Users of the Starbucks wallet can’t withdraw their earnings, and must spend them at Starbucks locations, thus giving them more incentive to engage with the Starbucks brand.
Still, the question remains whether users will actually want to purchase Starbucks NFTs. The NFT industry as a whole has taken a hit with the recent market volatility. Furthermore, according to a report from Chainalysis, a blockchain data platform, only 360,000 people actually owned NFTs despite over 300 million people using cryptocurrency, with NFT ownership accounting for only 0.1% of crypto users. There’s massive potential for success and failure in being the first adopter out of the gate. Should the Starbucks NFT / web3 program prove successful, expect numerous copycat programs to emerge in its wake.
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