About the Video
This is how your favourite coffee seller is also secretly a bank!
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⬇️ Timestamps:
0:00 → Introduction
0:10 → The Start of Everything
1:34 → Why is Starbucks a bank?
3:02 → Why is Starbucks So Successful?
4:33 → Starbucks’ Income Source
6:47 → Conclusion
Starbucks Corporation, initially known as Starbucks Coffee, Tea, and Spices, was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker in Seattle, Washington, in 1971. The three founders, inspired by entrepreneur Alfred Peet, started the company to sell high-quality coffee beans and equipment. However, the enterprise was quite different from the Starbucks we know today – it did not sell brewed coffee at the time but focused only on coffee beans, tea, and spices.
It wasn’t until 1982 when Howard Schultz joined the company that Starbucks began to transform. Schultz, after a trip to Italy, brought the idea of selling brewed coffee into Starbucks stores. He envisioned creating a coffee culture in the United States similar to the cafe culture he had experienced in Italy. This idea was initially rejected, leading Schultz to leave the company and start his own coffeehouse chain, Il Giornale. In 1987, Starbucks Corporation was sold to Schultz’s Il Giornale, which was then rebranded as Starbucks, and the rest is history.
Since then, Starbucks has grown into a global brand with thousands of coffeehouses in countries worldwide. It’s been innovative, not just in its coffee and customer service, but also in its approach to payments and customer loyalty.
In an unconventional twist, Starbucks has also become something akin to a bank. Its popular mobile app and customer loyalty program, which lets customers pay directly through their phones and earn rewards, effectively holds billions of dollars loaded onto digital Starbucks cards (or in customers’ accounts). As of 2021, Starbucks had nearly $1.6 billion in customer funds on its cards and mobile app – a figure comparable to the deposits at many actual banks.
This system benefits Starbucks in several ways. It reduces transaction costs, as every time a customer pays with a debit or credit card, a small percentage of that payment goes to card-processing companies. By encouraging customers to instead load money onto a Starbucks card, Starbucks can bypass those fees. It also helps increase customer loyalty, as customers who have loaded funds onto a Starbucks card will be more likely to choose Starbucks over other options to make sure they use the money they’ve already committed.
In these ways, Starbucks has not just revolutionized the coffee industry, but it’s also reshaped the model for customer loyalty and payment methods, acting as a sort of unconventional bank within the retail sector.
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Disclaimer: The content on this channel is for educational purposes only and merely cites my own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary
