Brief:

• Starbucks last week announced plans to shut down its online marketplace where it sells roasted coffee and related merchandise, according to a report in Business Insider. The closure is another step in the company's greater focus on using mobile technology to drive traffic into its sprawling brick-and-mortar network.
• Store.starbucks.com is offering up to 50% off select merchandise before closing on Oct. 1. After that, Starbucks will offer merchandise on third-party websites, such as Amazon.com and in grocery stores.
• Starbucks is growing its consumer packaged goods (CPG) business, selling items such as K-cup pods and bottled Frappuccinos at grocery stores. Starbucks this month announced plans to sell its new bottled Pumpkin Spice Latte in grocery chains, Business Insider said.

Insight:

Shutting down its web store is another sign of how Starbucks is shifting its strategy to drive traffic into stores by embracing mobile technology. Last month, the coffee chain outlined how its smartphone app will be a key part of broader plans to handle customer orders, payments and loyalty programs. The company will test a guest checkout feature for first-time users of its mobile application early in 2018, Matt Ryan, global chief strategy officer, said in a call with investors.

Payments made with a mobile device increased to 30% of transactions in U.S. stores in fiscal Q3 2017, compared with 29% in the previous three-month period, Starbucks said during its investor call. The chain's mobile order and pay feature that lets customers order with the Starbucks app and skip the line generated 9% of transactions. That's nearly double the 5% from a year earlier.

Currently, users of the Starbucks mobile app have to preload a Rewards card with money from another payment service before it can be used to pay for orders and earn loyalty points. The company's plan to enable ordering without the need for a preloaded card may help Starbucks drive overall sales by attracting new customers to its mobile platform.

Bringing new customers into the fold and partnering with major third parties like Amazon is critical for Starbucks as competition grows for coffee drinkers. There are signs that growth in Starbucks' rewards program is slowing in the U.S., where membership grew 8% in the quarter, down from 18% in the year-ago quarter and 11% from the previous quarter.

Some of the other ways that Starbucks is ramping up its mobile strategy include creating a dedicated Mobile Order & Pay store and enabling ordering via Alexa in Ford vehicles.