Starbucks Odyssey: Right Metaverse Strategy, Wrong Web3 Strategy

Starbucks is a brand that has historically been an early adopter and innovator when it comes to both product and technology. With the announcement of Starbucks Odyssey, Starbucks is now making its first attempt into leveraging web3 to enhance its customer relationship management (CRM) strategy and provide additional experiences to customers.

So why is this the right metaverse strategy while also being the wrong Web3 strategy? Let's first dive into what Web3 and metaverse are.

Web3, in the simplest terms, is an open, decentralized, incentive-centric internet with an emphasis on distributed ownership. Participants in this new internet cannot be barred from access and cannot be gated from utilizing their assets across ecosystems.

For those who are familiar with retail concepts, Web3 is essentially a CRM-based internet. As for metaverse, it is an experience-centric, hyper-connected and gamified space where users can participate via a variety of mediums such as screens, VR, sensors, etc.

Let's break down Starbucks Odyssey according to the press release:

• Members can engage in Starbucks Odyssey "journeys," a series of activities such as playing interactive games or taking on fun challenges to deepen their knowledge of coffee and Starbucks.
• Members will be rewarded for completing journeys with a digital collectible "journey stamp" (NFT).
• Members can also purchase "limited-edition stamps" (NFTs) through a built-in marketplace within the Starbucks Odyssey web app experience where they can also trade stamps to other users.
• No crypto wallet or cryptocurrency will be required. One may use a credit or a debit card for purchases.
• As stamps are collected, members' points will increase, unlocking access to unique benefits and experiences that have never been offered before.

In a way, Starbucks Odyssey is both a metaverse strategy (gamified experience) and a Web3 strategy (CRM). Its metaverse strategy allows customers to become more engaged, entertained and at the same time, educated about the company's product offerings. Its Web3 strategy allows customers to receive benefits from their activities and spending.

On the surface, the program sounds impressively comprehensive. So where does this go wrong from the Web3 perspective?

Users Are Gated

While it's great that Starbucks is simplifying the experience so that it's easier to onboard users, users are actually gated in the Starbucks ecosystem. Users don't have a choice to use their own wallet, trade on their favorite NFT marketplace or use their NFTs someplace else unless it's permitted by Starbucks.

It's easy to understand why the company would make this decision. For example, imagine Dunkin Donuts offering discounts to any Starbucks customers using their Starbucks NFTs. This may cause them to decide to go to Dunkin Donuts instead of Starbucks. That would be a corporate own goal.

But while this may make sense for Starbucks as a company, it nonetheless means that customers are unable to make their own decisions. If the above scenario is the case, brands will simply have to compete on quality (or maybe price), which is not a bad thing for consumers.

So why is this not very Web3? Take a look at how many apps you have on your phone. Let's say you have 30 apps. What if they are all Web3 dApps and all followed the Starbucks strategy? What will happen is that users will end up with 30 wallets or more. Users will then have to distribute gas fees to 30 wallets and have to check 30 wallets separately to figure out what they have. Can an average consumer really manage 30 wallets, which are equivalent to 30 bank accounts?

If Starbucks is gating users this way, is there a point in using Web3 technology like NFT at all? They can easily accomplish the same things using a database. It makes NFTs simply look like a tokenistic part of its marketing strategy, rather than something profoundly central to the company's approach.

Spaghetti Mess With Every Expansion

With the Starbucks Odyssey model, the only way to allow users to receive benefits outside of Starbucks is for other systems to integrate with Starbucks. This is costly from Starbucks' side, as it will have to continue to innovate and provide APIs for integration, just like how things used to work back in the early 2000s before the concept of the integration layer or enterprise service bus was introduced. If every business were to follow the same model, each business would have to integrate with one another. The results would be a spaghetti mess.

If Starbucks were to allow users to use their own wallets, any business would be able to interact with the NFTs. This could potentially enable a rapid expansion of utilities as businesses recognize the potential upside from the vast number of Starbucks customers. The end result would be a better user experience.

Conclusion

Web3 is a new technology, and the struggle with onboarding will continue for quite some time. Many innovations have been created from embedded wallets to OAuth-styled popups, but most of the time, this comes at a cost to consumers. Businesses like Starbucks must embrace Web3 thinking and guide their users toward it rather than just hiding and limiting what they can do for the sake of simplicity.

It's quite amazing that, in the end, all roads still lead back to standalone wallets, which is where we started in the decentralized journey. The idea of users owning and controlling their own assets to do what they want is very powerful. But while the concept is right, usability also has to follow — just not in a way where consumers do not have a choice.

(Jack Vinijtrongjit is the co-founder and CEO of AAG, a Web3 infrastructure platform.)