The Bizarre Business Model of Starbucks: More Than Just Coffee

🏦Starbucks has used its rewards system as a clever way to receive interest-free loans from customers and invest their funds in low-risk ventures.

💳Customers earn digital currency called Stars while using the rewards system, which can be exchanged for free food, drinks, or merchandise.

💰Estimates suggest that Starbucks earns billions of dollars a year from customer funds deposited in the rewards system, with a significant portion coming from unused balances.

🌍Other companies, including Apple and Walmart, have followed Starbucks' lead and entered the business of financial services to leverage their customer base and brand identity.

📚Government bodies globally are starting to notice the trend and propose regulations to ensure user protection and licensing for companies offering financial services.

How does Starbucks' rewards system work?

—Starbucks' rewards system allows customers to load funds into their account using a credit or debit card. They earn digital currency called Stars with each purchase, which can be exchanged for free food, drinks, or merchandise.

How does Starbucks benefit from the rewards system?

—Starbucks benefits from the rewards system by essentially receiving interest-free loans from customers. They invest these funds in low-risk ventures and earn interest on the deposited money.

How much money does Starbucks make from customer funds?

—Estimates suggest that Starbucks earns billions of dollars a year from customer funds deposited in the rewards system. Some of this profit comes from unused balances that customers forget about.

Are other companies following Starbucks' model?

—Yes, other companies like Apple and Walmart have entered the financial services landscape. They leverage their strong customer base and brand identity to offer services beyond their primary products.

Are there regulations for companies offering financial services?

—Government bodies globally are recognizing the trend of companies offering financial services and proposing new rules and licensing requirements to ensure user protection and compliance.

00:00In the consumer-driven landscape, the boundaries between business sectors are becoming blurry. Starbucks, known for its coffee beverages, has ventured into the financial sector through a clever investment scheme.

01:30Starbucks' rewards system, established in 2009, allows customers to load funds into their account and earn digital currency called Stars with each purchase.

05:34Starbucks benefits from the rewards system by receiving interest-free loans from customers. They invest these funds and earn interest on the deposited money.

06:50Other companies like Apple and Walmart have followed Starbucks' lead and entered the financial services landscape to leverage their customer base and brand identity.

07:03Government bodies globally are recognizing the trend of companies offering financial services and proposing regulations and licensing requirements.