Starbucks — A Web3 Odyssey
Over the past year, there has been no shortage of large companies entering the web3 space. While their success has varied, many have tried different strategies to integrate web3. Most have gone with a more web2.5 approach which helps to smooth the UX and sprinkle web3 aspects more as a bonus options for users. But what does web2.5 actually look like?
Starbucks Odyssey is Starbuck’s entrance into web3 with Polygon. Earn Points and Collect Stamps that are NFTs you can buy/sell/trade. Odyssey is a companion/separate program to Starbuck’s Reward program to explore customer’s appetite with web3…I mean web2.5. Now lets dig into what that actually entails and how it all works.
September 2022 is when the announcement for Odyssey came out, and it started with a news release and waitlist. This gave Starbucks a rough idea of who and how many people were interested for building out their product. The slow roll out is best to test, and iterate on design ideas as brands step into the realm of blockchain and NFTs.
In late January is when I, along with the next batch of beta testers, got an invite to the program. The signup and onboarding was straight forward and all web2. No need for Metamask (yet..) or writing down a seed phrase. Simply have a Starbucks Reward Account with the same email that you signed up for Odyssey and log into the website.
From there, read through a couple screens, pick an avatar out of 3 options and off you go to a nice landing page! The design was simple and clearly a start of things to come. Here you could answer quizzes, watch videos, and complete some simple challenges that guide users through the Starbucks Ecosystem. I’ll have to admit, I’m not a coffee drinker so it was enlightening learning about their approach to coffee… as I earned points of course.
The goal behind earning points is to get to higher levels, of which there are 3 tiers so far. Unfortunately we’ll have to wait till at least April to hear what the benefits of these Levels are.
The other goal of earning points is to complete all the items for a particular Stamp to collect that Stamp! Stamps help mark your achievements, give bonus points, are limited in number, and…are NFTs.
Web2 -> Web2.5
Everything to this point has been 100% web2 and for the majority of People this is where the program stops. But web3 means owning your own assets right? so how do I sell/buy this thing? Enter the “Market” button.
Starbuck’s Odyssey uses Nifty Gateway as their prime marketplace to buy/sell Stamps. Their UI is straightforward and you’ll first need to complete the Seller Authorization Process. This involves linking Stripe Connect to your bank account along with email and phone number. The process was quick and now you can sell your newly earned achievement (or buy someone else’s)!
It looks like there’s a 7.5% Creator fee on all Starbuck’s Collections on Nifty. The Credit Card/Service fee in this case was 2.8%, but I did noticed this varied based on the Sale Amount.
Great, earn Stamps that are yours that you can buy and sell. Simple! And no gas fees or need for Metamask, this is the web3 we need right? Well Again… so far 100% of this experience has been completely off-chain. Buying and Selling is simplified(no need for gas), done in $ USD, linked to a bank account, simple UI, but there’s no way to track any of this on any blockchain.
Till this point I would consider this Web2.5, but you may have noticed the “Withdraw Nifty” button. Let’s click that and move to web3.
Web 2.5 -> Web3
OK, these next steps are going to get a little complex…we’re adding blockchain which makes everything a little more complex. Starbucks Stamps are NFTs on the Polygon Blockchain. These have already been minted and held by a deployer address. There’s a limited 5,000 of each Stamp NFT so far.
The “Withdraw Nifty” process is straightforward. At this point you do need Metamask or another wallet, and enter your address(Polygon Address), pay withdraw fees(this collection has $0 withdraw fees), and click withdraw. Even this process is simple and Nifty covers the gas. Thank you Nifty, it’s the small things, 0.012 MATIC to be exact, that count.
When you receive your Stamp NFT to your wallet, it matches the ID Number in the Nifty Gateway Marketplace. Everything is being accounted for, and now you have it, you have your own achievement as an NFT in your wallet, it’s yours…now what?
You could sell it on Opensea, but there you’ll pay 10% creator fees and now you will have gas fees for everything (even though gas is only a few cents since you’re on Polygon). At this point, with no utility to self custody your Stamp NFT so there’s not much reason to take it off Nifty. Maybe in the future, but not now.
So with no outside utility (yet…) let’s get this NFT back on Nifty and in our display case in the Star Bucks Odyssey App. Yes, it disappears when you withdraw it from Nifty in your Odyssey Stamp Collection.
To Deposit you NFT back to Nifty, you need to connect your wallet (sign a tx) and send your Stamp NFT back to the deployer address. Important to note that only Nifty NFTs can be sent to this address and anything else could be lost.
Awesome, our Stamp NFT is now back home in our collection, and available to use within the Nifty marketplace!
OK, what does this all mean?
Starbucks has the start of something that could have aspects that appeal to everyone. They aren’t forcing you into downloading a wallet, properly store a seed phase… instead it’s an option for power users. Already they’ve had ~$40K USD Volume across their collections. That translates into ~$3,000 in fees which doesn’t seem like a lot but when you look at owners, even the largest Stamp collection only has 816 (as of writing this).
On top of this, it seems at least 1 item to get any Stamp is related to a purchase. To get my “Bean to Cup Journey” Stamp I had to purchase a bag of coffee beans for $13.95….which I’ll be giving to my parents who appreciate whole bean coffee. So they’ve sold +260 bags of coffee to add.
Benefits for the various Levels of points won’t come out till April, but you can imagine there’s some interesting gamification that could happen. Maybe some levels won’t be reachable unless you buy stamps, giving Stamps bonuses if you have a particular set of them, various tasks connected to the Starbucks Rewards App, these possibilities exist and are made simpler when not connected directly to smart contract development.
Oh and bonus Points from Stamps aren’t forever, they Expire!! Honestly a great mechanic to have.
Lastly, this approach gives something for everyone. Collectors can collect, Traders can trade, and web3 users can self custody. This funnel holds true where the the median is ~14% for # Sales / Unique Holders. And Self Custody? Seems less than ~4% of holders are doing this, and made a Dune Dashboard to track withdraws and holders.
Only time will tell how successful Starbuck’s venture into web3 is, but I will say they achieved one thing. I made my first ever purchase from Starbucks when I got that bag of whole bean coffee…and I may need to buy more to go on this web3 journey with them.
Nothing in this article should be considered as financial advice, please do your own research