Starbucks Poised for E-Commerce Blitz

Before you drink too many more cups of java, Starbucks Corp. could begin an e-commerce blitz — instantly transforming itself from a successful bean grinder into an online mass marketer.

The billion-dollar Seattle, Washington coffee seller has been dropping hints, but when it recently pumped $20 million into Talk City, Inc., a company that created and runs a popular chat site on the Internet, it became obvious to some analysts that something big was brewing.

Earlier in the year Starbucks opened up its new prototype Internet caf called Circadia. Located in San Francisco, Circadia provides 18 Internet connections, laptop rentals, a computer kiosk and a 10-person conference room equipped with a large-screen computer of presentations.

When you add to this equation the fact that Starbucks’ chief executive officer Henry Schultz is on the board of eBay and drugstore.com, a privately held Web-based pharmacy, you begin to understand why some analysts believe the company is ready to make a preemptive e-commerce strike.

Here’s the Scenario

Starbucks is no stranger to cyberspace. It’s been selling coffee beans and some compact disks via the Internet for a long time. But some analysts speculate that over the next several weeks, Starbucks will begin to share the game plan for its e-commerce blitz.

It goes like this: the coffee company will begin encouraging its faithful coffee-drinking customers to start shopping on the Web through its site. It will do that by turning its 2,000 coffee shops into well-primed Internet billboards hawking merchandise.

Analysts say Starbucks will also begin selling links to its Web site to “e-tailers” pushing wines, gourmet foods and books. Considering it has weekly floor traffic in its brick-and-mortar stores in excess of 8 million customers — that’s not a bad plan. In addition, it could easily use its tie in with Talk City to attract even more cyber-customers.

Is it Feasible?

This possible Starbucks scenario has caught the attention of Wall Street. Jerome Castellini, a fund manager who holds about half a million shares in the company, told The Wall Street Journal, “I’m too much of an investor in other Internet stories to dismiss the Web potential of Starbucks.”

Starbucks is also expected to use its upcoming magazine, called Joe, to promote certain online merchants. It’s a joint venture with Time Warner that will also be available on the Internet. To add more fuel to the rumor of Starbucks impending e-commerce blitz — is the fact that it has already registered several domains under the Joe name.

Some analysts say the coffee company could soon discover that becoming a major e-commerce player is more complex and risky than brewing a good cup of java.

What do you think? Let’s talk about it.

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