Why Did Starbucks Shut Down Its Online Store?

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While you can buy Starbucks (NASDAQ: SBUX) products seemingly everywhere in the physical world, there's one important place in the digital realm no longer selling them -- the company's own online store.

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The chain closed the retail portion of Starbucks.com on Oct. 1 after letting customers know the closure was coming in mid-August. It was an abrupt end to not just an opportunity to buy Starbucks items online; it also ended the company's subscription program.

While many products can be bought in the chain's stores or through its brick-and-mortar as well as digital partners, the company made it clear that not every item will still be sold.

"We cannot guarantee availability of any product in stores, but we know you will find many choices to enjoy," the company said in a customer service frequently-asked-questions page on its website. " You can purchase your favorite coffee and Starbucks merchandise in your local Starbucks. You can also purchase coffee on the Starbucks App for in-store pickup. And you can find Starbucks coffee to enjoy at home in your local grocery aisle." 

Syrups and sauces, which customers could use to duplicate their favorite drinks at home will "no longer be available for retail purchase." That's a move that's likely to not be well-received by people who own the chain's Verismo coffee brewing system precisely for the purpose of making beverages like the ones sold in stores.

Why did it do it?

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Starbucks has not said much about the move, but it seems to be closing the online store at least in part to drive traffic to its brick-and-mortar locations. Maggie Jantzen, a company spokeswoman, explained the decision in a statement to The New York Times as part of a simplification. "We're continuing to invest in amplifying Starbucks as a must-visit destination and are looking across our portfolio to make disciplined, thoughtful decisions," she said.

It's also worth considering remarks Starbucks Chairman Howard Schultz made during the Q2 earnings call. He explained that in order to win in the current retail environment, every retailer had to "become an experiential destination." In addition, he said that "your products and services, for the most part cannot, be available online and cannot be available on Amazon."

Starbucks does actually sell some coffee beans, and most of the items it sells in grocery stores, on Amazon. This includes ready-to-drink coffees in bottles and cans, some of which can be ordered on a subscription basis. The coffee company even offers its flavored syrups on Amazon, but that may be a case of the online retailer still having stock to sell of an item it may not be able to restock.

What's next for Starbucks?

While closing its online store might seem like an odd move for Starbucks in an age when digital shopping is all the rage, it could pay off in two ways. First, it should, as the company clearly hopes for, drive traffic to its stores. That should result in bigger orders as people pick up not just what they need for home, but also a drink and/or a snack.

Second, by not competing with its online partners, Starbucks may improve those relationships. That could lead to a stronger digital effort than the coffee chain could deliver with its own website.

I'd assume online sales, which the company does not break out in its quarterly earnings reports, were not all that significant a number for a chain with over 27,000 retail locations. Closing the online store may seem like a big deal to those who shop there, but the reality is that the ubiquity of Starbucks stores as well as grocery chains, and online partners selling its packaged products, make it relatively irrelevant.

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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Starbucks. The Motley Fool has a disclosure policy.