NCP-3 PROJECT

Sales and Distribution Management – NCP 3

Study on the distribution channels of Starbucks

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Table of Contents
INTRODUCTION.................................................................................................................................3
CHANNELS OF DISTRIBUTION...................................................................................................4
ADVANTAGES.................................................................................................................................5
DEMERITS.......................................................................................................................................6
RECOMMENDATIONS...................................................................................................................7
CONCLUSION.................................................................................................................................8

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INTRODUCTION

Starbucks is a successful international network of coffee shops due to its high-

quality goods, appealing retail environment, and well-established distribution
systems. Starbucks has purposefully created a complex distribution structure
that enables them to reach a large customer base globally. This research seeks to
present a comprehensive review of Starbucks' distribution networks, looking at
their benefits, drawbacks, and possible areas for development.

To ensure broad availability and customer convenience, Starbucks makes use of

a combination of company-owned stores, licensed outlets, internet platforms,
and delivery services. The company's distribution methods have been important
in helping it establish its brand recognition and maintain its competitive
advantage in the rapidly changing coffee market.

We will examine the benefits of Starbucks' routes of distribution in this paper,

emphasising the elements that contribute to its extensive reach and dependable
quality. We will also look at the several distribution methods that Starbucks
uses, such as company-owned locations, licenced outlets, online platforms,
mobile apps, and delivery services, and evaluate how well these channels work
to satisfy customer expectations and generate income.

No distribution model, however, is without difficulties, and this must be

acknowledged. We will also look at Starbucks' present distribution channels'
possible drawbacks and restrictions, such as its reliance on physical stores and
market rivalry. By identifying these issues, we can make suggestions for
improving the current distribution model, which will increase customer
happiness and promote growth.

This research seeks to throw light on potential areas for development by

conducting a thorough examination of Starbucks' distribution networks in order
to offer useful insights into the company's distribution strategy. Knowing the
advantages and disadvantages of Starbucks' distribution methods would help us
better understand its business strategy and advance our understanding of
efficient distribution tactics in the retail and foodservice sectors.

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This report's overall goal is to give a thorough review of Starbucks' distribution
methods and how they affect the company's expansion, customer loyalty, and
competitive advantage. With the help of this analysis, we hope to understand
Starbucks' distribution strategy better and offer insightful suggestions for how it
can continue to thrive in a market that is becoming more and more competitive.

CHANNELS OF DISTRIBUTION

Starbucks Coffee sells its products to customers through a variety of distribution

channels. The following are some of the main distribution methods:
Starbucks runs thousands of company-owned locations around the world where
customers can buy coffee, tea, pastries, and other goods.Starbucks also
collaborates with authorised retailers to sell its goods in places like hotels,
grocers, and airports. Although these shops are run by independent firms,
Starbucks offers support and training to ensure uniform quality across all of its
stores.
Online store: Customers can buy Starbucks goods, such as whole bean coffee,
K-Cup pods, and merchandise, directly from the company's website.
Retail stores: Starbucks also sells its goods in retail establishments like
supermarkets, petrol stations and other stores.
Mobile app: Customers can order and pay for their drinks using the Starbucks
mobile app, making it simpler to pick up their order at a Starbucks location
close by.
Delivery services: In order to deliver products directly to customers' homes or
places of business, Starbucks has partnered with delivery services like Uber
Eats and Grubhub.
Overall, Starbucks employs a multi-channel distribution strategy that enables it
to connect with customers through a variety of different channels and satisfy
their needs in a variety of contexts.

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ADVANTAGES
The distribution channels used by Starbucks have several benefits, such as:

Global reach: Starbucks is able to reach a variety of customers thanks to its

distribution channels. Customers have easy access thanks to the company's
presence in more than 80 countries just through its own stores.

Consistent quality: Starbucks ensures that its products are of consistent quality
regardless of where they are purchased by owning and operating its own stores
as well as giving instruction and support to authorised stores.

Convenience: Customers can conveniently order their favourite Starbucks

products from the comfort of their homes or places of business thanks to
Starbucks' online store, mobile app, and delivery services. Brand recognition:
Starbucks' distribution channels help to increase the company's brand
recognition by making its products readily available to customers through a
variety of channels.

Revenue growth: Starbucks can increase its revenue streams and lessen its
reliance on any one channel by diversifying its distribution channels.

Customer loyalty: By offering convenient ordering and payment options as well

as rewards for regular purchases, Starbucks' distribution channels, in particular
its mobile app and loyalty programme, help to build customer loyalty.

Overall, Starbucks' distribution channels offer several advantages to both the

business and its clients, fostering brand loyalty and driving growth.

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DEMERITS
Starbucks' distribution networks provide a number of benefits, but they also
have significant drawbacks, including the following:

Dependence on physical locations: Despite expanding its distribution methods

to include online and mobile ordering as well as licenced stores and delivery
services, Starbucks remains significantly depends on sales from its physical
locations. The corporation is susceptible to changes in consumer behaviour and
economic downturns because of its reliance on physical storefronts.

Limited distribution channels in some regions: Despite having a significant

global footprint, Starbucks still has limited distribution routes in some regions,
either because of a lack of demand or logistical difficulties.

High level of rivalry: Starbucks confronts competition from retailers as well as

other coffee shops in the highly competitive coffee sector.
Limited product selection: While Starbucks is most recognised for its coffee, the
corporation offers few options for food and tea, which may limit certain
customers' interest in its products.

Although Starbucks adheres to strict quality control standards, it may be

difficult to guarantee uniform quality across all of its licenced stores and
delivery services, which could result in unhappy customers.

Overall, even though Starbucks' distribution channels offer many advantages,

the business also faces some difficulties that it must overcome in order to keep
its position as a top coffee brand.

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RECOMMENDATIONS
Starbucks may want to think about changing its present distribution strategy by
adding more items to its current selection of coffee and related goods. While
coffee remains the company's primary product, diversifying into new markets
like food and non-coffee beverages could spur growth and draw in a wider
clientele.

Starbucks, for instance, should think about collaborating with well-known food
companies to provide a greater selection of food alternatives in its stores, such
as sandwiches, salads, and baked goods. To accommodate clients who might not
be coffee drinkers, the business might also consider introducing other non-
coffee beverages, such as smoothies, juices, and teas.

Starbucks might also think about expanding its delivery services to encompass
all of its products rather than simply coffee and associated items. To provide a
greater selection of options for consumers who want to have their food and
beverages delivered, this may be accomplished by collaborating with delivery
companies that specialise in food delivery, such DoorDash or Postmates.

Overall, increasing Starbucks' product selection and delivery options might help
the company retain its position as a top coffee brand, appeal to a wider
audience, and create new revenue sources.

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CONCLUSION

In conclusion, Starbucks' distribution methods have been crucial in helping the

company become the world leader in the coffee sector. Starbucks has been able
to reach a large client base and maintain a high standard of quality across all of
its products thanks to its multifaceted approach, which includes company-
owned stores, licenced outlets, online platforms, mobile apps, and delivery
services.
It is clear Starbucks' distribution networks have advantages. Due to the
company's extensive reach and consistent high quality throughout all of its retail
locations and authorised partners, brand loyalty is increased. The ease of use
provided by internet platforms, mobile apps, and delivery services has also
increased client involvement and happiness.
But it's important to recognise the difficulties Starbucks has had with its
distribution strategy. Dependence on physical stores carries hazards, especially
during periods of shifting consumer trends and economic downturns. The
difficulties that the company faces are exacerbated by rival merchants and
coffee cafes.
Starbucks can think about extending its product offerings beyond coffee and
collaborating with food companies to offer a greater variety of food options in
order to further improve its distribution model. Additionally, by extending its
delivery services to cover the entire product line, the company could
accommodate customers' preferences for delivery to their homes or places of
business.
By addressing these issues and adopting potential solutions, Starbucks may
continue to develop, attract new customers, and prosper in a cutthroat industry.
A flexible and dynamic distribution strategy will help the business satisfy
changing consumer needs and take the lead in the coffee sector.
Overall, this examination of Starbucks' distribution methods has revealed the
company's advantages and disadvantages as well as areas for development. To
develop successful strategies and keep a competitive advantage in a changing
market environment, it is essential to comprehend the importance of distribution
channels in the success of a retail and foodservice organisation. Starbucks is
well-positioned for future success in its distribution endeavours thanks to its
commitment to innovation and client pleasure.

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