Starbucks's web3 Odyssey is seeing early signs of success, BofA says

Starbucks's Odyssey program, an extension of Starbucks Rewards that seeks to expand brand loyalty in the virtual world, is seeing encouraging signs of early success, Bank of America said. 

The coffee company, which launched a beta test of Odyssey in December, allows members to participate in interactive journeys like games and virtual tours related to coffee education and Starbucks history and earn Odyssey Points that can be exchanged for rewards or Journey Stamp NFTs that can be collected and traded.

"Odyssey affords the ability to evolve loyalty beyond its transactional origins," a team of analysts led by Sara Senatore wrote in a Feb. 28 note. "Just as members can earn Odyssey Points by completing interactive journeys (in addition to purchasing beverages), they can also redeem them for interactive experiences, including access to exclusive events and int’l trips."

Starbucks's approach to web3 is "more holistic than the industry’s prior NFT forays," the analysts said.

Odyssey appears to be bringing new members into the Starbucks Reward fold, as well as motivating existing members to engage differently and at greater length, "a critical development" given that the rewards program membership growth has historically been a driver of comps."

Starbucks can also generate incremental revenue in perpetuity from royalty streams linked to secondary sales, the firm said, citing Nike as an example, which generated about $93 million in royalties from secondary sales of its NFTs as of September.

Some Journey Stamps have already sold for as much as $1,900, with total secondary trading volume reaching $164,000, the analysts noted.