The cancelation is the latest blow to the halcyon vision that Web3 technology could change how brands connect with consumers. A year ago, Disney exited the metaverse after deeming virtual reality a dead-end. And while NFT-based loyalty is still being tested by a few big brands such as Nike and Adidas, the approach has struggled to gain a foothold with mass audiences. Nike, whose “DotSwoosh” program has been one of the more successful efforts, conducted layoffs last month that impacted the Web3 division overseeing DotSwoosh, according to Vogue Business.
The issues that could have hampered Starbucks’ Odyssey platform are numerous, and they reflect larger concerns with the Web3 loyalty space, said Martha Bennett, VP and principal analyst at Forrester.
One potential problem was using technology that, instead of improving the rewards experience for users, only soured it, she said. As of six months ago, roughly 40% of consumers had still never heard of NFTs, and for those who had, the tokens ranked among their top choices for what they considered to be “cringe,” according to a study conducted by Morning Consult and Advertiser Perceptions.
Also read: How Gen Z defines “cringe” and other words
Odyssey had at least a surplus of 7,000 active members as of January, according to marketplace data published by Starbucks. And while the program’s total membership was likely larger—around 58,000 people, according to TechCrunch—the size of this audience may still not have been worth the pricey investment to build and maintain Odyssey, Bennett added. Starbucks has not provided information as to the costs behind Odyssey, but “these things aren’t cheap to run,” she said.
A low ceiling for ROI is another issue that mass consumer brands have yet to resolve. Starbucks’ NFTs were never more than $100 at the time of launch, and most of its tokens were doled out for free as a reward for completing activities, called “journeys.” The revenue opportunities available between these two pathways equate to a small fraction of the billions it brings in every year through its traditional rewards program, which reaches over 30 million people.
NFTs are still a luxury technology, Bennett said, which is why luxury fashion houses have so far found the most success with them. Brands such as Louis Vuitton and Gucci have dropped NFTs with prices in the tens of thousands of dollars, requiring far fewer buyers to make the efforts worth the costs. In comparison, one estimate puts Odyssey’s total revenue generation since launch at around $250,000, according to research conducted by Alex Baghdjian, co-founder and chief strategy officer at ad agency Funday.
Two of Starbucks’ Web3 partners, Nifty Gateway and Polygon, have been mired in controversy since Odyssey launched; Nifty Gateway revoked publishing privileges from creators that had not reached a certain earnings threshold, per NFT Now, and Polygon reportedly paid DraftKings millions of dollars to support an undivulged preferential relationship, per CoinDesk. The scrappy, sometimes improper behavior of Web3 technology providers can clash with the expectations of big consumer brands, Bennett said, creating another avenue for trouble.
“You have worlds colliding,” said Bennett. Starbucks declined to comment on its relationships with its tech partners. Nifty and Polygon did not return a request for comment on this issue.