Starbucks Is Testing the Industry of Coworking Space. Are the small giants in the Industry afraid?
Starbucks is testing the industry of shared office/Coworking space. Are the small giants in the industry afraid?
Original by Li Ruiwu, Chu Junhong, National University of Singapore Business School
More than a month ago, an article titled “Starbucks’ first paid office cafe is here, WeWork is trembling”, this article caught my eye. Is Starbucks also going to enter the shared office industry? I happily read it three times and found out that Starbucks is providing precise services for business customers.
It’s not so much an offensive move but defensive, because the free coffee in Co-working spaces has taken away many of Starbucks customers.
On 23rd March, Starbucks in Japan Tokyo Shinagawa Takanawa subway station launched the ” SMART LOUNGE” concept store, which offers: window for a single person seating area, private balcony, private boxes and Hot desks, this is simply the scene and configuration of the shared office space .
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▲ In March 2020 , Starbucks launched the “SMART LOUNGE” concept store in Tokyo, Japan to test the industry of shared office space ( data picture )
It seems that Starbucks has launched a battle to target business people with shared/coworking office space.
What kind of love/hate relationship does Starbucks and shared offices/ coworking spaces have? Let’s start with the evolution of the Internet and the office.
Mr Robert Li Rui Wu
National University of Singapore Business School Institute
Chinese EMBA-21 Class
Founder and CEO of O2Work
Chu Jun Hung
National University of Singapore Business School Institute
Department of Marketing Associate granted
Marketing Analysis and Decision Master Shi
Course Academic Director
Research fields: Management Channels, E-Commerce, Network Effects, Retail Competition, etc.
The commercial application of the Internet began with highly standardized books and audio-visual products, which disrupted the retail industry and gave birth to new business giants such as Alibaba, JD.com, and Amazon. Since then, people have believed that the Internet will be unprofitable and will disrupt all industries, including the office leasing industry.
Is it really going to happen?
2C vs 2B
First of all, the retail industry is a 2C format, and its business path is: consumer goods producers – large wholesalers – small and medium traders – large shopping malls / supermarkets / convenience stores – consumers.
With overcapacity and increased in competition, large wholesalers, small and medium-sized traders, and large supermarkets are afraid to stock up the inventory because afraid that their stocks does not sell and thus making losses ; on the other hand, they are unwilling to prepay for goods from manufacturers and cannot afford the costs. For manufacturers, receivables are losses. At the same time, manufacturers do not dare to hoard raw materials and products, hoping to time production according to orders. The entire supply chain does not function smoothly, and all parties have a hard time.
With the application of the Internet and its technology and the logistics of the last mile industry in the city has been opened up. Many manufacturers can achieve on-demand production, delivering products directly to supermarkets, convenience stores or consumers. E-commerce platforms have subverted and integrated the supply chain of consumer goods, compressed intermediate links, and benefited the interests of producers and consumers.
The Internet has also opened up the entire upstream and downstream of coffee production, circulation and consumption, making Starbucks a platform that provides unique consumer products and lifestyle services. It not only directly connects coffee bean plantations and bean farmers, to roasting and processing plants and food factories, but also establishes a global logistics distribution network and a global member network, and opens directly-operated stores around the world to serve every store and Takeaway customers.
Drinking a cup of coffee and spending some time in a Starbucks coffee shop has become a way of life.
The office leasing industry is a 2B format. Even if a large number of freelancers and individual entrepreneurs emerge (they are actually more like sole proprietorships) , the office is still not an impulsive consumer goods, and the main users of office space are from all walks of life. Industries, enterprises of different sizes and various government and non-governmental organizations.
The business path of office leasing is: property owners – property leasing brokers / real estate agents – shared/coworking office space operators – tenants . The popularization of the Internet and mobile Internet applications has greatly accelerated the transmission and dissemination of property rental and sales information, effectively resolved information asymmetry, and shortened the vacant period of properties.
At the same time, due to the wide application of the Internet in the office, the infrastructure configuration of the office has been changed, and emerging office scenarios such as serviced office and shared office have emerged.
The iterative upgrade of the Internet and the widespread promotion of laptops and smart phones have an impact on the office leasing industry not to eliminate the intermediate links of its industrial chain, but to create new customer needs and extend the business negotiations and other affairs originally carried out in the office. Arriving in hotel rooms and lobbies, airport lounge areas and cabin seats, high-speed rail seats, fast food restaurants, coffee shops, this may be unique to the new era of digital economy.
As the saying goes: I destroyed you, but it has nothing to do with me .
“The Third Space”
Due to the promotion and application of mobile Internet and WIFI , Starbucks has created a ” third space ” , that is, for office workers, it is a third space outside of residences and offices, and for students, it is a third space outside of residences and classrooms. , Is a decent, warm and comfortable place for everyone .
Suddenly at one point of time, there were almost two kinds of customers in Starbucks coffee shops, students with thick textbooks, computers and a large cups of drinks, and business people with computers, mobile phones, thick business card holders and a cup of coffee .
Despite this, Starbucks coffee is still a lifestyle service business. Based on espresso coffee, it has developed a variety of drinks and foods, and it sells fruits, dried fruits, coffee utensils, water bottles and cups, and some Starbucks brand accessories, etc. It is similar to the convenience store in Japan’s fourth consumer era, and has become a small living community of ” leisure, gathering, learning, and meeting “.
“New Scene of Office Space”
Nowadays many shared/coworking space borrowed the idea of Starbucks’s store design. Some coworkings space’s cafes have baristas preparing coffee for their customers/members, while others have launched self-service freshly grounded coffee beans coffee, all provided for free.
The furniture category and layout in the shared office space are exactly the same as those of Starbucks coffee shops, mainly the sofa area, high table area, square or long table area, and deck area. Members especially like the deck area. Business people who used to have business meetings in Starbucks coffee shops have returned to coworking office spaces.
Because the public sharing space area of coworking office space is often larger than that of Starbucks coffee shop, the view outside the window is better, the business atmosphere and office facilities are more professional and complete. Such scenes and functions not only meet office needs to the utmost extent, but are also more attractive to students’ choice of space for self-study and various trainings.
As we are in office service providers form, coworking space office provides members with comprehensive and complete office hardware. At the same time, it also creates an open public area similar to the Starbucks third space. Some coworking space operators even provide free beer and pastries.
▲ The shared office space in Singapore’s central business district can achieve the same office environment as a Starbucks coffee shop (O2Work picture)
Facing with more and more members, not only we provide professional finance, taxation, legal affairs, investment, marketing guidance and services, but we also start to pay attention to the lifestyle needs of members. Youke Workshop, a Chinese co-working brand, is already promoting a corporate welfare program and an e-commerce platform for members.
In fact, this may be an inevitable trend in the development of social and economic life. Urbanization is another feat of mankind following industrialization, but the biggest problem in modern cities is transportation. As the Internet is getting faster and faster, people can no longer bear the wasting time commuting.
Therefore, nowadays is not like the only way to be productive is you has to be in the office, but when we are at different times choose a suitable place nearby to complete different work content. These suitable places not only include various coworking office spaces like WeWork and O2Work, but also various stores like Starbucks Coffee cafes.
The business community value of coworking office space is becoming more and more prominent, and the living community function of Starbucks coffee shop is improving so much more. Each has its own characteristics but learns from each other, interacts and learns and integrates with each other, and jointly meets the work and life needs of urban white-collar workers and perhaps it will be the future trend.
Article By: Mr Robert Li RuiWu (O2Work Founder and CEO, National University of Singapore Chinese Business School EMBA-21 class ) , Chu Jun Hung ( Associate professor of Marketing at the National University of Singapore Business School)
*The views in this article do not represent the institutional views of the National University of Singapore Business School