How Starbucks Makes $41B/Year
Talk With The Video
Summary
- They beat other coffee companies because they are vertically integrated.
- They have relationships with farmers to get exclusive beans.
- They own the roasting production, so they save money by not paying a markup for roasted beans.
- They manage everything from the beans getting grown to the customer buying the coffee.
- Owning the entire supply chain allows them to make profit at every stage.
Video
How To Take Action
I would suggest implementing a few key strategies from our discussion on the vertically integrated coffee company.
Build Strong Relationships
Start by focusing on relationships. Build strong connections with suppliers or partners. This is crucial because having exclusive access to resources can set you apart from competitors. For example, if you’re in retail, developing a unique relationship with a manufacturer can give you a unique product or better rates.
Vertical Integration
Consider vertical integration where possible, even on a smaller scale. If you're a small bakery, think about sourcing your key ingredients directly from producers rather than middlemen. If you own a small online store, consider handling your own order fulfillment instead of outsourcing. This helps save money and gives you more control over quality.
Control Quality and Costs
Take control of as many parts of your business process as possible. This could mean creating your own marketing content instead of hiring an agency or using in-house staff for tasks you might normally contract out. This keeps costs down and ensures consistent quality.
Own the Customer Experience
Finally, manage the end-to-end customer experience. Whether you’re selling products or services, make sure you control the entire journey. This means from the moment a customer discovers your brand to the point they complete a purchase and beyond. Provide support, gather feedback, and continually refine the experience to build loyalty.
These steps don’t require a huge investment but can make a huge difference. By applying these strategies, you'll start seeing more control over costs, improved quality, and better customer experiences, which naturally boost profitability.
