Krispy Kreme builds on omni-channel retail ambitions with payments innovation

Krispy Kreme’s Australian business chalked up a 23 per cent increase in conversions in just one month after becoming the brand’s first team globally to rollout a cross-channel payments solution.

Krispy Kreme A/NZ head of marketing and ecommerce, Russell Schulman, told CMO the decision to bring on Braintree’s platform came two years after the team debuted an ecommerce solution locally. In the past two years, sales in this owned channel have increased 136 per cent to become a sizeable chunk of overall revenue. As a result, the company has increased its customer service headcount from one to five staff.  

This has not come at the cost of cannibalising physical locations, either. Schulman said Krispy Kreme has increased its physical retail network by 30 per cent in less than a year across Australia, and this year expanded into New Zealand with three stores and a distribution deal with BP into 41 locations across the Tasman.

Alongside owned channels, Krispy Kreme has debuted on Ubereats, a move Schulman initially thought would take share away from its owned digital and physical operations, but was necessary given the rapid change in food delivery in recent years. Today, Ubereats revenue is almost as large as that from the owned ecommerce site.

It's all part of a big push by Krispy Kreme locally to build digital capability and make digital a foundational layer in its go-to-market strategy and growth.

What has been important as the group’s digital strategy progresses has been recognising each channel reflects different occasions and consumer needs.

“We have been developing an occasion-based marketing strategy, but we also recognise the need to remind people of occasions to consume our products,” Schulman explained. “Our ecommerce is more of a catering service, where larger transactions occur, whereas Ubereats is more about people who want donuts now and transact quickly. So each [channel] has slotted in well and there hasn’t been much cannibalisation as a result. We are going true omni-channel for the consumer.”

The next digital innovation is rolling out an integrated payments proposition. Schulman said key criteria included a flexible, cloud-based solution that could grow with the company locally and globally, and that could plug into its existing tech ecosystem, including ecommerce platform, Magento, its marketing automation platform, Bronto Software, and shipping aggregation engine, Temando.

Previously, the team tried using banking tools, which proved inadequate in meeting rapidly changing payment needs.

“We try to find the specialist in each area, such as Magento for ecommerce, rather than one platform offering,” Schulman commented. “Braintree is a payments specialist and we see this as a partnership bringing a depth of knowledge to the table. It’s not just one big agency trying to do it all.”

Braintree’s platform provides buyer checkout experience, fraud protection, tokenisation of credit card information aimed at keeping the buyer and merchant/seller safe, and a range of different payment methods, such as Apple or Google Pay, PayPal across any platform.

A key selling point for Krispy Kreme was the built-in security and fraud capability, which took the risk away from its small in-house IT team.

Braintree was first brought in to address latency and security issues and fees. Over the past year, Krispy Kreme has started tapping its capabilities as a way of improving the B2C offering in A/NZ, Schulman said.

“A data breach is such a high priority for brands today, so that was a nice tick,” Schulman said. An ability to scale the system easily was also key. “Globally, we’ve also been talking about launching an app, but managed to avoid it and stuck with the fully responsive mobile site experience, saving payment details through Braintree.”

For Schulman, being able to offer subscription-based payments was an obvious first step. “A lot of customers are businesses ordering regularly from us. We previously had to do 3-4 integrations, then realised a system does that out of the box,” he said.

Within the first month of going live with Braintree, the Australian business had seen a 23 per cent rise in conversions via ecommerce. Customers can not only save payment details via the site, they can also set up automated reordering payments.

Building out subscription-based opportunities again ties to identifying occasions where consumers buy donuts, such as office event catering, Schulman said.

“When we did market research, however, it wasn’t something that was resonating with people. So we went with a technology-led approach, then used marketing to say to people: ‘Did you know you can order and just have donuts delivered to you?’” he said. “The ease of payment, and set-and-forget capabilities, allow us to grow in that market.”

More broadly, having a consistent payments interface helps Krispy Kreme realise its cross-channel brand ambitions.

“Customers don’t see a distinction across channels when they buy our brand – they’re buying a Krispy Kreme donut. We want to bring the same mentality into our systems,” Schulman said. “If you order in-store or online and want it delivered in the next hour. Say you’re in the queue but in a rush, you can bypass the queue by ordering online instead.”

The PayPal integration was another win. “I didn’t think our corporate customers would be big users, but close to 35 per cent are PayPal,” he continued. “Previously, using PayPal would take you off to another platform and we’d lose a people from a conversion perspective. Full integration is benefitting us there.”

In addition, having an integrated mobile-based payments system could even help speed up ordering processes via Krispy Kreme’s drive-through offering.

“Those are exciting tools from a customer perspective. Having Braintree allows us to do all of that,” Schulman said. “2018 was a huge year of growth for us launching the new stores. In 2019, we’re looking to further revolutionise the way people interact with our business with us. We’re still very siloed with systems, for example, and retail stores have no connection to ecommerce, while wholesale sits outside that. It’s about getting a holistic seamless shopping experience.”

What’s more, consumers have a different understanding of what a good customer experience. “It’s different for different people, or at different times or scenarios. It could even be the same person with different needs at a certain point in time. We want to be flexible and offer what customers want at that point in time,” Schulman said.

According to Braintree head of Australia, Carolyn Breeze, another benefit is that the platform does processing and inquiry on the spot, selling transactions to banks the next day.

“What this is doing is creating the same user interface and experience across those environments, so it is consistent and increases engagement. When we tokenise, we also enable the ability to come back to the site and not have to re-enter their details, which reduces customer friction,” she explained. “That then allows Krispy Kreme to roll out these subscription-type services around the vaulting and token capability.

“The fraud capabilities, meanwhile, ensure the merchant is safe because information is not touching their system and we’re doing all checks to protect them.

“Fraud is becoming quite critical in the food industry in particular. And when consumers are meeting brands in a digital environment, there is an expectation their information is safe. We’re allowing brands to deliver on that promise to the customer.”  

Breeze said the Krispy Kreme deal is significant because it shows an organisation trying to be more customer-centric by taking a different approach. Other Braintree customers include Uber, Airbnb and Guzman Y Gomez.

“Krispy Kreme knows that it’ll win marketshare and bring people in-store and it’s exciting to partner with organisations do that,” she said. “This is breaking barriers in terms of payment experience across different channels. That can be seen in the way the brand allows customers to order in advance of going to the store, or in-store, or subscribe. That will eventually expand to partners, and open up to other markets. Krispy Kreme is breaking company ground and it’s nice to be part of that journey.”  

Schulman said Krispy Kreme’s global team views Australia as a solid testing ground and innovation hub, indicating we’re likely to see the payments platform go global sooner rather than later.

“Look at the unique challenges with size of population, geography – if you can solve here, it’s easier to push back into the US,” he said.

Schulman’s next priority, meanwhile, is to integrate the digital payments proposition with the in-store point-of-sale systems to provide consumers with a truly seamless payments system.

“It’s fundamentally changed the business planning. The way we first approached it with our manufacturing teams was more as an afterthought, now they’re planning days out by retail, wholesale and ecommerce and budget accordingly,” he added. “People get excited by the success of it and sharing that success gets people engaged.”

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