This article originally published in Self-Service World magazine, February 2007.
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| Lief Larson, president, Valhalla Worldwide |
First on my list is the Zoom Shop from San Francisco-based Zoom Systems. Last October the company raised an additional $35 million to fund its push to automated retail leadership. If you have yet to see a Zoom Shop, you're in for a treat. These things look like a snack vending machine on steroids. But instead of Doritos and gum, these kiosks move high-end products via a touchscreen interface and the swipe of a credit card, with a portion of the revenues going to the location owner.
As part of my research for this column I checked out a Zoom Shop located in a nearby Macy's department store. Macy's, which you may not think of as a tech-forward retail environment, has received a boost from Zoom Shop. The ideally situated vending kiosk, tall in stature and wide in product, was offering various gizmos, including iPods and related accessories. What a great way for the retailer to be associated with the hottest electronics without having to invest in a specialized gadget department.
Now, purchasing something like a $300 iPod from a vending machine might take a little getting used to, but the success of Zoom Shop tells us that consumers just might be ready for high-end, sophisticated vending. It is estimated that as many as 300 Zoom Shops are installed. It's like retail-in-a-box technology and a new take on the old and proven vending machine business model — though I doubt you'll see objects larger than what can fit in your hand anytime soon.
Second on my list is redbox, a renter of DVDs through its network of about 1,800 automated vending kiosks. The company started testing the terminals in Denver back in 2004. I was fortunate to have the wide-scale deployment to McDonald's restaurants happen in my backyard, in Minneapolis. I've since seen redbox show up in locations such as grocery stores.
The touchscreen user interface provides a selection of current or popular movie titles. With the swipe of a credit card, the machine dispenses the DVD of your choosing, which can be returned to any redbox location after viewing. Each kiosk holds more than 500 DVDs. The company also released an online rental program that works with the kiosks.
Redbox's business model, although simple, has turned the movie rental industry on its head. Most of us were used to renting at Blockbuster, Hollywood Video or even the neighborhood mom-and-pop video rental store for about $4.25, and others had dabbled with subscriptions to Netflix for $19.95 a month. Redbox's pricing changed everything. Now, at the redbox terminal you can rent movies for $1 per night.
If you ask really nicely, I can hook you up with a copy of a study I sponsored on redbox kiosks. Sixty-six percent of users stated price as their primary reason for choosing redbox, with convenience coming in at 36 percent. An impulse to rent or the selection of titles had almost no noticeable impact, which tells me that users found value combined with accessibility as a major purchasing factor.
Though redbox cannibalizes sales from traditional movie rental stores, it stands on its own in terms of price over income. From December 2005 to November 2006 more than 15 million DVDs were rented from more than 800 redbox-equipped McDonald's stores. Further, redbox-equipped McDonald's locations sold 5 percent more food and drink than non-equipped locations.
Vending kiosks are taking off. Whether the product is $300 or $1 per night, these kiosks have proven their ability to succeed. Expect to see vending kiosks used in new and increasingly creative ways in the near future.
Lief Larson is president of Valhalla Worldwide LLC, and founder and former editor-in-chief of Kiosk magazine, the forerunner of Self-Service World magaine.
