Students write prescription for kiosk success

A drug-dispensing kiosk took home top honors at Coinstar Inc.'s February Whiteboard Challenge at the Kellogg School of Management at Northwestern University.

Coinstar, parent company of redbox DVD-rental kiosks and Coinstar coin-counting kiosks, hosted the competition last month to stir up new ideas, said Gregg Kaplan, president and chief operating officer of Coinstar.

"We were delighted with the level of creativity and depth of thinking that the students brought forward," said Kaplan, who also recently addressed investors to describe the company's newest kiosk deployments. "We believe there are countless untapped ideas in the automated retail space, and with anticipated self-service retail transactions expected to reach $1.6 trillion by 2013, we want to continue fostering new ideas."

The winning team, DrugBox, was one of seven finalist teams that presented kiosk concepts to a panel of university professors and Coinstar executives on campus on Feb. 23. Judges rated each based on three criteria: kiosk ideas, business cases and presentations.

About 25 teams of three MBA students each submitted kiosk concepts for consideration, but the team behind Drugbox, earned the $6,000 in prize money. Runner-up teams were awarded $3,000 and $1,000, respectively.


David Schottland, Sheila Schottland, and Raphael Tse, designed DrugBox, a self-service kiosk that would be pre-stocked with non-vital, high-demand, prescription drugs.

From left to right:Gregg Kaplan, COO and
president of Coinstar, Sheila Schottland,
David Schottland and Raphael Tse.

"The major value propositions of DrugBox are speed, convenience and discretion," said 28-year-old David Schottland. "The experience at traditional pharmacies is cumbersome at best – there are long lines, it requires special trips to the pharmacy, and we often find out embarrassing personal information about the person in front of us."

The opposite is true with DrugBox, said Schottland of Evanston, Ill., who pointed out that the kiosk's integrated IT system could help fill scripts, answer drug-interaction questions, speed up the payment process with insurance providers and remind people to refill or pick up prescriptions.

If Coinstar were to build DrugBox, it could intercept customers as they conduct their daily routines by deploying DrugBoxes in the same high-traffic areas where redboxes currently reside, including 24-hour convenience stores, gas stations and office parks.

"No special trips, no lines, no embarrassing TMI," said Schottland, who thought it important that his team's concept fulfill an unmet consumer need. The team also wanted to work in a market with substantial revenue opportunity, which they found in pharmaceuticals. The U.S. prescription drug market in 2009 was roughly $300 billion. And the team also wanted to play to the strengths of a decentralized distribution model, "namely with a focus on high-demand, easily predictable products that generally would be small both in size and weight," Schottland said.

Lastly, the teammates wanted their idea to include a social responsibility component.

"Conceptually, if DrugBox could make better patients, it could bring down the overall cost of health care in our country," Schottland said.

Schottland and his team knew the complexity of their idea was risky but pushed ahead because they believed in its value.

"All of the other entries were very clever and well-thought out, and ours certainly seemed to be different from many perspectives," he said. "We knew our idea could be viewed as overly complex, and it's no secret that health-care regulation can be a daunting hurdle. "

The group spent significant time researching the industry, learning how all the players interacted and conducting informal market research with health-care providers.

"Ultimately, the thesis of the idea -- that certain drugs are perfect for a kiosk network and that consumers will value convenience and an easier experience -- was strong enough that we spent the most time making the communication of our thesis as clear as possible," he said.

That process, spanning many hours over a month-long period, obviously paid off in the end.

"We understood that our idea could have been fairly polarizing, but we were really honored and flattered to be selected from among our incredibly innovative and intelligent classmates, which made the win so special for us."

Whiteboard Challenge's runner-up ideas included a kiosk that brings together buyers and sellers of used merchandise and an energy-drink kiosk.

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