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Big-ticket vending: Two success stories

Vending is traditionally the domain of candy bars and sodas, but two companies have demonstrated how the unattended selling model can be used to move high-dollar items. Could this evolving model give retailers a whole new way of looking at their real estate, both indoor and out?

November 13, 2005 by James Bickers — Editor, Networld Alliance

Traditionally, the vending business model works by generating a small amount of profit on a large volume of items. You don't make much money on a single candy bar or package of crackers, but the economy of scale kicks in when you move thousands of units.

But there is no reason why unattended selling devices like vending machines cannot be used to move bigger, higher-margin items. Two companies, San Francisco-based Zoom Systems and Sacramento-based WebRaiser Technologies Inc., have demonstrated the potential in increasing the amount of sale while maintaining the tried-and-true delivery methods.

Case 1: Zoom Robotic Stores

Sometimes, the solution to an existing problem opens up entirely new vistas of opportunity. Such was the case with Zoom Systems, the Australian firm founded in 1998 to distribute ink and toner cartridges to large corporations and government agencies. Gower Smith, chief executive officer for Zoom, found himself staring down a major logistical problem: how to properly route and distribute the myriad brands and sizes of cartridges to the many different offices in a given facility.

He went to the drawing board and came back with plans for an automated supply cabinet that allowed users to select what they needed, when they needed it. He later patented the design, hooked up with Hewlett-Packard and in 2000 brought the technology to the United States.

Gower Smith (right) discusses the Zoom Shop with attendees at the 2005 Self-Service & Kiosk Show

But why stop at ink cartridges? In 2004, the company began development of the Zoom Robotic Store, the first of which was installed and "opened" in March 2005.

The product selection in any given Zoom Store will vary depending on where you see it - consumer electronics, music, gift and novelty items, or virtually any other product that isn't prohibitively large. "We have to be able to deliver an iPod or a candle or a CD," Smith said. "All very different shapes."

Watching a Zoom Store in action is unquestionably impressive. Consumers browse through a Web-like storefront via a touchscreen, complete with recommendations for related products and detailed product information. Upon checkout, a robotic arm swings into action, fetches the products, and delivers them to the consumer.

"Zoom Robotic Shops are highly complex machines with many different integrated components," Smith added. "That always presents itself as a challenge. We carefully design and manufacture them, but then they're left alone, unattended in airports, shopping malls and hotels. Ensuring reliability was difficult but critical before we sent any to market. Successfully achieving consistently excellent service has been vital to our continued progress."

And that progress is moving quickly - Smith said the company will have installed 100 of the shops by the end of 2005, and he projects a base of 3,000 by 2007.

"I'm not kidding that people tend to gush when talking about them, and since many of our customers are business people in airports, they are enthralled by the idea," Smith said. "More than 25 percent of customers return to purchase from a Zoom Store again."

Case 2: The VendiGas system

One of the great joys of warm weather months is the ability to cook outdoors, but one of the great frustrations is the need to gas up the grill. From finding a retailer that is open to making sure the valve on the tank is the right size, it can be enough to drive a person to use charcoal.

The Amerigas/Dekko/WebRaiser propane-dispensing solution, as displayed at the 2005 Self-Service & Kiosk Show

A new solution hatched by propane company Amerigas, manufacturer and patent-holder Dekko and software developer WebRaiser Technologies removes that frustration and puts a seamless, self-service system in its place. Customers drop off an old tank, select and pay for a new one with a touchscreen interface, and watch as their new, filled tank is dispensed.

The delivery system is based on pneumatics, in order to remove the possibility of generating a spark near the containers. According to Gary De Blaquiere, vice president of business development for WebRaiser, the unique nature of the product being dispensed forced the design team to start off at square one.

"There weren't any `off-the-shelf' components to address this need," he said. "This team had to invent the solution from a blank piece of paper."

In addition to safety issues, regulatory concerns presented challenges. Different agencies in different states have a litany of requirements, from where the machines need to be positioned to how the cages are designed to how the latches work. "At first glance the system may not look extremely complex, but behind the scenes the system was designed to satisfy many regulatory concerns," he added.

De Blaquiere said there are approximately 35 of the systems in the field, chiefly at building supply companies, grocery chains and retail outlets. The systems, which knock transaction time down from 20 minutes to an average of 3, are performing very well. "Last weekend, one of the sites did well over 150 transactions," he said. "Remarkable, given we are on the outside of the peak selling season."

Amerigas, Dekko and WebRaiser are also packaging the product for distribution to the vending industry under the VendiGas brand, a program that will bundle the machinery with a propane-servicing agreement from Amerigas. That program, he said, will launch in Q1 of 2006.

More research on these key terms: Retail Kiosk software Vending

De Blaquiere also said that the technology should be viewed beyond this particular implementation with propane.

"If you look at what this technology really is, it's outdoor retail," he said. "Look outside of many retail locations including grocery and c-store, and you can see how this type of technology will help the retailers monetize their real estate. They will now be able to offer more products and services 24 hours a day, 7 days a week and 365 days a year. This technology will change how retailers view the outside of their stores."

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