Advanced Vending Machines Enable Retailers to Set up Mini-Stores at Airports

A San Francisco startup company called Zoom Systems (www.zoomsystems.com) is placing extra-large vending machines, referred to as robotic retail store networks, in locations such as airports, hotels, office campuses and universities across the U.S. Instead of offering drinks and snacks, these machines typically offer up to 120 high-dollar items such as iPods, digital cameras, headphones and wireless laptop cards. Each machine is about 40 square feet in size. Users choose a product using a touch screen that displays detailed product information. A robotic arm retrieves a selected item and deposits it in a bin, at which time the user’s credit card is charged. With hundreds of machines in place, Zoom is betting that consumers will have few problems with spending as much as $500 at a vending machine. Results are promising, as the machines generate between $60,000 and $240,000 in annual sales per location. Zoom had more than 1,500 ZoomShops in place as of 2015, in the U.S., Canada, Europe and Japan. Just as ZoomShops can be customized to locations, they can also be customized to brands. For example, a cosmetics company could customize a ZoomShop so that it carried the look and feel of the brand, and offered the best of its product line (Benefit Cosmetics LLC has pink vending machines that look like buses to sell its wares). Because the stores are located in high traffic consumer areas, these customized stores can provide branding opportunities as well.

Another widespread use for vending machines is DVD rentals. Customers charge the rental fees to credit cards. Redbox is a venture owned by Outerwall, Inc. (formerly called Coinstar, Inc.), that began with part ownership by a subsidiary of McDonald’s Corporation. There were about 35,000 Redbox kiosks in the U.S. as of late 2015, in locations such as McDonald’s restaurants, supermarkets, Wal-Marts and other high-traffic locations that offer a selection of about 120 to 200 movie titles each, for a modest daily rental fee. At their option, users may select DVDs online and then pick them up at a Redbox location. It costs the firm roughly $18,000 to install a kiosk. Redbox’s revenues were $1.89 billion in 2014, $1.97 billion in 2013 and $1.91 billion in 2012. DVD rentals face daunting competition from online movie downloads, including the offerings of Netflix and Amazon.com.

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