August 28, 2003, 12:00 AM

Circle K finds profit in its web kiosk program

Cirle K’s Zaplink kiosks are serving up profits as they help the retailer build new communities of regular customers attracted to unique services like an e-mail video messaging system.

It’s the bane of the small-footprint store: Figuring out how to increase profits by offering more products and services that appeal to new as well as existing customers, while leaving room for customers to shop.

That’s what convenience store chain Circle K Stores Inc. is doing with its web-based Zaplink kiosks, which are serving up profits as they help the retailer build new communities of regular customers attracted to unique services like an e-mail video messaging system. “Our transactions are increasing every month and we’re already profitable,” says Michele Tihami, director of Zaplink Services for Circle K parent ConocoPhillips Co.

While offering new ways to draw in and engage customers in entertaining and promotional activity, the kiosks provide three sources of revenue that Circle K shares with kiosk provider InfoTouch Technologies Corp.: an Internet access charge of 19 cents per minute, transaction fees for cash transfer and online bill payment services and advertising revenue.

Each Zaplink kiosk contains a web-access device and a computer that operates a revenue-producing video advertising/messaging screen that stores place above their sales counters. Advertisers include Coca-Cola Co., KB Homes and Easy Fast Advance, a financial services company. Ads and messages on the screen may call attention to products in the store or to services available on the kiosk, Tihami says.

Zaplink kiosks, which generate most revenue and profits through transaction fees and advertising, are profitable, Tihami says. She adds that the Internet access fees cover the cost of providing web access as a way to draw customers. The incremental customer traffic the kiosks bring is also expected to produce a lift in store sales, though Tihami has yet to analyze that, she adds.

Meantime, Circle K will promote and explain each kiosk service in store window signs and in ads placed in publications that cater to demographic groups, including Hispanics and youths, who have shown a strong interest in using the kiosks, Tihami says. “We’re trying to avoid the classical marketing mistake of not telling them how to use a new product,” she says.

Circle K is rolling out Zaplink one market at a time to build a strong customer following in each. “Our strategy is to pick a single market and build density,” Tihami says. Circle K, which operates 2,300 convenience stores nationwide, has deployed kiosks in 150 stores in Arizona and 10 in northern California, and plans to deploy 10 next month in Charlotte, NC, and eventually throughout its chain.

Density of kiosks and users in a market makes it more likely consumers will use kiosks more frequently, such as to try out the Speak Your Mind video messaging system, she says. Although it produces no fees in addition to the Internet access fee, the Speak Your Mind feature is expected to grow as a draw into Circle K stores as the service expands in an international network operated by InfoTouch, Tihami says.

Zaplink’s other features include surfing the Internet, printing store coupons, and using voice-over-Internet technology to process cash transactions with Western Union that, for a fee, can be redeemed at the store counter.

Circle K expects to continue thinking of new ways to leverage Zaplink to generate traffic and revenue, Tihami says. It’s currently working on a pilot to sell state lottery tickets in California, letting customers purchase and print their tickets from the Zaplink kiosks.

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