How web-enabled kiosks are adding more C to C-stores
By Paul Demery
Once known as the place to shop for emergency milk and newspapers, convenience stores have evolved to become a source of cappuccino, sandwiches, gourmet cookies and other not exactly emergency fill-in purchases. Now 7-Eleven Inc. thinks c-stores can evolve further and become a one-stop shopping destination for flowers or jewelry.
7-Eleven is building those expectations on a backbone of web-enabled kiosks that it installed to replace labor-intensive, over-the-counter check-cashing services in its 5,800 North American stores. It is evolving those Vcom kiosks, as it has branded them, into retail shopping and financial services centers, offering consumers the flexibility of paying for goods and services with hard cash, credit cards, direct bank drafts or even deposited paychecks. Although its kiosk program has only been running in pilots that began in Dallas in November, Vcom is already showing signs of increasing store traffic and revenues, says CIO Keith Morrow. “We’re encouraged by the early results,” he says, declining to provide specifics.
In fact, 7-Eleven is pleased enough with the results to roll out the kiosks to 1,000 stores by June and another 1,500 by the end of the year. Eventually, the company expects to have Vcom kiosks in all 5,800 North American locations.
Initially, the kiosks were used as ATMs and cash dispensers, replacing a check-cashing service that 7-Eleven offered over the counter. Their initial goal was to free counter personnel from the popular check-cashing service. But 7-Eleven soon learned that it could serve additional customer needs by providing other ATM transactions and cash services through American Express Co., and by letting customers purchase money orders and pay bills through Western Union.
These additional services bring 7-Eleven multiple benefits: They provide customers with cash to spend in the store, earn the retailer transaction fees and give customers additional reasons to visit 7-Eleven more often. “We hope it’s a convenience for all customers, but it brings in new customers who want to perform several transactions at one time,” Morrow says.
Catering particularly to the unbanked—people without credit cards or checking accounts—7-Eleven’s Vcom kiosks can accept up to 30 monetary bills of any denomination, at unlimited total cash value, to pay for things ranging from utility bills to gifts ordered from Internet retailers. The kiosks, operating on Windows NT servers with Internet protocols for data transmission, integrate with 7-Eleven’s back-end Oracle financial software, making it easier for the company to account for Vcom activity and revenue.
Building on the initial success of the Vcom program—which the company measures in the number of checks cashed and the number of registered check-cashing members, both of which have been increasing—7-Eleven is now launching a slew of other services through Vcom kiosks. They include accessing mobile telephone account services, including bill-payment, through direct connections with Verizon Communications, and connecting directly with Public Access Insurance for quotes and to pay premiums on automobile insurance polices from Instant Auto Agency. The Public Access service will also allow Vcom users to communicate online with customer service reps. Public Access and Instant Auto Agency are subsidiaries of Instant Insurance Holdings Inc.
Into the Post Office
In a retailing service currently under development, Vcom users will be able to make online purchases of flowers and other products from Internet-based retailers through an arrangement with Cyphermint Inc. Morrow says it’s too soon to say which retailers will offer shopping through 7-Eleven kiosks, though he singles out florists and chocolate sellers as likely participants.
Ken Stempler, vice president of sales and marketing for Cyphermint, says his company’s kiosk-based e-commerce system is gaining interest among a growing number of retailers and other organizations, such as the U.S. Postal Service, that, like 7-Eleven, will host the kiosks, as well as from retailers that will sell products through kiosk-generated transactions.
Retailers that will sell through the kiosks tend to be those with broad consumer appeal and who see kiosks as a way to reach a bigger audience, particularly among consumers who may not have regular access to the Internet, Stempler says. Companies selling through the Cyphermint system include JewelrySprite.com and PayByCash.com; others are in contract negotiations.
He notes that the kiosk channel is becoming popular among retailers without a physical store presence as well as among online entertainment ticket services that can use selected kiosk locations to target areas served by nearby movie theaters and concert halls. Retail purchasing transactions placed from a Vcom kiosk stay within the Cyphermint system rather than going to a retailer’s web site, and are limited to a select group of products from any one retailer, Stempler says.
7-Eleven’s Vcom kiosks will also complement the retail chains’ stored-value card program, Morrow adds. Until this month, 7-Eleven shoppers could use the stored-value card only after loading value onto it at a store service counter. But as of Feb. 3, users can load value with a credit card on the company’s web site, 7-Eleven.com. “You can load value on the web and then use the card at a Vcom kiosk, at the gasoline pumps or at a POS counter,” Morrow says.
7-Eleven supports the kiosk program through a range of promotional activity, most significantly through 7-Eleven’s regular radio advertising for all its products and services.
One effective promotion, Morrow notes, has been a free $5 bill issued through the kiosk to customers who register for check-cashing services. Another key promotion is the hiring of temporary store greeters who mention the kiosk service as customers enter the store. Although store clerks are not expected to act as technical trouble-shooters for the self-service kiosks (which have their own telephones that can be used for customer service), store personnel must become familiar with the kiosks just as they would other store offerings. Employees are given the option of cashing their 7-Eleven paychecks at the kiosk for no fee, which encourages them to mention the ease of use to others, the company says.
The shrinking kiosks
Meantime, 7-Eleven’s kiosks have been shrinking, literally, and that’s good, says Morrow. When 7-Eleven first commissioned NCR Corp. to roll out in-store kiosks in 2001, the kiosks measured nine feet wide, taking up a lot of space for a convenience store. But as 7-Eleven worked with NCR to perfect the machines to offer more services, they also shrank in size. They went to six feet wide, and then to the current three feet. Now the relatively svelte machines are small enough that 7-Eleven will deploy two in some stores in less space than was required by the original model.
The growing need for two kiosks per store stems from the increasing number of services available on the kiosks, Morrow says. The kiosks can cost up to $60,000 each, though Morrow says that, as in most computer technology, kiosk prices have been dropping.
Retailers selling through 7-Eleven kiosks may pay a placement fee to have links appear on the kiosk screen, or fees based on transactions, Morrow says. Cyphermint charges a one-time set-up fee to retailers that sell through the kiosks, ranging from $15,000 to $100,000. The fee depends on how many links Cyphermint needs to create between the retailer and the kiosk-based e-commerce system and whether a retailer connects to the Cyphermint Pay Cash System, which enables consumers to make online payments by deducting funds from a networked account.
In addition, Cyphermint may charge a monthly service fee of as much as $2,500, depending on the amount of maintenance a retailer requires. For example, if a retailer sends in printouts of product and promotional information, that costs more to upload into the Cyphermint system than information that retailers send electronically, Stempler says. Retailers selling through the Cyphermint system provide information about products to Cyphermint, which maintains the product information on its own servers. Kiosk customers don’t actually connect to the retailers’ sites until they are ready to check out. Rather, Cyphermint delivers the product information to the kiosk. Only when the customer pushes the Buy button does the kiosk connect to the retailer’s checkout page.
The right direction
Cyphermint also charges transaction fees on kiosk-activated retail sales that it shares with 7-Eleven. These fees range widely depending on the type of transaction, from about 5% to 40% of the value. Sellers of digital content, for instance, would pay fees at the higher end of that range, Stempler says.
Consumers can add value to the Pay Cash System by mailing money orders to Cyphermint or setting up direct deposits from their checking accounts. They can also load value with credit cards at Cyphermint.com, but Cyphermint advises against the use of credit cards because it accepts only cash advance transfers, which typically charge higher interest rates than credit card purchase transactions.
The range of shopping and payment options at 7-Eleven is likely to continue
evolving, as the retailer continues looking for new ways to add convenience
for customers, Morrow says. “We’re heading in the right direction,” he says.
paul@verticalwebmedia.com
