A deal for Build.com to acquire web-only small appliances merchant Living Direct has been in active negotiation, sources tell Internet Retailer.
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The difference between the two projections hinges on each researcher’s estimate of retail kiosks as a percentage of all kiosks and by their differing methodologies of counting sales. For 2001, Summit uses a base of $379 million for kiosks deployed worldwide in all industries; Frost & Sullivan figures $492 million.
Summit also projects that the number of kiosks in retail locations worldwide will grow to more than 60,000 in 2005, from about 36,000 in 2001.
Nexpansion charges retail clients a monthly fee for each kiosk, but Kent says the fee is typically recouped by advertising space on the kiosk that retailers sell to manufacturers. She adds that retailers can consider combining multiple services on the same kiosk, such as providing information about pharmaceutical products and vitamins, along with an Endless Aisle general merchandise and foodstuffs service.
Leveraging the kiosks
But in adding content to leverage the kiosk investment, retailers walk a fine line between too much and not enough. Vitamin Shoppe Industries Inc. stores, which uses the Healthy Living Product Suite from Portland, Ore.-based Healthnotes Inc. to provide vitamin information on kiosks, often have customers waiting to use the devices, says Lesli Rodgers, Vitamin Shoppe’s vice president of marketing. Vitamin Shoppe places kiosks with the Healthy Living application, which can run over the Internet as well as over private networks, in a library room with a table and chairs. Customers often print out research data from kiosks before making a purchase. “We give up valuable floor space, but we think it’s worth it,” Rodgers says.
The Healthy Living Product Suite appears in more than 6,500 supermarkets, pharmacies and natural product stores in the U.S., Canada and the United Kingdom. The latest release of Healthnotes kiosks, version 7.5, includes a Category Management Report that tracks kiosk usage, providing retailers with information on customers’ shopping behavior. The report also calculates approximate gross sales dollars generated by kiosk usage; in beta testing, retailers realized $8,600 to $37,000 in sales generated by a single kiosk, Healthnotes says. It bases its calculations on an assumption that 20-30% of questions answered on a kiosk result in a sale and that an average sale is $5 to $7 for food products and $10 to $15 for vitamins and supplements.
Retailers who sell over kiosks, however, for now can only hope for the kind of traffic that Healthnotes kiosks experience. Because of kiosks’ newness, it may take time for shoppers to think of them as a way to buy something that a store doesn’t carry. Getting more shoppers to take advantage of kiosks will require shoppers to change their behavior, says Kent of Nexpansion. “Shoppers are so used to being turned away from retailers when they have a special order,” she says. Getting shoppers accustomed to the idea of easily getting help from a machine for ordering unusual products, she says, is an education process that merchants should support with their marketing programs.
Providers like Nexpansion, betting that kiosks will be successful retail tools over the long term, are expanding the product fulfillment systems that support their kiosk systems. Nexpansion and its associate food distributors offer some 50,000 products. Nexpansion, whose roots are in Netgrocer.com, uses Netgrocer to provide general foodstuffs and ethnic specialties. For natural and organic foods, it uses MotherNature.com; for pet food and supplies, it uses PetFoodDirect.com and ThatPetPlace.com; and for general merchandise and consumer electronics, it relies on Trilegiant Corp., a unit of Cendant Corp. Trilegiant normally handles fulfillment for membership clubs in affinity relationships. Cendant is an investor in Nexpansion.
In the not-too-distant future, Kent says, Nexpansion expects to expand its offerings in such areas as travel services through Trip.com, adding a selling category most retailers have probably never considered.
Meanwhile, P&C and other retailers will be evaluating how to proceed. “This is still unproven in the marketplace,” says Krishna of Frost & Sullivan. “It will take another 18 to 24 months to prove out what works.”
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