March 31, 2006, 12:00 AM

Bringing the web to consumers

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Using Endeca Retail for Kiosks site search and navigation software from Endeca Technologies Inc., Home Depot will be able to tailor content available through the kiosks, such as making particular inventory and cross-sell opportunities available to in-store shoppers.

Home Depot is testing kiosks in two shopping malls in Atlanta, and it’s working with Maynard, Conn.-based Kaon Interactive Inc., a provider of three dimensional graphics software, to roll out this year life-size kiosks capable of letting shoppers virtually open and reconfigure parts of a refrigerator in its full size.

At a meeting earlier this year, Seegers demonstrated on an overhead screen how customers in the appliance section of a Home Depot store will be able to view a life-size image of a refrigerator on a kiosk, manipulate the image to open doors, take out and replace shelving, even replace a water filter.

The goal, he says, is to use the kiosks to virtually expand the selling floor. Consumers usually want to buy only refrigerators that they can touch in the store, but no selling floor is big enough to display all the different models of refrigerators Home Depot offers, he adds.

Kaon offers its 3-D software as a hosted application, through which retailers (or Kaon itself) can develop the initial interactive product demonstration files, says Kaon CEO Gavin Finn. Retailers can access the hosted application to modify the demonstrations, then download them as Java applications to their own web servers to distribute over their corporate intranet to the kiosks in their stores, he says. “We’ve never had a customer who had to change their web infrastructure to run our applications,” Finn says.

Kaon’s subscription fees start at $25-$35 per product per month, in addition to initial set-up fees of between $5,000 and $10,000, Finn says.

Kiosks for everybody

It isn’t only large retailers that are putting kiosks in key roles in new multi-channel merchandising and marketing strategies. Redbox Automated Retail LLC is the new gorilla in the business of Internet-connected kiosks that rent and sell DVDs. Owned jointly by McDonald’s Ventures, a unit of McDonald’s Corp., and Coinstar Inc., Redbox has an exclusive deal to roll out its kiosks in the fast-food company’s restaurants as well as deals with other companies including grocer Ahold U.S.A-but other players are cropping up to serve smaller slices of the retail market.

ELO Media LLC, for example, has placed about 40 of its web-based kiosks in locations throughout the U.S., including two on Marine bases, says CEO Oren Hon. “In the next year or two, we’ll have close to 1,000 machines in the market,” he predicts.

ELO Media currently sells most of its DVMatic kiosks-including a 330-DVD kiosk for $17,000 plus $100 per month maintenance, and a more expensive kiosk that holds 500 DVDs-to third-party companies like Box Office Video that install and operate them in stores under contract with retailers. ELO Media’s clients also get their own web site tied to, where customers can research videos, check availability at a particular kiosk and use a credit card to reserve a DVD. Once at the kiosk, the customer uses the same credit card to pay for the DVD, which the kiosk identifies by its attached RFID tag and automatically dispenses it. When customers return DVDs, the same RFID tag enables the kiosk to record the return and update information on the DVMatic web site.

Gary Pierce, the owner of Box Office Video, based in the Houston suburb of Tracy, Texas, says he rents an average of 4,000 DVDs through his single DVMatic machine, which is located in a Houston-area convenience store. Videos rent for $1 a day for an unlimited number of days, plus he sells about 100 used DVDs a month for about $5 each. After spending about $1,500-$2,000 each month for new DVDs to stock his machine and paying a 10% commission to the store owner, he says he can make a monthly gross profit of about 25%.

Business has picked up after a slow start, he adds. “People at first were a little distrustful because they hadn’t seen one before,” he says. “Now every month business goes up.”

Big Mac and a DVD

Although ELO Media, Piscataway, N.J., and others like Centerport, N.Y.-based MovieMate Inc. (which sells smaller kiosks starting at $8,000 for 100-DVD capacity) are further ahead than Redbox in web functionality, their bigger rival has ambitious plans to roll out up to 2,000 kiosks with full web features later this year, says Gary Waring, vice president of marketing for Redbox.

Redbox, based in Oak Brook, Ill., has 800 kiosks already installed for renting and selling DVDs, with about 750 of them in McDonald’s locations, the remainder in grocery stores. The kiosks are all connected to the Internet, but for now their only web feature is the e-mailing of receipts to customers who provide their address. By year-end, when it expects to have 2,000 kiosks installed in the market-including several hundred in Ahold’s Giant Food and Stop & Shop supermarkets and others in The Kroger Co.’s Smith’s grocery chain-Redbox plans to offer online ordering and real-time inventory lookup for each kiosk in its network.

Redbox will either sell or lease kiosks to retail partners, but unlike ELO Media, it will directly operate all its kiosks over the Internet instead of farming them out to third-party operators, Waring says. That will enable consumers to find and reserve a DVD online, pick it up at any Redbox kiosk, then return to any kiosk. “You can pick one up in Park City, Utah, and return it in Chicago,” he says.

More roles

As kiosks become more widely used in key retailing strategies, merchants can be expected to continue finding new uses for them, says Mendelsohn of Summit Research.

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