On something as vague as distribution

There’s really a lot to write on distribution.

I’ve decided to focus on vending machines automatic retailing first.

A few years ago, I saw vending machines selling iPods in the airport.  I was so surprised I wrote about it.   Turns out they are far more sophisticated than that, and also they are really not called vending machines.  My bad. 🙂

Not only did I see them in airports, but I started noticing them in stores like Macy’s too.

Naturally I started to wonder why they’re there, and who the consumers are.

Well, sometimes it’s just way more effective to ask the founder than to theorize ad infinitum. 🙂

So that’s what I did yesterday morning.

I sat down with Gower Smith, founder of Zoom Systems to talk shop.  Specifically self-serve retail shops.  Zoom shops are completely standalone mobile retail outlets that sell everything from face wash to Proactiv to iPods, iPads, and other Apple products.  And guess what?   These shops are big business.  In fact, the average Zoomshop does over 20x the business of a traditional vending machine.  Some of the top selling units are easily making mid-6 figures in retail volume.  That’s right – 1 vending machine.  $500K ballpark.  And still in growth mode.

Mind blown.

So who are these consumers, and what’s the motivation to buy from an automatic retail unit?

I started with Macy’s.   Why is there a store within a store?

As I learned, at least for Apple, setting up a retail store within Macy’s allowed the brand to reach a whole new type of consumer.  The Macy’s shopper is female, and typically purchases Zoomshop products using a Macy’s store card or gift card.   They don’t often frequent Apple’s retail stores.  No cannibalism = great.

These units also work for Apple because it lets them control  the entire user experience  (and that seems to be a pretty important Apple criteria 😉 )  Instead of locked up boxes with anti-theft wiring on it and signs to go see front desk for your product, you can browse the selection of products in an approved display environment with approved messaging.  You even get to pay and get your product without having to interact with any disgruntled or poorly trained staff!

And Proactiv vending machines?   Well think about it, if you have pimply skin, do you really want to be interacting with a person to talk about your pimply skin?

Given that zoom systems can capture loads of actual customer data — including traffic count of passerbys and traffic flow, abandonment rates in shopping interface, the types of information being browsed…you’re starting to get a physical retail system with as much data and A/B testing ability as the average website.

Talk about the potential here. 🙂

Thanks to Gower Smith for answering all my questions, and for the data on Zoomshops 🙂

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