Buying iPods from vending machines

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If you happened to be staying at the Argent Hotel in San Francisco for last week’s Macworld Expo, you might have noticed something odd about the vending machine in the lobby. Instead of popping in something south of a dollar, this machine will suck a few hundred bucks right from your checking account. But instead of spitting back some sort of God-awful tooth-rot that’s been sitting behind glass for the past twelve lifetimes, the ZoomShop machine in the Argent sells something much sweeter: iPods.

ZoomShops look like ordinary vending machines at first blush. Behind the glass lie rows of products stacked in an orderly fashion, awaiting passersby with cravings for peanuts and potato chips. But then you notice the lighting and the case itself, which looks more Sharper Image than Minute Maid, and the ATM-style touchscreen off on one side.

But it’s what’s inside behind the glass that’s really eye-popping. iPods—nanos, videos, shuffles, you name it—as well as accessories like noise-canceling headphones and cases. There are also items for the business traveler like cell phone batteries and headsets, phones from Virgin Mobile, LinkSys wireless products and blank media from Maxell. And there are fun things, too, PSPs, Gameboys, even Sirius and XM portable satellite radios.

It works like this. You come up and access the machine via an ATM-style interface. Three touches will take you to a purchase decision. Along the way you can get product information, or see some accessories. Swipe your card, and once it’s approved, a robotic arm appears from behind the touchscreen. It moves a delivery bin to the shelf where product is, and gently removes it for you. Your receipt prints up, and you’re on the way. There’s even a way to make sure that you get your goods before your card is charged.

ZoomShops had their genesis in Australia in the late 90s where Zoom Systems was installing machines on campuses and in office parks so that people could buy printing supplies, like toner and ink, and drop off their empties for recycling, all without having to go to an office supply store. Out of this grew the software controls for an automated retail environment. A Japanese company provided the robotics know-how, and in 2000, Zoom arrived in the United States with a new idea: high-dollar items sold in high-traffic locations by automated systems.

“We wanted to offer technology to brand leaders and retailers who wanted to deploy stores in locations like airports, malls, and hotels,” Zoom System CEO Gower Smith told Playlist. “Places where they had real estate and interest in selling high-value, popular products, but they were not retailers.”

Thus was born the ZoomShop—the company doesn’t even like to call them vending machines—a way to reach valuable consumers like business travelers in places they tend to hang out, but do not necessarily shop. The idea is to offer a limited selection of merchandise, focusing on items with brand-name appeal like the iPod or PSP, targeted towards the location where the shop is set up—think business travel in airports and gift shops in malls.

“Each of the concepts we bring to market is to bring the best of the best of the best,” says Smith. “We don’t carry mp3 players from four different makers. At a traditional consumer electronics store you’d see Samsung and iRiver and Creative. We’ve decided from a digital music standpoint, Apple is the best of the best of the best, so we offering that strategic exclusivity.”

Zoom then pops these items in places where people spend a lot of idle time like an airport—a survey released last summer shows business travelers spend an average of 77 minutes lingering there, most of that time at the gate.

“We can really reach locations that would have been very, very challenging to reach if you had to have the real estate and cost of a staffed store,” says Smith. “Yet locations like airports have huge traffic and very good demographics. People are there waiting, they want it, and we can give it to them.”

Although it wouldn’t release specific numbers, Zoom claims to be selling a lot of iPods. Indeed, the Argent was sold-out of two different models. However Smith did tell us that turnover has ranged from 12 times all the way up to 60 times per year in some locations, and that he’s selling eight-to-ten accessories for every iPod. Over the 2005 Holiday season, he says his stores were raking in an average of $8000 per square foot, with some hitting up to $15,000.

So far Zoom has about 130 stores in Atlanta, California, Colorado and Nevada. You can find them in malls, hotels, airports, retail environments, even grocery stores. Smith says he hopes to have 10,000 stores in the next five years.

Where next? According to Zoom’s merchandising boss Rick Cusick it could be anywhere. “Our only requirements are 28 square-feet and thousands and thousands of people.”

Mathew Honan is a San Francisco-based writer and photographer. His work has also appeared in Macworld, Wired, Time, and Salon.

For more on the iPod, please visit the iPod Product Guide.

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