Kiosks: Touching New Markets

Are you part of the $428 million kiosk market? If not, maybe you should be: the market is expected to grow to $2.94 billion by the year 2003, according to Kiosks.Org, an independent organization of kiosk developers. Gem City Engineering Co. (GCE), of Dayton, OH, is already taking advantage of the booming kiosk market.

Scott Ely, GCE's senior vice president, attributes the growth in the kiosk market to consumers' acceptance of kiosk devices such as ATMs (automated teller machines). "The use of computers by school-age children and young adults will continue to boost kiosk acceptance. Children are routinely using computers in schools and at home. Receiving information onscreen is not new to them," adds Ely.

GCE, established in 1936, is a multifaceted company that designs and builds automation equipment. The company specializes in robotic systems integration and clean room automation. GCE is privately held and employs more than 550 people. Its annual revenues are over $100 million. The company boasts an international customer base, ISO and QS9000 certification, and more than 350,000 sq. ft. of manufacturing space.

Not being a typical VAR, GCE gambled on the kiosk market early in 1995 by opening the Kiosk Division. GCE wanted to remain diversified as a hedge against market fluctuations, according to Ely. Manufacturing kiosk housings fit well with GCE's engineering, design and manufacturing capabilities. The company also had engineers with years of experience in system integration.

The result is the Kiosk Division's offering a complete kiosk solution, from initial design to complete manufacturing, integration and installation. Today, the 40-employee Kiosk Division is focused on increasing sales by 20% annually by selling kiosks to customers in a variety of markets including retail, banking and transportation.

More Than A Cabinet Maker
While the kiosk market is booming, it's an expensive market to enter, admits Larry Whitehead, manager of sales engineering, Kiosk Division. Much of the expense is in manufacturing operations. Whitehead says the Kiosk Division benefits from GCE's long-established design and manufacturing capabilities.

"There are many cabinet-makers that consider themselves kiosk manufacturers. We manufacture customized kiosk housing. And, unlike cabinet makers, we provide the entire kiosk solution, including the hardware and software," explains Whitehead. The hardware includes a central processing unit (CPU), touch screen, printer and card readers.

Whitehead estimates that there are thousands of cabinet makers, but only a handful of true kiosk manufacturers who also specialize in system integration. Armed with a complete solution, the Kiosk Division tapped into fast-growing segments of the kiosk market.

Hot Markets For Kiosks
"Retailers are seeing the benefits of using kiosks. Retail is a particularly hot market," says Whitehead. "The biggest benefit kiosks offer retailers is the reduction of inventory."

A clothing store, for example, can display jackets in various sizes for customers to try on. (An added benefit is the reduction in square footage needed for a store to operate.) An in-store kiosk allows customers to view the jackets in various colors on the kiosk screen. Other related items, such as belts and hats, can also be displayed on the kiosk. Once an item is chosen, the customer orders it online, using the kiosk's touch screen or keyboard. Merchandise is then shipped from the retailer's warehouse to the customer's home.

A kiosk doesn't necessarily replace a store salesperson, notes Whitehead. "The kiosk can be used effectively as a sales tool," he says. A sporting goods store, for example, can use a kiosk to display product videos of large items, such as canoes and tents. The Kiosk Division is tapping into other markets, in addition to retail.

The use of interactive kiosks for public access to the Internet is increasing. Shopping malls, for example, can offer public access to the Internet for a fee. Airlines are using kiosks for ticketing and flight information. Kiosks are also widely used in human resources applications. Gem City Engineering, with six locations, uses kiosks to enable employees to update information, such as name, marital status, and 401(k) information.

Partnering For Success
To meet the demands of a growing market, where does the Kiosk Division find its customers? Ely says attending trade shows, such as Comdex, Marketechnics, and the point of purchase (POP) industry's show, have led to sales. Forming partnerships, he says, has been even more successful. "We partner with two software companies, North Communications (Los Angeles) and Muse Company (New York), and act as their manufacturing arm. Our Kiosk Division designs, integrates and delivers a customized product to their customers," Ely explains.

The Kiosk Division also partners with other vendors in its "Kiosk Kartel" to deliver a complete solution, says Whitehead. The Kartel vendors include POS hardware and software vendors. "A 20-store retailer does not want to deal with four or five vendors when buying a kiosk. The retailer wants a one-stop-shop, and that's what we offer," explains Whitehead. The Kiosk Division provides the design, integration, training, service and support of the kiosks for the retailer.

Offering A Customized Solution
Kiosk customization, from the housing to the software, is one of the Kiosk Division's strengths, says Whitehead. Gem City manufactures kiosks in virtually any size, shape or color. The company manufactures kiosk housings in a variety of materials including wood, aluminum, stainless steel and plastic. The demand for customized kiosks is growing, says Whitehead.

"Kiosk owners want their kiosk to have a certain look or feel", he observes. "The kiosk is almost like their unique signature." Customized kiosks must be ordered in units of 10 or more; otherwise, it is not cost-effective to construct and integrate them, notes Whitehead. The company also offers a standard kiosk model for customers who need only one or two kiosks. Having the manufacturing capability enables the Kiosk Division to design, manufacture and deliver a kiosk in six weeks or less. A quick turnaround is important, but so is service and support, he says.

A recent report from the META Group (Stamford, CT), a market research firm, indicates that kiosk uptime must be near 100% or kiosks face user rejection. "Providing pre-sale training and post-sale support are essential to being successful in the kiosk market," says Whitehead. The Kiosk Division also leases kiosks to smaller companies on a monthly basis. Offering a complete, one-stop solution has lead to many referrals for the company. "Repeat business is a great indicator of how well we are doing," concludes Whitehead.