Zooming Into A New Market

Imagine not having access to ATM machines. Banking could only be done during business hours. We wouldn't have the convenience of withdrawing money from our checking or savings accounts, making balance inquiries at any time, or directly depositing our paychecks. The ATM has become an integral part of how we function on a day-to-day basis.

If systems integrator Zoom Systems has its way, someday we will all feel the same affinity for E-Stations. According to Gower Smith, CEO and founder of Zoom Systems (San Francisco), E-Stations are designed to carry products that are frequently purchased and don't have a shelf life. "It's all about convenience," says Smith. "It's also about the branding and information that we can provide a vendor. There needs to be an economical value for the consumer as well."

Hewlett-Packard (HP) is one of Zoom Systems' largest customers. E-Stations are designed to carry HP items such as printer cartridges and other office supplies often needed on an urgent basis. Printer cartridges typically require more information to purchase than a regular vending machine provides. HP's E-Stations could be located in areas where there isn't typically room for printing or office supplies, such as office buildings, supermarkets, college dorms, and other high-traffic areas.

The goal is to provide consumers with urgent products in an easily accessible way. However, impulse items, such as CDs or books, might also be found in an E-Station in high-traffic areas, such as airports or college student unions. A can of Coca-Cola is a classic impulse purchase, but it is not information intensive. So, it can be purchased through a regular vending machine.

"We have had some products that have sold better than others," Smith recalls, "but I wouldn't say we have had a failure. One E-Station even has a locker that can fit large items, such as a printer, so there aren't really any physical barriers. The challenge in finding what sells comes from the marketing point of view — matching products with specific markets. If we find that a product isn't being accepted, we will change the product mix until we are successful." Smith expects sales to double next year.

"All We Need … Is A Phone Jack And An Electrical Outlet" So, how do Zoom Systems customers know if their machines are effective? Two words — the Internet. Each E-Station is hooked up to Zoom Systems' E-Center via the Internet. The E-Center is a central online host network that collects information from each E-Station via the Internet at any time. Credit card authorization is also routed through the E-Center to the payment companies. This online host network lets Zoom Systems customers remotely modify the end-consumer purchasing experience from any modem in the world. These modifications include:

• changing pricing
• managing inventory levels
• monitoring back-end logistics, such as alerting when a system needs to be repaired
• generating a database of customer preferences and purchasing patterns.

"All we need to install an E-Station is a phone jack and an electrical outlet," says Eric Grosse, vice president of sales and marketing. "We provide immediate access not only to the physical product, but also to the information that consumers need to make intelligent purchasing decisions. We provide these two capabilities 24 hours a day, 7 days a week." Each machine, with the Internet service included, usually costs about $250 per month for the customer.

Unit Basics
Each E-Station contains a touch screen, a magnetic stripe reader, a PC, a PIN pad, and a receipt printer. Some machines also have audio capabilities. An attract loop (something like a commercial) runs on the touch screen while the machine is not in use. This loop usually explains how the system works and the system's benefit to the consumer; it is cooperatively designed by Zoom Systems and its customer.

When customers touch the screen to gather information or make a purchase, the machine goes through a presentation, directing them to the product that they need. For example, if a customer purchases an ink cartridge from HP, prompted questions might include the cartridge number and printer type. The information is processed, and the customer is directed to the correct cartridge. If the customer authorizes the purchase, it is placed in a virtual shopping cart — the same system used when shopping over the Internet.

After all purchases are complete, the customer selects to pay via debit card or credit card. Transactions take about 15 seconds, and the correct ink cartridge and a receipt pop out of the machine. The consumer walks away happy; and HP makes a sale and learns the purchasing habits of another of its customers.

"The interaction and service that the customer gets from the E-Station is in many cases superior to talking to some brain-dead sales associate or customer service representative," says Grosse. "HP knows its customers are getting all of the information they need in a convenient and comfortable format."

Building Business Solutions
The basic E-Station is about the same size as a beverage vending machine, according to Smith. "The system is modular, so we can bank a number of machines depending on the product range. We are leveraging existing equipment from the vending industry. Our E-Stations work like LEGO blocks — we add the pieces that the customer needs. And, we have quite a nice set of modular pieces to cover the diverse range we need."

Smith's vision for Zoom Systems is to provide E-Stations with the correct technologies to fit its customers' needs. "Our first system had a color monitor and buttons, similar to ATM machines," he explains. "We felt that integrating touch screens would offer our customers a more flexible solution. The technology costs more, but it allows us to be more creative. We also used to integrate a bar code scanner that facilitated purchases from accounts in an office building, but that technology was driven by customers' needs, and is no longer used. We found it didn't work well enough for what it cost."

Zoom Systems can use its receipt printers, in conjunction with loyalty programs, by printing a coupon on the back of a customer's receipt when the customer has made the appropriate purchases to earn the extra savings. "We integrate what we feel are the best technologies to work with our Internet-based solutions," Smith continues. "The Internet also has its advantages as a communications medium, because it is inexpensive and has global reach. Our customers can access the E-Center from any modem in the world. They can find out in real time the status of any E-Station with the product they want in stock. We also have a storage system combined with our E-Center to keep track of various information for our customers on their E-Station customers' buying habits."

The Internet also makes it handy to stock and repair E-Stations. Each E-Station can be programmed to send an alarm through the E-Center to a vendor who stocks and repairs the system. This function helps eliminate downtime.

Moving Ahead Via The Internet
While the vending machine is the most tangible aspect of the Zoom Systems' solution, Smith contends that his company is more Internet-based than vending-based. "We provide e-commerce vendors with an efficient way to sell their products to consumers who have an immediate need," he explains. "Shipping orders to the home or office can be expensive. There is no variable cost per transaction with our system. We offer our customers a cost-effective solution. Plus, we offer consumer buying information." Looking forward, Smith would like to see E-Stations be able to locate products for consumers at other E-Station nearby, if the machines they are using are out of that product. "Because we are on the Web, we can provide access to the locations of our stations, and possibly give customers a map to find a particular E-Station," Smith explains. "That technology is still a few years away."