Photo: The Sock Spot
Can an e-tail startup establish a physical presence using hi-tech vending units?
The Sock Spot, an online retailer of novelty socks, is looking to broaden its business prospects by moving into physical retail via “automated retail units” (AKA vending machines).
The e-tailer is testing the vending machines at Westfield San Francisco Centre. The first unit to be located at the facility is at the entrance of the concourse level at the mall. It features 40 pairs of socks curated for customers in the San Francisco Bay area.
Ben Williams, CEO of The Sock Spot, called the vending units “an evolution” in retail that enables a small company such as his “to expand the reach of our brand, deliver a unique, online-esque experience to brick and mortar, and use our wealth of digital knowledge to specialize the assortment.”
The machines, Mr. Williams said, make use of touchscreen technology and include an add-to-cart feature where customers can purchase more than one pair of socks at a time. The machines are cashless accepting mobile payments and credit cards as forms of payment.
“As we proceed, the machine is going to keep evolving; adapting both its assortment and its interface to fit the people around it and offer a truly unique and interactive experience,” he said.
Sock Spot’s Williams sees vending units as a way for his company to expand its physical presence in a significant way. The goal, he said, is to create “a single seamless experience” between the e-tailer’s shopping site and the vending units.
Discussion Questions
DISCUSSION QUESTIONS: Do you see hi-tech vending units as a good way for digital brands to establish physical touchpoints without the investments associated with pop-ups or opening stores? What do you see as the upside and limits of this approach for a niche business such as The Sock Spot?
Poll
BrainTrust
David Weinand
Chief Customer Officer, Incisiv
Ananda Chakravarty
Vice President, Research at IDC
If nobody told me that vending machines for e-tail-only brands were out on display, I probably would not find out. However, social media has a way to spread the word around to younger generations and, therefore, may facilitate the publicity required to use the vending machines. it’s akin to “what if they threw a part and nobody came?”
Vending machines are a good way for start-up online retailers to “dip their toes” in physical retail. It is a good way to get regional product interest to guide assortments. In addition to mall entrances or hallways, airports, train stations, college campus and other venues with high traffic would be prime locations for vending machines.
While it won’t be a huge boost to revenues, it is a good start.
While I do see the concept as a good way to achieve branding and marketing – I don’t know how much incremental revenue these drive. Most of us spend a lot of time in airports where many brands have implemented hi-tech vending units. Best Buy has their vending units and I’ve seen several cosmetics companies with units. I can honestly say I’ve never once seen anyone using them. I used Best Buy’s once to buy headphones and it was a good experience. I notice the brands, which is good, but I don’t see a lot of use.
This is not a new concept. Companies have tried vending machines for products in the past, often in the mobile/telecoms business. However, for an e-tailer the objective of opening brick and mortar stores is to get that vital connection with the customer, to build the brand and develop the touch point with the customer. A vending machine is not ideally suited or capable for this objective. If all they are doing is trying to get more coverage, then fine. But one would hope that their online presence would be the best way to do this. If they are just looking to pick up sales from people in the mall shopping for other things then great, I’m sure it will give them sales. Will it enhance the brand? I very much doubt it and the supply chain costs to replenish a small vending unit can be very high indeed, making it less or not-at-all profitable.
The advantages digital brands get from a physical presence are legion — among the big ones are that customers get to touch and handle product, store help to guide and answer questions, AND the constant reminder of physical presence.
Hi-tech vending machines offer a physical presence and opportunity to buy. So they cannot replace the values of a retail presence.
There will be some limited ways they succeed — and perhaps Sock Spot will be it. But rather than introducing people to their wares (I need to touch/feel socks to judge their quality) they will be a quick purchase opportunity for those who already know the brand.
I’m not impressed. But it will work in a few cases.
The U.S. has lagged much of the world in automated merchandising for many years. It is mainly a matter of getting shoppers acclimated to an experience that goes beyond single serve drinks and snacks. There are some category characteristics that make some more suitable than others. Socks will work better than chandeliers for obvious reasons. But beyond the physical, reasons focus on comfort involvement in the category first and familiarity with the brand being purchased second. Companies like Redbox had both physical advantages (compact size and durability of DVDs) and customer familiarity (Die Hard II is Die Hard II — period) on their side.
The problem with vending machines is that they are a convenience play. They cater to items customers need in the moment, such as the headphones example earlier. For brand building, pop-ups with human presence is a much stronger play. Even digital signage will be just as effective. Cost is low, but so is return for vending.
So, not a great investment unless your products fit squarely in the convenience category. If anything, the branding value will be negligible. The exception would be high traffic spots with limited volume and long wait times, e.g. transportation hubs. Therefore, the scalability will be limited — you won’t be able to put digital vending on every corner and expect returns. And they certainly won’t replace pop-ups or stores.
Vending machines are hardly a new concept — even in the context of brands making a push into physical. I think vending machines can be a great way to make retail part of the customer’s journey, rather than the destination, because of their flexibility. Think of how many journeys you make every day, how many places you go that aren’t stores, how many places you pass through where you’re not shopping — bus stops, train stations, parks, sports grounds, concert venues, cinemas, swimming pools…. These can all be turned into sales spots for retailers. For brands starting out they can also be a more cost effective option than a full store or pop-up to test the market. I definitely think there’s an opportunity here. Maybe they won’t bring masses of revenue in, but they serve as another touchpoint for brand awareness.
Vending machines have been around for a while and this is a good way to test the brand attractiveness. Even if the customer doesn’t buy from the vending machine it would be good awareness for online ordering later. Personally the location choice by the door is kind of strange for me because you have a lot of walk through traffic but how many people like to stand in the doorway to browse?
I’m well familiar with that particular spot — it’s the main entrance to the mall (with the Muni and BART entrances directly behind it in the picture) — and my prediction is either (1) people will be too busy going by the machine to use it, or (2) they WILL use it and it will be the source of added congestion to an already badly congested spot.
So we have one basic problem — finding locations that have traffic, but not too much of it. But beyond that, we have the basic issue that people aren’t likely to buy something from a vending machine they’ve never heard of, and the machine itself offers little opportunity to make an impression. So as an element in a marketing campaign, perhaps; as the sole point of distribution: no.