Home shim clear shim
WhatsHot Companies News Products Features Help
shim

Reprinted from National Petroleum News


DIGITAL KIOSKS
ARRIVE

The convenience and petroleum retailing industry begins to explore digital kiosks as brand enhancement and profit centers.

By Keith Reid

Digital kiosks have been around for a number of years, typically providing information services and customer surveys in a variety of applications. With the rise of the Internet, and increased Internet connectivity at retail sites nationwide, digital kiosks are seen as providing new opportunities to add profit centers and improve customer service. Radiant Systems, Inc., headquartered in Alpharetta, Ga., believes that digital kiosks are going to become commonplace in the retail environment, and that 75 percent to 85 percent of all retailers will have a kiosk integrated into their bricks-and-mortar sites by 2003.

A Radiant kiosk helping speed up the order process in a foodservice application.

Supermarkets, movie theater chains and the hospitality industry have received much of the early attention. Now, convenience stores and petroleum retailers are being looked at as potential benefactors of this technology. MEI, the leading provider of cash payment systems for the kiosk industry, envisions a bright future for kiosks in the c-store environment.

"Kiosks are a natural revenue-generator for the c-store industry because they enable customers to get products and services more quickly and efficiently," said Otto Lohse, industry market manager, retail cash management for MEI. "They also help generate traffic and attract new customers without the expense of additional personnel."

Virtually any online application that can be delivered to the home or office PC can be ported to kiosk hardware with an Internet connection. Potential offerings include e-tickets for entertainment and travel, Web shopping and even Web surfing and e-mail access, either for a nominal fee or as a free service.

In a similar, but decidedly separate application, digital kiosks can facilitate a variety of site-specific functions, such as ordering food at a quick-serve restaurant, facilitating a car wash, taking care of utility bill payment in areas where this is common, and purchasing lottery tickets. With this approach, digital kiosks do not unnecessarily create new profit centers, but rather lower the overhead associated with existing profit centers while hopefully adding greater customer convenience.

A hybrid approach where the kiosk becomes an ATM, or the ATM becomes a kiosk (depending on the developer's traditional business) is also being explored. In addition to dispensing cash, the ATM could also dispense concert tickets or discount coupons for in-store items and anything else offered by a digital kiosk (see article on page 30 for more information). Although they will not be covered in this article, specialty kiosks that facilitate such activities as photo processing and change counting/cash redemption are also being developed as drop-in profit centers. And self-checkout technologies, which also tend to fall into the kiosk category, will be covered in next month's NPN.

While many of these approaches promise value to both customers and retailers, they are all in their infancy -- particularly where the convenience channel is concerned. Some approaches will undoubtedly work better than others, and others may work well but not in the c-store environment.

BP Connect tests the waters

London-based British Petroleum, which is undergoing some aggressive re-imaging at its sites throughout the world, has let it be known that BP will take a leading position on technology.

The BP Connect site has been designed as a hub where busy motorists can stay connected with the world though Internet access to information both at the dispensers and in the shop.

The fuel dispensers are Internet-enabled to provide customers with traffic reports, weather reports, news headlines, special store promotions and general information about BP -- particularly its environmental-focus message. The information is updated every 15 minutes so that it remains fresh and useful.

From the dispenser kiosk, customers can also order food and drink combinations at the dispenser from BP Connect's QSR, The Wild Bean Café, while they fill their tanks. To get around the fulfillment and time issues associated with this concept in previous efforts, the menu is limited to selected morning and afternoon offers. While the external design is universal, BP works with Fort Wayne, Ind.-based Tokheim and Austin, Texas-based Wayne Division, Dresser, Inc. to provide units featuring each company's Internet-linked internal electronics.

A Netyou Internet services and telephony kiosk, typically found in travel centers.

For the customer who is seeking more information than that provided at the pump, the BP Connect site is equipped with two Internet kiosks inside the store. While the dispenser-based and in-store kiosks offer some of the same information, there are differences. In order to avoid slowing traffic through the islands, the material presented at the dispenser tends to be more limited than that found inside the store. For example, the dispenser may only display news headlines, while the store kiosk provides access to the full article. Likewise, the store kiosk provides a traffic map with high congestion routes highlighted in red. The in-store kiosks also offer the most popular service, which is step-by-step directions to a location that can be printed out with a map. The in-store kiosk facilitates the traditional kiosk roles of providing information, with news about BP's environmental initiatives and a survey for the customer to rate the experience, note any problems or provide comments.

BP works with a variety of partners to provide these services, including Accu-Weather (weather), Traffic Station (traffic), Vicinity (directions) and Yellow Bricks (news).

There are currently kiosks at 20 BP Connect sites in the United States, with sites in the Cleveland area, Indianapolis, Atlanta and one in suburban Chicago. Of these, seven have both dispenser and in-store kiosks, while 13 have the in-store kiosks only. The plan is to have 300 BP Connects deployed by the end of the year. All of the current stores are company-operated, though BP is considering ways to offer this design to other members of its network.

"So far, the reaction has been positive," said Phil Bartholomae, innovation manager for BP Global Retail. "There are generally two types of customers using this technology. The first are the technically adverse who are not interested in what the kiosks have to offer. From the beginning, we were concerned about creating an offer that would drive these customers away. We've avoided that, and there's no Web interaction required to do a gas transaction. The second group, which has been about 30 percent of our customers, is more than willing to take advantage of what the kiosks have to offer."


BP Connect's new look, in this case a site in the United Kingdom.

BP Connect's U.S. digital offerings differ somewhat from those being explored at the U.K. sites, which lack the dispenser kiosks but provide added kiosk functionality inside the shop.

Two kiosk concepts, eKiosk and Giftshop, are offered in the U.K. store. The eKiosk is used as a Web surfing and e-mail platform. The Giftshop provides access to Internet-based retail partners that deliver a variety of gift items to the recipient's home after the order is placed online. Each new BP Connect store will typically have two eKiosks and one Giftshop kiosk.

By inserting 1 pound into eKiosk, customers receive 10 minutes worth of Internet access to browse, retrieve and send electronic and video mails. Prepaid cards can also be used at the kiosks, and BP is planning to give away 50,000 cards that will give half an hour of Internet access time free of charge.

"A pound for 10 minutes is the right pitch for the right market," said Drew Davy, BP Connect's U.K. e-business manager. "Business people are a core part of our business and our pricing is highly acceptable for the value they receive from the service. Accessing the Web at an Internet cafe can be quite cheap at non-peak times, but that's hardly practical for the mobile professional. In some hotels, a pound will only get you five minutes, which is quite expensive."

While the customer can browse with some freedom, a content filter keeps users from accessing material that would generally be considered offensive. This helps protect BP's image, and should not pose any significant inconvenience for the target user taking advantage of this service.

The separate Giftshop kiosks allow customers to select from a limited variety of on-route gift choices centered on alcohol, chocolate and flowers. For a more adventurous gift idea, customers can find out more about a local balloon trip. If the customer decides to buy the product or service, the kiosk will ask for address details and the chosen date of delivery. This information can be typed in using the onscreen keyboard. Swiping a credit or debit card can process the payment.

"They use the touchscreen kiosk to place the order and there is a limited but good range of gifts to choose from, so that they can get their task accomplished and get on the road," Davy said. "I like to say that the concept is designed for the 'forgotten or feel guilty' occasion."

Differences in the general state of Internet connectivity, and the nature of the business professional and commuter customers, tend to make Web/e-mail access, and perhaps general e-commerce, less desirable in the U.S. market.

"The fundamental difference is the needs of the customer in the United States verses the customer in the United Kingdom," said Bartholomae. "The U.S. customer is typically a busy commuter who most likely has Internet connectivity at home or work. A high percentage of the market will not be people who hang out in the c-store for any period of time surfing or checking e-mail. This is not to say that sites on a turnpike motorway will not find these services useful, but it is not an offer BP has today in the United States. The same holds true for e-commerce applications such as the Giftshop offer. The kiosks have card readers built-in, but we're not doing it at this point."

BP's position on surfing access is supported by John Neumann, marketing manager for Orlando, Fla.-based Netyou Computer Communication Corporation, a company that provides Internet connectivity and telephony services for travelers through the kiosk platform. Netyou offers Web phone, Internet access and e-mail at tourist and traffic locations such as truck stops and resorts.

Radiant's Beacon kiosk offers retailers a small footprint.

"Any model based on selling Internet access to a customer in a c-store is probably not going to do that well," said Neumann. "A person in a c-store is not going to want to pay 25 cents a minute to access the Internet. These tend to be local customers who stop in for something to eat or drink, and fill up on gas. Internet access has to be pretty low on the list of things they want to do in the store. If they want Internet access, they likely just turn on their computer when they get home. However, if they are traveling it's a different story. The c-store chains that have shown interest in what we have to offer, see it as being potentially useful in their sites located near interstates where there are a lot of traveling customers who will pay to access the Internet when they're on the road."

Neumann noted that a successful advertising-based model, where Internet access could be offered free to the customer, with an outside revenue source paying the bill, could make this service more acceptable in the c-store environment. This could be particularly useful in underdeveloped areas.

Old Greenwich, Conn.-based Tosco is currently exploring offering its customers advanced Web access. Although the company is tight-lipped about the current state of its activities while the merger with Phillips Petroleum Company is being developed, it planned to offer customers high-speed Internet access at a significant portion of the 6,000-plus Circle K store network. C-store shoppers will be able to pay with cash (using a MEI cash acceptor) or credit card. Access would include e-mail, online shopping, local information and long distance telephone services. Test marketing is already underway at several Circle K stores located in Phoenix, where the Internet service is currently offered free to customers.

Advertising and e-commerce

An offer such as movie tickets or redeemable in-store coupons may very well justify the floor or wall space used by a stand-alone kiosk, but it's far more of a reach when an offer such as airline tickets is proposed. All of these approaches still require far more research and testing before they are individually validated as a profitable addition to the c-store/petroleum retailing environment. In the end, the transaction volume and fee scale have to be sufficient to replace any traditional store products pushed out by the kiosk's store footprint.

Seemingly more on target, and with somewhat more validation to date, are direct marketing coupon applications that let the customer decide if they want a nickel off a can of soda in the store by simply touching the screen and receiving a printed coupon.

San Jose, Calif.-based Ten Square launched its content network (using both dispenser-based and in-store kiosks) with a couponing application, where coupons are generated at the pump or in-store kiosk for store items, cross-merchandising promotions with local partners, and promotions supported by national advertisers. In addition, incremental revenues are generated just by exposing the customer to the offer -- whether or not a coupon is redeemed. While Ten Square's coupon application has been well received by the retailers who have tested it, and the company continues to forge ahead bringing new sites online in a variety of cities, the program has seen slower expansion than expected. To some extent, it's cited as a "chicken and egg" scenario.

A considerable investment is required to get Internet-ready at the pump or in the store, which can be a tough sell in today's competitive environment. Marketers generally want to see a concept fully proven in the marketplace before they spend the money bringing it to their sites. Conversely, proof of the concept becomes stronger as more retailers adopt the program. To help overcome this bottleneck, Greensboro, N.C.-based Marconi Commerce Systems has developed its XMS™ system that will allow retailers to inexpensively add an Internet-enabled display to their existing H dispensers and G-SITE point-of-sale. This should make the Ten Square network more accessible to a larger number of retailers and increase the installed base.

BP Connect's Internet-enabled dispenser.

National advertisers may also be slow in realizing the opportunities present with the content network marketing approach. As the network ramps up in terms of number of sites it will have a more compelling case to offer national advertisers. The .com bust has hardly encouraged risk taking in this area.

Norfolk, Va.-based Outsite Networks, Inc. is also looking to provide retailers with similar functionality at the dispenser (promotions and couponing), though with more of a do-it-yourself format for marketers to create their own promotions while adding a supporting CNN or Weather Channel feed. The Outsite approach is centered on a loyalty program approach as well, and now incorporates RFID for customer identification. While this strategy eliminates the issues associated with an outside content network and national advertising arrangements, it does require the marketer to be more involved in the content development and delivery process. Given the nature of independent petroleum marketers, this may not be considered a bad thing.

Meeting needs
in the store

With all the past hype, and continuing confusion over how e-commerce will shake out, some companies are concentrating on providing in-store kiosks that take care of a variety of immediate needs. Radiant sees a primary role for kiosks in supporting existing tasks that tend to be time-intensive for employees and less convenient for customers.

In general, these digital kiosks facilitate a variety of tasks that would otherwise require human intervention. Tasks include ordering food at a QSR (as realized at some BP Connect sites) or paying utility bills in states like Florida, Texas, and California where this is a common phenomenon. In fact, the retail bill payment transaction volume in Houston alone can top 1.5 million.

Dave Ritchie, Radiant's vice president of sales, computer products, noted that in today's conservative industry environment, selling a concept to retailers that does not provide a clear return on investment when compared to other products like drinks and snacks, is a difficult proposition.

"A kiosk can offer a variety of services such as venue ticketing, store merchandise sales, deli ordering, directions, weather and news, and employee-related applications like multimedia training and access to personal human resources records," said Ritchie. "Do retailers want to provide a service like weather, where the return on investment can be hard to gauge, or they want something that provides a more solid ROI like selling merchandise or eliminating the line in a customer queue?"

However, as with anything else, kiosks will not be successful unless they are placed in a good location and promoted.

"How the retailer defines success is critical," said Ritchie. "If someone says they just want an 'e-presence' they are never going to be happy -- that is not a goal. A merchant can get a kiosk and put it in a corner and forget about it, and not get much in return. Or, they can place it by the coffee center and use it to up-sell, reduce a queue and take customer satisfaction surveys. They will get out of a kiosk what they put into it."

Reprinted from National Petroleum News



shim


WhatsHot Companies News Products Features Help
home shim clear shim

© Copyright 2001 and 2000 NetWorld Alliance


navhome navhome

Home | What's Hot | Companies  | News | Products |  Features | Help


>