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ZoomSystems |
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September 2, 2013 Issue |
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The Most Powerful Name In Corporate News and Information |
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As the Global Leader in the growing Automated Retail Industry with Delivery of a Product from a Manufacturer to the Consumer at an Unattended Point-of-Sale, ZoomSystems is becoming a New Distribution Channel for Retailers and Brands |
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Jack Lawrence
Jack holds a B.S. in
Business Administration from Georgetown University, plus an MBA from Rutgers
University and an MBA from Seton Hall University. ZoomSystems is the global leader in the growing automated retail industry. Founded in 2002 and headquartered in San Francisco, Calif., ZoomSystems develops and operates a valuable, turn-key, unattended point-of-sale solution for iconic brands and retailers in North America, Europe and Japan. Through its self-service, standalone satellite ZoomShop stores, in-store units and supporting technology platform, ZoomSystems delivers the product from the manufacturer to the consumer, helping brands increase their reach and improve their sales through a better consumer experience. Top brand and retail partners include Macy’s, Best Buy, Apple, Proactiv, Tracfone, Media-Saturn, Benefit Cosmetics and more. |
Automated Retail
ZoomSystems
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – September 2, 2013
CEOCFO: Mr. Lawrence, what is the concept at ZoomSystems? Mr. Lawrence: ZoomSystems develops and operates an automated retail platform for retailers and brands. Our global solutions include the hardware, software, and managed services to deliver a product from the manufacturer to the consumer at an unattended point-of-sale.
CEOCFO: Could you tell us about how the concept began, and where you are today? Mr. Lawrence: The company was founded in 2002, and it was started by our founder Gower Smith, who is from Australia. He was in the computer industry, and was working with HP and the printer cartridge business. He came upon an idea to make print cartridges available at the time in vending machines, so he developed a concept around having an unattended, automated retail system to dispense ink cartridges for home printers. He then took that concept to a much larger level, and he brought that to the US and started selling Apple iPods out of these ZoomShops along with other consumer electronics and then built the business from there.
CEOCFO: Which products might surprise people that are being sold through the automated retail? Mr. Lawrence: We know that things do very well when people recognize a brand such as BestBuy, Apple, Proactiv, and Macy's, and we just launched Benefit Cosmetics. We find that consumer electronics, cosmetics, or direct response products work well where it is limited in their offering to retail, but you can get them online or real-time at a ZoomShop. We know those work, and people are very familiar with what they want, especially now with people seeing things, having information online, and then being able to go buy them. Consumers are very informed, so it really works well for us. The other thing you would be surprised about is the price points. Out of our Macy's Apple machines, we sell iPads and iPad minis, so you are talking about $500-$600 items that are available to the consumer and a person can purchase it out of our ZoomShops.
CEOCFO: Are these in store or are these in other locations? Where are your machines typically? Mr. Lawrence: They are in both. We are in locations such as airports, malls, or travel plazas where this becomes a small format store in a new location for a retailer brand. We are becoming what they point to as part of their multi-channel strategy, where they would have a retail in-line store, a big box store, on-line store and now an automated retail store. The Automated Retail shops are unattended and a shopping-cart experience line on-line, but they actually deliver the product real time. The other place we operate the ZoomShops are in store, where the product category is very hard to manage because of theft or customer service. We have ZoomShops that are on shelves selling razor blades, as well as larger units that are selling Apple products in Macy's.
CEOCFO: Is this a direct sale or do you service and maintain the physical ZoomShop? Mr. Lawrence: I will use Macy's as an example. Macy's is the merchant of record, so our retailers and brands are actually the person or company selling the product to the consumer and they own the inventory. We manage the end to end systems, so we have integrated in to their systems. This ZoomShop, the automated retail shop, is actually a point of sale system on the Macy's transactions, inventory, and financial systems. In their case, you can use your Macy's card or a Macy's gift card, and when you purchase the transaction you get a Macy's receipt. It is pretty much an unattended point of sale system for Macy's. What our solution does is that we actually manage the inventory from the manufacturers all the way through to the ZoomShop, and then we integrate all of our software into the back end systems of the retailer or brand.
CEOCFO: Who fills the machine? Mr. Lawrence: We have replenishers that go out and fill the machines. We have service partners that are throughout the world and they get trained on servicing the units. We then put together demand forecasts and manage the inventory, and we have it shipped from third party warehouses or from our partner's warehouse right to a local servicer. They take up the package, they go to the ZoomShop, they open it up, they replenish it, and they track the units on our inventory. It is end to end system that we manage.
CEOCFO: Is it the superior technology that allows this all to go smoothly? Mr. Lawrence: What we have done over the last eleven years is that we have built that end to end system so that a brand that is big such as BestBuy, Proactiv, or Apple can trust that when they say they want to do a national roll out, we will manage that end to end solution. All of our systems have interfaces or APIs that connect into the retailers' financial systems, so that is the important part of what we do. Our relationships with all of our service partners is also important, so we have relationships with Fuji Film, third party warehouses, and payment providers. All of those relationships we interface with directly, so it is what we call the 360 solution for delivering an automated retail platform.
CEOCFO: Do companies typically advertise that these are available? Mr. Lawrence: We have locators, or in other words people go online and ask where they can get a product. It will show up that they can possibly get a product down the street at their local mall. In other cases, if you are in an airport where people are either waiting at the gate or walking through the airport, they would see the BestBuy express machine, which is a big blue machine that has recognizable BestBuy branding. They would go up and see what is available, and the signage around the ZoomShops are pretty compelling. We just launched Benefit Cosmetics two weeks ago in airports and it is a big pink bus. It is all about engaging with the consumer, making them aware it is there, and having well-known brands and customers that use the products ongoing is very valuable because they know what is there, what they want, and they come back again and again.
CEOCFO: What is the competitive landscape for Zoom? Are there many companies in the space? Mr. Lawrence: There are a number of start-ups that are building automated retail machines, which are very cool. There is some really great technology out there and they are definitely trying to compete with us. The Vigix technology, which we just acquired, was a company that was competing with us. They were going out to the same retailers and brands and saying that they had an automated retail solution for them. We see that growing, and where we have been fortunate is that we have very good investors that have been with us for a long time. We have been able to build that tend to end infrastructure to allow us to offer a broader service to our partners and also be able to talk to the major global brands in the world and say that we can deploy their product worldwide and in such a way that we can give them an end to end solution.
CEOCFO: How do you reach potential customers? Mr. Lawrence: Right now, many of them are coming to us in the sense that they see the ZoomShops out in the marketplace and they would like to understand exactly how they could build out their own network. We still go out to a number of different retailers and present our solutions to them because we are addressing a number of things in store, which three years ago we did not have. We had the big stand alone units that you see in airports in malls, but now we are designing with new innovative technology small units that address a different need for a retailer. In the example I was using with razor blades, right now the razor cartridges that you go to a store and try to buy are all locked up or put behind the counter. We have a solution now where we have a smaller ZoomShop that fits right on the shelf. You can go up, touch the screen, pick your razor blades, select them, pay with a credit card, and it dispenses the product right there. Those retailers we are now going up to and saying that we have the software, hardware, and the systems to deliver that product to the consumer. Now we have an opportunity to grow the company with an in-store offering to the retailers.
CEOCFO: Are you opening in the US or North America at the present? Mr. Lawrence: We operate across all of North America, and we operate in Europe as well as Japan.
CEOCFO: Do you see additional countries coming on board? Mr. Lawrence: Yes, in fact we are launching two new countries this Fall and then we are launching another six next year.
CEOCFO: What went in to the decision of where to be located? Mr. Lawrence: Our global partners wanted us to go there, so we were able to go in to a particular new country with two or three concepts being offered at once. That put an infrastructure in place and immediately had multiple customers to fund it as well as to set it up.
CEOCFO: Is there an issue with security? Mr. Lawrence: From a standpoint of product theft, our supply chain is very automated and there are checks at each point where the products are delivered. Anywhere from the product arriving to the warehouse, to the product getting picked, packed, and shipped to the servicer. That servicer then has a responsibility of placing units into the actual automated retail ZoomShop. At that point in time, it is a closed system. The units are sold through, we track the sell-through, and then we place replenishment orders back to our system so that closed loop is very valuable. Our theft percentage is very low and it is far below the national average for a retailer. The second part of our security addresses credit and gift card fraud. Because we have an automated system where we can track credit cards, we preauthorize the credit card. We have fraud parameters where we track when a credit card is used twice or we can do additional security checks where we limit the amount of product sold. Also, a lot of the locations are in airports and malls -which is high security. We have very few break-ins because of these high-traffic, secure locations.
CEOCFO: What is the revenue model for you? Mr. Lawrence: It has three components. We have an up front development fee which sets up the retailer, integrates our platform into their supply chain and financial systems, tests all of the products, sets up the planogram, the consumer offering, and the look and feel of the shop itself. There is then there is a purchase of the hardware, i.e., the ZoomShop. We then provide a long-term end to end service to manage the supply chain, software upgrades, merchandise and product offering. This is effectively a small format store and point of sale system on the retailer’s store network.
CEOCFO: Do you see additional acquisitions? Mr. Lawrence: Potentially. I think that there is some very good technology, but to be able to grow and put the infrastructure in place is a significant hurdle for many of these smaller companies. We think that they would be better served to work with us, and in fact we have a number of our competitors that also provide this product. It is a case where if it makes more sense to have them as a part of Zoom versus just working with Zoom or competing, we certainly will take that as an opportunity.
CEOCFO: How is business these days? Mr. Lawrence: Business is very good. It is growing, and as I mentioned it is growing internationally but also domestically. We just launched Benefit Cosmetics, and we are launching three new concepts in the next four months. We feel very good about being able to offer a retailer a complete end to end system, so we are out now working with our locations partners and others securing a new distribution channel for these retailers.
CEOCFO: Why should people in the business and investment community pay attention to ZoomSystems?
Mr. Lawrence:
ZoomSystems is becoming
a new distribution channel for all retailers and brands worldwide. The
ability to have an unattended sale is very cost-effective, so we are the
most productive 28 square feet of store space that people have seen and we
believe that we can deliver the economic model and technology for our
partners that make a lot of sense for them and helps them sell more products
in more places. |
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“ZoomSystems is becoming a new distribution channel for all retailers and brands worldwide. The ability to have an unattended sale is very cost-effective, so we are the most productive 28 square feet of store space that people have seen and we believe that we can deliver the economic model and technology for our partners that make a lot of sense for them and helps them sell more products in more places.”- Jack Lawrence |
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