Jun 26, 2020

Eduardo Alvarez was quick to realize how a retail kiosk serves a customer need. Developing a product and a business model to meet that need has been a gradual learning process. Transparent containers let customers view available inventory in MagNet Analytics kiosks. June 26, 2020 Editor's note: This is part two in a two-part series on Magnet Analytics. Eduardo Alvarez was one of several entrepreneurs to develop a movie rental kiosk around the time Redbox launched in 2003. As everyone now knows, Redbox emerged the winner. Eduardo Alvarez has learned retail kiosks one step at a time. The lesson wasn't lost on Alvarez, who realized the importance of the business model that Redbox employed: the company took full ownership of every aspect of the brand. After launching his own kiosk development company, Vigix, in 2006, Alvarez learned even more about retail kiosks partnering with a variety of consumer brands, as described in part one of this two-part series. Vigix grew over the next few years, and in 2013 the company reached what appeared to be a turning point when ZoomSystems, which operated Best Buy Express and Proactive skin care kiosks, bought Vigix. "They approached us to use our technology for a specific application," Alvarez said. ZoomSystems wanted Vigix to develop a kiosk that could fit on a retail shelf to dispense Gillette razor blades. "The whole idea was to make the kiosk very small so that you can put it in high traffic locations that are hard to get to. "  Plans change In 2015, however, ZoomSystems declared bankruptcy. Alvarez then launched his second company, MagNet Analytics. At this point, Alvarez had learned how to build a kiosk that was easy to replenish, which made it easy for independent contractors to service. For the customer's benefit, the inventory container is also transparent. "We kept the kiosk form factor with the advantage of dispensing products in a way that people would immediately realize that machine had product inside," he said. A multi-level merchandiser The MagNet Analytics kiosk is a multi-level merchandiser. The MagNet Analytics' kiosk is a vertical, multi-level merchandiser with angular shapes that takes up no more than 3.5 square feet of floor space. The unit's base — made from stainless steel, carbon steel, aluminum and Plexiglas — displays rows of merchandise, while a touchscreen covers the top half of the base where the customer can browse inventory and select an item for purchase. A horizontal section above the base holds an additional set of show units of merchandise. At the top of the unit, a triangular prism consisting of three screens that play remotely controlled video loops promote the products contained in the kiosk. Using predictive analytics, the service module automatically notifies the service person when to deliver a new container so that the kiosk never runs out of product. Pilots completed MagNet Analytics has deployed 20 pilots in the past three years, having tested kiosks in partnership with McDonald's, Disney, Delaware North sports venues, Airmall and various property management companies. Mophie branded battery charger kiosks deployed in train stations have been the most successful so far. One reason is that the units are in a location that is not designed for shopping but where people might have a need for the product. Not your typical shopping experience "They need a very convenient way to get the product, and that is where we shine, because the kiosk is very quick," Alavarez said. "That (location) is a very different mindset from people that are shopping (in a mall). "  When shopping in a mall, people want to touch the products. There are presently two Mophie kiosks at Amtrak stations, which are above ground. The subway stations were not successful, which Alvarez attributes to the inhospitable nature of subways and the tendency for kiosks to get dirty. Fund raising continues The goal is now to raise funds to manufacture kiosks and deploy Mophie kiosks for personal electronics and chargers in locations like convention centers and train stations that are not designed for retail. While the Mophie kiosk is branded, Alvarez can also sell other brands in the kiosk, such as Marley branded headphones. He also plans to sell Magnet branded chargers and headphones. Retail prices will range from $35 to $150. "We are constantly open to different categories; this (personal electronics) is just the first one," he said. "The platform lends itself for an infinite number of categories." There are three ways Alvarez partners with locations. One is charging them rent on a fixed monthly basis or through revenue sharing. To date, most contracts are on a fixed monthly basis. Going forward, he thinks revenue sharing gives more flexibility to locations. By the numbers Based on pilots, one Mophie kiosk can generate $3,500 in monthly product sales, yielding $1,325 in profit taking into account cost of goods, rent, capital amortization, replenishment costs, repairs, Internet connectivity and credit card fees. Alvarez's plan is to expand from 350 kiosks to 1,000 in the next year, reaching 10,000 kiosks in years five through eight. The company has raised $2 million from investors and is working on another $2.2 million from WeFunder. Alvarez was quick to realize how a retail kiosk serves a customer need. Developing a product and a business model to meet that need has been a gradual learning process. Images courtesy of MagNet Analytics.