One Year Ago: E-tail Invades the Real World

Although the Internet created cyberspace, which does not exist in a physical sense, the Web is entering the real world in a new way.

Retailers are increasingly bringing the Internet into brick-and-mortar stores in the form of Web kiosks that allow customers to shop online at the store's e-tail counterpart.

For example, kiosks are already in the works or operating at Barnes & Noble, Kmart and Staples.

"It wouldn't surprise me if in five years a number of online merchants used kiosks to expand their presence," IDC analyst Joe Williamson told the E-Commerce Times.

Multichannel retailers are finding that kiosks are a cost-effective way for retailers to expand the number of products available and avert lost sales due to out-of-stock merchandise.

Moreover, a positive experience buying online at an in-store kiosk can give reluctant Web users the push they need to begin doing more shopping online.

"Retailers are really starting to understand that leveraging Web technology can be beneficial," Yankee Group analyst Christine Loeber told the E-Commerce Times.

Better Yet

The trick to successfully implementing a kiosk strategy, according to Williamson, is to make ordering through an in-store kiosk more convenient than the alternative of asking a salesperson to place the order, or going to another retailer.

Even so, Loeber says that retailers should provide consumers with customer service to guide them through the e-tail experience.

Although it is critical to ensure that the kiosks are strategically placed within the store and user-friendly, another important step toward boosting consumer adoption is to develop customized kiosks that provide more information than the company's standard Web site.

Kiosks could also be used as a source of additional product information, according to Williamson, who commented that "the average kiosk has more and better information than the average salesperson."

Optional Benefits

Although the Web savvy may find it silly to use a kiosk at a retailer when they could go home, log on and purchase an item from any variety of merchants, Internet kiosks do have some advantages over online shopping.

Loeber pointed out that consumers still want to see and touch merchandise. Offering an online kiosk lets retailers keep smaller quantities of merchandise in stock to serve that purpose, while still being able to provide consumers access to products in a variety of colors and sizes.

Alos, having a kiosk in a store that sells a number of large and bulky items -- such as the office furniture and machinery offered at Staples -- gives consumers the opportunity to see and touch the merchandise they are interested in, and then order it online.

A choice of payment methods is another bonus to ordering via an in-store Web kiosk. While most orders placed online from home require consumers to pay with a credit card, kiosks located in retail outlets often let buyers choose to pay at the register with cash or a check.

Pure Plays Out

Despite the obvious benefits of kiosks, Loeber and Williamson agreed that kiosks from pure-play Internet sellers, such as Amazon.com, are probably not on the horizon.

Loeber pointed out that consumers would not take kindly to being told that the item they purchased through an Amazon kiosk has to be returned via the mail for a refund.

Although Web shoppers today are used to being told that they have to return their Internet purchases through the mail, in five years that approach will be "completely unacceptable" to consumers, according to Williamson.

If Amazon did choose to venture into the real world via kiosks, Williamson said the e-tailer could structure deals with independent retailers similar to the affiliate programs currently in place. For example, Amazon could leverage its existing partnership with Toys 'R' Us and put kiosks offering an expanded selection of toys and children's books in the toy seller's brick-and-mortar outlets.

On the Back Side

Kiosks may be the most visible sign that the Web is invading the retail world, but they are not the only way retailers are using Internet technology to improve their bottom line.

In January, for example, Maytag, in conjunction with Kodak and e-Vend.net, rolled out a camera and film vending machine that uses the Web to process credit card payment information.

"The Internet provides a cheap way for vendors to do these kinds of things [such as process payments]," Williamson said. The analyst predicts there will be an increase in the use of the Internet for back-end transaction processing.

Feeling Insecure

Although consumers may not even be aware that such vending machines are using the Internet to process payments, those that are aware may end up with security and privacy concerns.

"A lot of the security concerns are perceptions created by the media," Loeber said.

However, Loeber added that "as long as there are no big plane crashes of online security that make the press," consumers will gain acceptance of Internet payment processing.

What the Future Holds

One possible side effect of the kiosk phenomenon, according to Williamson, is that retailers will build smaller stores and rely on kiosks to give customer access to a wide variety of products.

The real test, according to both Williamson and Loeber, is customer acceptance.

"If they like [kiosks], we'll see them everywhere," Williamson said.