Innovation lessons from a vending machine
June 13th, 2011
11:50 AM ET

Innovation lessons from a vending machine

Editor's Note: Jan Chipchase is Executive Creative Director of Global Insights at frog, a global innovation firm. He lives in China and works in frog's Shanghai studio - when he isn't conducting extensive research on consumer behaviors around the world. This post is part of the Global Innovation Showcase created by the New America Foundation and the Global Public Square.

By Jan Chipchase - Special to CNN

Want to find the next big idea? Here’s a counterintuitive way to start:

- First, acknowledge that America is a place where consumers often lag behind the rest of the world when it comes to the mass adoption of new technologies.

- Second, take a step back and look at what innovations have worked outside of the United States.

- Finally, consider how to bring these innovations to American audiences.

I’m not necessarily talking about “reverse” or “trickle-up” innovation - terms that are often used to describe inexpensive products created for low-income consumers in emerging markets that are later tweaked for America and other developed nations.

I’m taking a broader view and asking: What products and services work for the middle class in, say, Europe or Japan - or the middle class in Egypt, for that matter - that don’t exist in the United States?

Let me give you an example of the fruits of such thinking.

For the last dozen or so years, in many European cities and towns it has been possible to rent a movie at any time via vending machines.

Redbox, a company that saw its revenue grow 37.7% in the first quarter of 2011, adapted this idea to the United States. Then, it implemented a very American twist: on June 17, Redbox will start renting video games in more than 21,000 of their 27,000 vending machines in the United States.

Redbox’s real impact goes far further than merely renting out DVDs in the U.S. by borrowing a concept that has been around for some time in other parts of the world. They have introduced new forms of interaction into the American urban landscape, such as making it more acceptable to use touch screens to browse content in high-footfall, outdoor public spaces, such as 7/11 stores, where Redbox often places its rental kiosks.

And Redbox has not only introduced non-beverage/non-snack vending machine use to a new American demographic, but also offers online and mobile-phone reservations for rentals.

The company wisely marries the physical and digital worlds - thus updating both the retail vending machine and the online ordering experiences.

Check Out: More from the "Global Innovation Showcase" created by the New America Foundation and the Global Public Square.

Most important, the value proposition — cheap movies that cost only $1 a night for all DVDs, even for new releases, versus $4.99 on iTunes for a rental download - provides sufficient pull for customers to take out a credit card and swipe to authenticate (for rental pick-ups) and complete transactions.

Redbox’s parent company, Coinstar, which not-so-modestly pitches itself as “the world’s leading supplier of valuable services that make life easier for consumers” has reinvented the rental of tangible media.

While that may seem downright quaint and maybe even doomed in an age of instant downloads and video streaming on phones and tablets, data show that physical media still dominates how Americans consume their home entertainment, at least in terms of movies.

Read: Are we still an innovation nation?

The recently released (April 2011) “Entertainment Trends in America” report from market research firm NPD found that U.S. consumers spend 78 percent of their home video budgets on buying and renting physical DVD and Blu-Ray discs, including online and in-store retail purchases and rentals.

In comparison, 15 percent was spent on video subscription services, like Netflix (Redbox’s main rival), and pay-per-view, digital downloads (such as Apple’s iTunes), paid streaming, and video-on-demand purchases comprised the remaining 8 percent.

Sure, the need for tangible discs for movies and video games won’t last forever, and Redbox is following Netflix’s lead and is working on a video-streaming service, which will be subscription based.

But I ask you, entrepreneurs, innovators, students and consumers: how can a similar infrastructure of online and mobile reservations and self-serve kiosks support the sales or rentals of other tangible objects?

Read: Rebellion of an innovation mom.

Don’t think of the Redbox example as a model for vending machines, or even movie and video game rentals, but instead as an example of a smart platform through which to support a timely exchange of physical products. What value added-services might be introduced to add convenience in the United States that already work in other parts of the world? I'd love to hear your thoughts via comments below.

(In my next posts for the Global Innovation Showcase on CNN.com, I will take you around the world with me as I research how consumers use technology, both high and low, in areas ranging from Afghanistan to Thailand and beyond.

How is the concept of mobile money playing out in the Middle East? How do salespeople reach Chinese customers in the suburbs of Shanghai? How will these observations affect your own habits, behavior, businesses,  and lives, whether you’re located in New York or New Delhi? I’m looking forward to sharing these journeys here, and I hope that you will share yours with us, too.)

The views expressed in this article are solely those of Jan Chipchase.

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Topics: Innovation • Technology • United States

soundoff (13 Responses)
  1. j. von hettlingen

    No doubt it's convenient to rent a movie any time via a vending machine. I do think a shop with customers is more appealing. People nowadays are living more or less in a virtual world, lacking contact they become less and less sociable and friendly. Vending machines have their advantages but they don't substitue human warmth and promote relationships.

    June 13, 2011 at 1:06 pm | Reply
  2. SarahPalin

    When I get elected president, I'm going to put JOBS in a vending machine. That's my solution to the JOBS problem. Now I'm going to contact China to build me some JOBS vending machines. Isn't the GOP great!

    June 13, 2011 at 2:33 pm | Reply
  3. Anonymous Citizen

    Hey Twitter, give me one more character per post, thats all I really ask for for Xmas...

    Due to unforseen yet unavoidable circumstances, I have found myself in a semi-transient situation.

    Things I have lost recently: perfectly good pair of glasses, lots of clothing, 3 computers...

    ...Things I have gained recently: a set of golf balls, a new outlook on life, peace of mind...

    There are many places not far from civilization as we know it where internet access is *still* dial-up...

    ...why is this the case? we need our own private network backbone in this country...

    ...preferrably with slightly restricted access, particularly for, ahem, "tourists"...

    ...dont get me wrong, the net is great and all, its just that its old news...

    Anonymous Citizen writes...
    RE: all of the above

    Believe it or not, there are places right here in our own country where high-speed internet access is not as freely available as the open sky. That's where I've been lately. Been reliving my youth in the instant classic game Pirates... ...but with that I digress. Also been thinking about another classic, Elite. That one's well over 25 years old.

    Pirates Elite edition... that'd be a good stocking stuffer! Better than 1 extra byte from Twitter!

    The one thing I've learned over the years is that you have to stay on the correct timeline. We aren't. But we can get there. All we've gotta do is pull our collective heads out of our collective butts and figure out how to get there. It just takes some skillful planning and organizational teamwork and hopefully even a little bit of luck every now and then... ...some quality simulator time never did much harm either.

    Now I'm not trying to suggest we all get lost in some great new online game for a while, and there have been others I won't mention. I will say this... any good programmer knows that the fewer errors you have going into a project, the fewer bugs you will have coming out of one. Whether its a solo project or a team effort, it's all the same. And what's out there now, all three of the major players... it's all crap! If I had to pick one, I'd have to adopt Linux first, then work on picking through the discarded remains of Microsoft and Mac later. But I think I could do better than Linux too. It's all old-school. Time for a new style old school approach vector. I guess if I were playing one of the latest crazes it might be different, but... ...what do you see?

    and with that I digress... BTW: I'm my own spellchecker.

    June 13, 2011 at 8:58 pm | Reply
    • Anonymous Citizen

      All I have to say in response to this thread is, thank you McDonalds for providing free wi-fi. Good marketing strategy.

      June 13, 2011 at 9:06 pm | Reply
  4. Me

    Interesting concept... very true.

    BUT; the question should be addressed to FOREIGN "entrepreneurs, innovators, students and consumers"; because most Americans (I would guess 90% minimum) have never traveled/lived oversees :)

    This is another reason why US should re-structure its Immigration policies; as educated foreign people can bring ideas that we successful in their original countries; bringing Value and Jobs to America.

    June 15, 2011 at 5:41 pm | Reply
  5. Holly2463

    This is cool. Vending machine is nice. Specially for our generation now we all use already a computer. It's already Hitachi. So this is good.

    Elite Systems Services

    August 12, 2011 at 8:20 pm | Reply
  6. Gwendolyn1992

    Excellent! This is very helpful to others. Thank you for the blog.
    Elite Systems Services

    August 27, 2011 at 5:51 am | Reply
  7. Nicole Monk

    When the first vending machines started group of different vending machines occurred, reconstructed and more efficient I think vending machines are most seen in convenient store, streets etc.

    Elite Systems Services

    August 27, 2011 at 9:33 pm | Reply
  8. Claudia Kitchen

    Wow. This vending machine is really amazing. Nice information, valuable and excellent design, as share good stuff with good ideas and concepts, lots of great information and inspiration, both of which we all need, thanks for all the enthusiasm to offer such helpful information here. I'm sure this is really comfortable to sleep and 100% safety. I will check this out. Thanks.

    Elite Systems Services

    October 14, 2011 at 12:42 pm | Reply
  9. palmbeachvendingmachines

    Among all the distributors of Vending Machine Palm Beach Vending is one of the best producer of Vending Machines.

    January 18, 2014 at 4:13 am | Reply

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