Interactive Kiosks Have Big Future

Online Specialty Goods Market Growing

Small Business Electronic Banking Moving To Internet

Interactive Kiosks Have Big Future

A report out from Frost & Sullivan (F&S) predicts that interactive kiosks based around Internet and allied technologies will soon become commonplace in public places.

According to F&S, its ongoing research into the market for its "US Interactive Kiosks Components Market" service, points to kiosks becoming user-friendly in everyday dilemmas.

F&S' report argues that kiosks are convenient for end users and vendors alike. They provide the end user with ease in accessing useful information, while they benefit the vendor by providing the ability to increase customer service and decrease labor costs.

Generosa Litton, an F&S' analyst working on the research, said that kiosks have advanced from being boxy information machines to elegant and attractive self-service stations. Kiosks, she noted, generated revenues totaling $213 million in 1998, a 32 percent increase over the revenues from 1997.

According to Litton, the ability of kiosks to leverage a company's Internet investments into a strategically located public access device, as well as the success of ATMs (automated teller machines) and self service gas stations have provided a market model for interactive kiosks.

"Although the interactive kiosk market is still in the development stage, rapid market growth is not projected until the year 2002 because consumers lack awareness of the benefits of interactive kiosks. Also high prices hinder market expansion, and poor designs lead to project cancellations," she said.

Kiosk application software, meanwhile, allows clients to obtain information or perform a transactions with the use of a touchscreen interface. Several software market participants of various sizes customize software for kiosks, allowing variability between units. The use touchscreens has forced touchscreen manufacturers to improve clarity, reliability, and durability, F&S says.

According to the report released at the end of April, kiosk enclosures experienced a 21 percent revenue growth from 1997 to 1998, and are forecast to continue growth into 2005.

The growth of enclosures can be attributed to increasing acceptance of self-service applications, outsourcing opportunities, and a slimmer form factor.

Frost & Sullivan's Web site is at http://www.frost.com.

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Online sales of premium specialty goods like gourmet foods, cosmetics and jewelry are expected to rise ten-fold in 1999 to an average of $241,000 per Web retailer, according to a new study by market research firm ActivMedia.

The majority of online specialty goods sites are already operating at a profit, ActivMedia found. This is in part because the products sold cannot be easily substituted, said Harold Wolhandler, vice president of research at ActivMedia.

"This particular niche has been thriving because they are protected a bit from the competition. It gives them a leg up on turning a profit, expanding rapidly and being willing to invest in Web sites," Wolhandler said.

The study was based on a random survey of 178 premium specialty goods retailers on the Web. ActivMedia also examined the Web sites of such specialty retailers as Clinique, Virtual Vineyards, Levi Strauss and Eddie Bauer. Such sites differ markedly from Web retailers like Wal-mart and Amazon.com in that they have little interest in offering their products at a discount, Wolhandler said. "They don't want to be in competition with themselves."

The study also found that two in five visitors to specialty online stores are new users, which ActivMedia believes contradicts some views that the market for specialty goods will taper off as the demographic profiles of Internet users broaden.

The average annual online sales of specialty goods is expected to reach about $833,000 per retailer in 2000, Wolhandler said.

ActivMedia estimates that 51 percent of these specialty goods sites will invest between $1,000 and $10,000 in their sites this year, with 12.5 percent planning on investing over $100,000 on their sites. About 23 percent of the sites will invest less than $1,000, the study found.

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The current rush of consumers hopping on to the Web to do their online banking will soon give rise to a new generation of business users doing their business banking on the Net, according to a report just out from Meridien Research.

In fact, the firm says, such will be the rise of interest in online business banking that within five years the Internet will be the dominant electronic channel for small business banking.

According to the report, entitled "Internet Banking For Small Business," the move online will come about because the support requirements for small business - i.e. relationship managers and branches – have been seen as too expensive for this face-to-face market.

Octavio Marenzi, Meridien's research director, said that new Web browser-based technologies enable more cost-effective service delivery for small business.

Banks, he noted, generally serve small businesses through a patchwork of wholesale and retail systems, largely repackaged retail "solutions," none designed particularly for this "in-between" market.

According to Marenzi, the use of the Internet for the delivery of small business services now accounts for barely 20 percent of electronic usage in this market. However, he said, Meridien expects it to overcome all other electronic channels within four years, achieving 65 percent dominance by 2003.

"The emerging vendor community includes retail-focused vendors moving upstream as well as corporate cash management vendors moving downstream," he said, adding that the market is set to become much more competitive.

The Meridien report identifies the key functions of an electronic banking set of systems directed to the small business market. These include transactional capabilities that go beyond simple bill payment to include wire transfers and SWIFT (Society for Worldwide International Funds Transfer) payments.

The report suggests that a more comprehensive systems administration is also required. To provide more targeted services, the report concludes that banks must also be able to link business accounts with owners' personal accounts.

Spending on small business banking services is expected to grow more than 40 percent to $61 billion by 2003 according to the report, so it is not surprising that vendors are now weighing in with electronic banking products targeted at small business.

Meridien's Web site is at http://www.meridien-research.com.

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The typical Internet shopper is female, belongs to a high-income household, is likely to make impulse purchases, and uses both online and traditional retailers for shopping and buying, according to a new survey of nearly 3,000 online shoppers.

That same typical shopper will help bring the sale of traditional consumer technology products to $14 billion by 2002, says the Consumer Electronic Manufacturers Association (CEMA). CEMA is a division of the Electronic Industries Alliance, a trade association representing about 500 U.S. manufacturers.

The study -- which reveals insight into what's driving Internet users to wield their credit cards but has few surprises about the expected growth of that industry -- was spurred by demand from CEMA members for hard data on online purchasing decisions and habits.

CEMA spokesman Matt Swanston says the study found that online shoppers fall into four categories: convenience lovers, money savers, smart shoppers and selection seekers. Convenience lovers make up 65 percent of the online shopping community and include the largest percentage of women, according to the CEMA study. These online shoppers are likely to favor sites like 1800flowers.com, Etrade.com and 911gifts.com, CEMA said.

Money savers are largely men and Generation X-ers who view the Internet as a place to buy cheaply, the study found. This group is more likely to shop at retail stores than buy online; however, CEMA expects their online expenditures to double within the next year.

Rounding out the online shopping world are smart shoppers, who view the Internet as a research tool and are more likely to make planned purchases than impulse buys, and selection shoppers, who are likely to be from lower income groups and favor specific Web sites like Walmart.com and Amazon.com, the study found.

The study, titled "Online Shopping: Impacts on Consumer Technology," was based on an electronic-mail survey of 2,725 Internet shoppers.

CEMA also found that nearly a third of online shoppers plan to double their Web-based purchases within the next year -- a statistic that would surprise few in the online retailing arena, which now includes the wares of obscure boutiques, conventional department stores and just about everything that falls in between.

Separately, the Consumer Electronics Manufacturers Association predicted that interest in buying consumer technologies online will grow by 135 percent over the next two years and represents 13 percent of total industry volume. Computer products topped the list as the most popular online electronic purchase, with two-thirds of online shoppers searching for or buying computer hardware or software on the Web. Other home office products like phones and fax machines followed, with 23 percent of online shoppers using the Internet for help with such purchases. The overall Internet shopping rate for TV sets was 6 percent, according to CEMA.

"On average, more than 75 percent of consumers who likely will make a consumer technology buy in the next two years will use the Internet to research their purchase," said Todd Thibodeaux, vice president of market research and senior economist at CEMA.

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