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How The Future Of E-Commerce & Retail Store Is Influenced By PropTech

 

 

What does the future of e-commerce and retail look like? In this video, I explain how PropTech influences the way we shop, what it means for your business and why you should pay attention. 

 

I'll show you:

- How people are shopping less in stores and more online.  
- The different types of technology that will change the way we shop in the future.
- Some examples of companies disrupting traditional brick & mortar stores with their own unique models (and how they're doing it).

 

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How The Future Of E-Commerce & Retail Store Is Influenced By Proptech

 

On this show, we have two fantastic entrepreneurs, Susanna and Robina, who are the Cofounders of SOS, a network of smart retail. What that means is cool, unlike anything you’ve ever seen before, vending machines that will completely disrupt the way we think of vending machines nowadays. Robina and Susanna, how are you both?

 

We’re doing well.

 

You guys are venture-backed, and you are in a very exciting space, a space that is ancient. How did you come to this? Why did you decide to start SOS? Tell us the personal story behind this.

 

The personal story is that Robina and I were colleagues in finance on a trading floor. It’s a very male-dominated segment of finance FX. In many words, I had my period at work and needed a product. For the millionth time, I couldn’t find one. This happens all the time with women on-the-go. In that moment of frustration, I marched over to Robina’s desk across the trading floor. I said, “This is insane. I need to find a quarter. I need to bang on a machine. My alternative is to leave the office, waste my time, miss my meeting, and be late. We need to change this.”

 

Women are climbing the corporate ladder, the fastest-growing segment of the workforce, yet these products we need every day are still inaccessible. It’s a major inconvenience and obstacle for women living their lives. The other thing that we quickly realized was women need a lot more than just feminine care products on-the-go. From the first moment, we expanded what these machines would be selling to include other essentials like skincare and haircare. As of 2021, it’s PPE. The vision we’ve had from the beginning was to create a network of machines delivering on-the-go essentially across wellness categories, which is what exists in the SOS network.

 

When you think about what the technology offers, you look back to where we came from, trekking through villages by horses to get the product or waiting for the product to arrive internationally through some trade or even ships later on. You think about retail stores and think, “The only disruption that can happen here is eCommerce, the ability to look at something on your phone, tap it, and Instacart, or DoorDash or whatever you want brings it to you.”

 

That’s just one way of looking at the world. The other way of looking at the world is, why can’t you just turn around in very close proximity, and there it is? You don’t have to go downstairs and let the DoorDash person. It doesn’t have to be this whole last-mile logistics. Is this the future of retail? Is it going to be more eCommerce, and this is a niche within the big trend? Is this going to be its own category?

 

 

 

Vending, generally speaking, as an industry is very outdated. It’s an industry that needs to be disrupted because people need products when they are outside the home. There’s still not a great delivery mechanism and vehicle to deliver products to people when they’re outside the home. These mini-marketplaces or mini-machines are a nice vehicle to do that as long as we can upgrade these machines from the coin-operated payphone model that most people conjure up when you say the word vending into something that’s more aligned with consumer preferences. For example, Apple Pay, Google Pay, and credit cards should all be acceptable forms of payment for these devices. Those types of upgrades and enhancements and upgrading the user experience and user interface at these devices will transform adoption for vending in the future.

 

Vending and automated retail, in general, are going to meet the modern consumer with the hyper-convenient, just-in-time, on-demand service that we’re all growing to expect across every service industry that we touch and experience. To your point of the infrastructure behind last-mile logistics and all of the apps that most of us are using these days, the products you need exactly where you need them is ultimately what SOS is trying to do. We’re trying to be the first major disruptor in this space.

 

You didn’t pick an easy business to go after. You’ve got hardware involved. If you look at the spectrum of hardware, you got little sensors that you can peel off and stick somewhere. You’ve got these slightly bigger sensors that can detect things, and then you’ve got huge vending machines. Of course, you’ve got prefab modular homes. That’s not part of it. That’s something different.

 

You’re dealing with the production of vending machines, making sure the design and operate the way you want. There’s a software layer involved. You’ve got to get these big vending machines and get them from place A to B. You’ve got to service them. You’ve got a whole another level of complexity versus most startups. Why did you go after something so crazy?

 

It’s because we’re passionate about the problem we’re solving. We get excited about this vision of a world where SOS machines are in every major city. They’re connected, speaking to one another, and app-enabled, which is the idea of building a proprietary SOS app that would allow a consumer or a person to find a machine near them. It’s to have a profile that stores their product preferences so they can find machines near them that hold the products they want to try.

 

There is an incredible marketing platform that we can build. There is a lot of complexity to what we are building, but it also makes it extremely interesting. It creates a lot of opportunities for us to introduce a new way for brands to connect with consumers and introduce a new expectation that consumers will have when they’re outside the home.

 

Even though this business was born and created out of industries that Robina and I do not have backgrounds in, from the very beginning, we said, “The only reason this doesn’t exist is because people haven’t tried to do it.” Why not be the team or the founders who say, “We can do so much better?” These machines can look so much nicer.

 

 

Vending is a very outdated industry. It’s an industry that needs to be disrupted. That’s what the SOS network is doing.

 

 

This can be a fun, exciting, and engaging moment in your day, as opposed to a relic in the back room, collecting dust that looks like a piece of junk. We decided that we wanted to build a world that we’d like to live in, and we’re doing it. We’ve seen other disruptive, amazing companies create products that didn’t exist or could barely even be imagined. We’re happy to be able to be a company that’s doing the same.

 

Vending machines can be anywhere and everywhere, but they’re dumb nowadays with the way they operate. Even the market segment itself is so fragmented. There are so many operators and there’s been so little consolidation. The revenue per machine tends to be quite small. The bulk of what’s being sold is often we think of it as snacks, food, beverages, and candy. We don’t typically think of PPE, skincare products, and health and wellness products, so you’re reimagining what it means to have a vending machine. The beauty of this is you’re limited by your imagination.

 

Wherever you walk or look where there’s high traffic, you could put a vending machine there. What happens in the future if you achieve your vision? In some ways, achieving this vision creates this huge monster of a company. If you achieve your vision, what are the changes in the world? It’s not just for the people you touch as consumers and do talk about that. What are the business implications? What other industries will be affected? It sounds scary. It sounds like you’ll disrupt retail completely. Why go to a retail store if 80% of the things you need are right there? Walk us through the end state.

 

For us, we’re pretty focused on this mini moment. A lot of the products that we’re selling on our machines are travel-sized products. They’re intended to address a very specific need, which is this emergency just in time miss that you have when you forget a product at the house, or you’re on route to a meeting and in between meetings, and you don’t have time to pop into a full brick and mortar location. For us, we view ourselves as complementary to brick and mortar. We are a sampling mechanism for brands to get their products into the consumer’s hands. If the consumer loves the products, which we hope they do, that, in turn, would lead to a full-size purchase, perhaps.

 

Whether that happens in a brick-and-mortar location or on a brand’s website, we view ourselves as an interesting discovery platform for brands. For the consumer, the expectation and the vision for them in 3 to 5 years’ time are to transform specifically women’s experience when they leave the house. That’s what gets us leaning in at the edge of our seats every single day and up every day trying to solve this as we want to build a world that caters to women’s needs a little bit better than it does now.

 

Walk us a bit through how the industry looks now. If we’re looking at the vending machine space, what is the state nowadays?

 

It’s over a $7 billion market, so it’s sizable. As you correctly pointed out, it’s very fragmented. There isn’t a vending machine operator that exists nowadays that’s introducing this network effect, which is what we’re trying to create in SOS. That is where we are leaning in and making sure that for our consumer, whether they find a machine at the airport, hotel, sports stadium, or at work, the SOS products and the user experience is consistent, elevated, and delightful.

 

 

 

It’s estimated that 1/3 of the world’s vending machines are located in the US, with 15 million vending machines. In the US, you’ve got five million vending machines. Apparently, only a fraction of that is currently in operation to a million or so. That’s where the $7 billion-plus comes from. That means the average American adult spends $35 per year on vending machine items. It’s a market that a lot of people want to break into. There’s a big market to buy refurbished vending machines. It seems like an easy business, one that doesn’t scale. Is that your perception in terms of a business someone could start?

 

In the traditional sense, I would agree with you. What we’re building as an SOS is somewhat different. If I wanted to buy a vending machine, put it in a high-traffic location, and sell Coke and chips out of that, that’s a very different model. It’s an achievable model for you or me to introduce. What we’re trying to do is different because there’s this entire data effect that we’re collecting and technology that we’re introducing beyond just the hardware and curation of products that we introduce as founders into this network of devices.

 

In terms of the business compared to a snack vending machine, in the early days when we founded the company, we were researching the vending space. In a lot of those relationships, there’s a premium to get to the best, most profitable locations for snack vending. There’s a barrier to entry, which is obtaining the rights to those locations.

 

SOS is uniquely positioned because we are disrupting space and introducing a category that’s an amenity in grade A commercial properties. We are adding value to the owner-manager and a tenant space that gives us permission to be there. In terms of the work that we’ve done as founders and company, we have invested heavily in relationships, networking, and building that value prop for the grade A commercial property and our managers. That is a major barrier to entry to do what we’re doing, which is permission to be in these premium, high-value locations and be the first there.

 

Can you give us an example of the types of locations that a product like this can scale to?

 

The business was born on a trading floor in grade A, a million square foot plus office tower in Downtown Boston. COVID has impacted some of that go-to-market significantly in the sense of the future of the workplace is evolving. We’re not exactly sure what it’s going to look like. From the beginning, we’ve always known that SOS is a network. It will be across all of these different premium commercial office space locations, as well as premium retail.

 

We see a lot of activity and interest from the franchise sports leagues like MLB, NHL, NBA, and transit hubs, Penn Station, South Station, and all of the major airports, like LAX and JFK. We’re thinking of creating this community that is everywhere she goes, at work, at play, and on-the-go traveling with friends and family, but seeking to have the network meet her where she is.

 

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Creating the World's First Co-Living Start-Up: https://www.youtube.com/watch?v=K2MQNZnfvOA

Innovative Housing that can change the world! https://www.youtube.com/watch?v=K92fRT04Qjo

Building an Online E-Commerce Furniture Empire: https://www.youtube.com/watch?v=WhznBbYMhhg

 

About Zain Jaffer:
Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780M.

 

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30,” “Inc. Magazine’s 35 Under 35” and the “SF Business Times Tech & Innovation Award”. He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.

 

 

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