Euromonitor International is pleased to present an interview with Alex Rashkovan, inventor and founder of The Auto Store Company. The company was founded in 2012 and seeks to “bridge the gap between ecommerce and bricks-and-mortar retail”. This interview focuses on the company’s overall vision and more specifically about its operations in Russia, the market in which The Auto Store Company currently maintains its largest presence.
Can You Please Describe The Auto Store Company?
ASC (Auto Store Company) provides retailers and brands with 24/7/365 automated shopping platforms that reduce costs and increase revenue opportunities. The entire customer experience becomes easier and more familiar through ASC’s “virtual sales assistant” (avatar) technology. By enabling countless new points-of-sales and converting storefronts into “shoppable windows”, ASC delivers the benefits of the automated banking (ATM) revolution to the world of retail.
How Do Automated Stores Fit In With The Notion Of Omnichannel Shopping?
Retail customers increasingly demand the ability to order product anywhere (via mobile, tablet, PC, store) and fulfil their order at a convenient physical location whenever it fits their busy schedule. Indeed, about half of online shoppers choose to receive their order at a location other than home. As retailers shift toward an integrated and competitive omnichannel strategy to meet this customer demand, retailers must seek solutions that reduce overall costs, increase sales and revenues, and allow for remote order placement and fulfilment using cash.
At ASC, we bridge the gap between online and bricks-and-mortar retail by enabling customers to order products from anywhere, fulfil from (almost) anywhere, and do so at any time. As online shopping continues to grow, so too does the market opportunity for automated retail. ASC offers a convenient and flexible solution, turning shops into 24/7/365 locations and enabling new satellite points-of-sale, all with reduced Capex (no expensive real estate) and Opex (no staffing). ASC’s interactive and multilingual user interface, based on its proprietary “virtual sales assistant” (avatar) technology, makes the ordering and fulfilment process easy and friendly—while allowing retailers to engage in enhanced upselling and cross-selling at the point-of-sale. The ASC system also allows customers to build a product basket, pay by cash, credit/debit card or e-pay applications, and return products if needed through its smart locker compartments. Further, ASC’s automated retail units create customized digital branding and advertising options for retailers, empowering them to promote and sell their products at the same location.
We Were Interested To Learn That 80% Of The Auto Store Company’s Current Operations Are In Russia. Why Russia? What Are Some Challenges And Opportunities That Are Unique To The Russian Market?
The market demand for ASC’s unique and proprietary automated retail line remains global in scale. ASC’s current strengths in Russia and CIS arise from the needs of a key client, Herbalife. For over two decades, the parent company of ASC, the Filuet Group, has been establishing and managing fulfilment centres for Herbalife in Russia and the CIS. A few years ago, Herbalife requested that Filuet develop an innovative, low-cost (Capex/Opex) product access and order fulfilment platform for these markets. As a result of these efforts, the Auto Store was invented and subsequently spun out as a separate company, ASC.
A key challenge in Russia is that it is a cash economy. As a result, ASC’s automated retail line is unique in its ability to handle cash and return change like a human cashier, as well as credit and electronic payment, transactions. In addition, sales increase significantly in Russia by shortening the distance required for order fulfilment for the consumer carrying cash, put it simply the closer the product to where the cash is the more incremental sales are generated. The opportunities for automated retail in Russia have proven to be significant, although the high rate of growth and sales experienced to date is not unique to the Russian market. Our research and experience shows that consumers everywhere want to be able to order product from anywhere at any time and be able to fulfil that order in a way that is easy, friendly and convenient.
What Products Are Currently Being Sold In Russia Through Asc’s Automated Stores?
Currently the entire product range (food supplements, cosmetic) offered by Herbalife in Russia is sold via the ASC automated retail line. The ASC network in Russia and other markets where it is used by Herbalife is available exclusively to Herbalife members and distributors (sales representative) only. We are currently in discussions with one of the biggest supermarket chains in Russia, which is keen to pilot the ASC concept in order to offer 24/7 service for essential items, those items we normally run out of during the weekend or overnight. According to one of the executives of this chain, “since we pay rent for our real-estate 24/7 and 365 days a year, why not try to use this entire time for sales?”. In a 7 day week we have a total of 168 hours during which most brick-and-mortar shops are more closed than open (most shops are open 6 days a week/8-10 hours per day). With ASC they can stay open 24/7!
Where Are Asc’s Automated Stores Mostly Located Within Russia? And What Are Important Factors To Consider When Adding New Automated Stores?
At present, ASC's automated retail line is focused on the Herbalife service network, through which we have converted traditional Herbalife sales centres into 24/7 automated order fulfilment and service locations. We also have various satellite locations, which again are fully automated fulfilment centres offering 24/7 product access and service as illustrated in the attached brochure. One of the key factors affecting a retailer's decision to add new automated centres is the retailers' ability to reduce costs, increase sales by offering customers longer "opening hours" (indeed, once our automated retail centres open, they never close) and enhance their digital branding capabilities. In congested cities such as Moscow, where traffic can extend drive time considerably, ASC is an excellent platform to bring a retailer's core product range closer to the consumer and help him/her spend less time driving to get the desired product.
What Are Other Product Categories That Asc Is Most Excited To Enter, Specifically In The Russian Market?
In Russia, as in other global markets, we see tremendous opportunities among product categories such as mobile phones, electronic gadgets, toys, and OTC drugs.
How Do You Distinguish Asc’s Automated Stores From Other Traditional Vending Machines?
The difference between ASC's automated stores and vending is like the difference between Uber and the traditional taxi station concept. Unlike vending, our UI/UX, which is based on a "virtual sales assistant" (avatar) at the point of sale, offers customers an easy on-line buying experience with immediate gratification. In addition, have you ever tried to buy several items at once from a vending machine? You need to repeat the entire transaction each time you order. With the ASC product line, the customer can build a product basket, same as you do when you shop on-line. Moreover, the ASC product line will allow for product returns, as needed, through our smart locker compartments.
Who Is Most Likely To Purchase Products Using Automated Stores?
As ASC has developed a proprietary "virtual sales assistant" (avatar), which can be branded to each retailer's needs and customized for upselling and cross-selling capabilities, the entire ordering and fulfilment process has been made easy and friendly. Even consumers that are less comfortable with technology or ordering online can benefit from making their purchases through ASC's automated retail line. One of the things we enjoy seeing are families interacting with the ASC avatar and making a "game" out of the ordering and payment process.
Finally, Where Do You See The Automated Retail Space Going In The Future?
Much like the exponential growth in automated banking over the years, retailers are beginning to adopt automated retail and make the ATM revolution their own. With automated retail, your store never closes and storefronts can be converted to "shoppable windows". In addition, as customers increasingly prefer "click-and-collect" services when they order online, the opportunity for retailers and customers to fulfil their orders conveniently at satellite automated retail locations grows as well. Much like other service areas of our digital economy, the future of retail increasingly