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Reebok Sees Future In Selling Out Of A Machine

If you've been to an airport recently, you might have seen those vending machines with high-priced Apple items. Well, the company behind that technology is now helping Reebok sell its products in this untraditional way.

ZoomSystems built a machine for Reebok to sell its Retro Sport shirts. This one is at JFK Airport in New York.
ZoomSystems built a machine for Reebok to sell its Retro Sport shirts. This one is at JFK Airport in New York.

The company is called ZoomSystems and its backed by some of the biggest names in the venture capital and finance world, including Goldman Sachs .

In the last five years, it has unveiled 1,000 of these high tech machines called ZoomShops, filled up with non-traditional items for brands ranging from Apple to The Body Shop to Best Buy .

Adidas-owned Reebok committed to have its gear sold in 375 of the ZoomShops, which will be solely Reebok stocked. The first machines were unveiled in airports such as JFK in New York and DFW in Texas this week and will roll out in malls and military bases over the next three years. The product of choice is $35 Retro Sport T-shirts that the company makes. The shirts in machines now have vintage NFL logos on them.

ZoomSystems CEO Gower Smith told CNBC that the company's machine might look like the same machine that dispenses gum and candy, but he prefers to refer to it as a single-brand retail store that uses minimal square footage and has no labor cost.

"We're an entirely new channel that's an alternative to the self service model," said Smith. "We're closer to being a new way to deliver these type of products than a vending machine."

The benefits for a company like Reebok is to be able to sell its products directly at higher margins and at the same time be agile with the placement of where it sells. ZoomSystems naturally receives a percentage of the sales for the service it provides.

"We're a disruptive low cost model," Smith said. "Consumers are constantly using more technology and they prefer this experience. It's like an online purchase but there's immediate gratification."

Since the items are at a higher price than one expects for a last-minute impulse buy from a machine, it's understandable how the concept could take some getting used to, but Smith said it has been an easy transition.

"We've had no problems with consumer acceptance because people get used to it very quickly," Smith said. "It's very much like the initial response to the ATM and what happened soon after."

ZoomSystems has ZoomShops in United States and Japan and is moving into Europe next week.

Questions? Comments? SportsBiz@cnbc.com

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