Coinstar

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Coinstar, Inc. (NASDAQ: CSTR) converts loose change into currency, donations or gift cards via self-service or interactive kiosks. The company was founded in 1991 and David W. Cole serves as CEO.

Coinstar is headquartered in Bellevue, Washington. The typical kiosk, painted green and the size of a vending machine, is located at grocery stores, drug stores, larger merchants, banks or other retail locations. Coinstar deducts a fee for conversion of coins to currency, but not for gift cards or donations.

Coinstar is now a multi-national provider of services for the front end of retail stores, including coin counting, entertainment products such as skill cranes and bulk vending, prepaid products, money transfer and DVD rentals. The company has over 60,000 locations including a variety of services in the US, UK, Canada, Puerto Rico and Mexico. The coin counting service is available in the US, Puerto Rico, Canada and the UK.

Coinstar also owns 47% of Redbox[1], the DVD rental company.

Contents

[edit] Kiosk design and operation

The coin counting processing fee, deducted from the total once coins have been counted, is 8.9 percent (USD) in the USA, 9.8 percent in Canada and 7.9 percent in the UK. Some machines may offer a lower rate, in this case the store hosting the machine has subsidised the rate. A newer service enables users to use their coins to buy a gift card from merchants without the usual fee ("fee-free") — including such retailers as Starbucks, Amazon.com, Borders, Pier 1, Hollywood Video, Circuit City, Eddie Bauer, Cabela's, KB Toys, Timberland, AMC Theatres, Old Navy, iTunes, J.C. Penney, Linens 'n Things and Disney Store.

US and UK users also have the option of donating their change to a selected charity without paying a processing fee. In the US, Coinstar has raised over $20 million for charities including the American Red Cross Disaster Relief fund, Leukemia and Lymphoma Society and Unicef's Trick or Treat program. Many Coinstar machines in the US also sell prepaid products such as green-dot preloaded MasterCard, prepaid wireless airtime from major carriers and long distance cards. In the UK gift cards are not available but phone cards are, including Virgin, Tesco Mobile, orange, T-mobile, vodaphone, swiftcall and United.

To process coins, one simply pours unsorted loose change to the machine. The machine accepts all denominations of coins from one-cent coins to one-dollar coins, its only restriction being 1943 Steel Cents and Eisenhower Dollars. When the machine finishes counting coins it issues a scrip, called a voucher, which the user can redeem at the place of business providing the coin counting service at face value for currency. The same mode of operation and redemption is provided on those Coinstar machines situated in Great Britain, Canada, and Puerto Rico.

If the user chooses the fee-free option the machine issues a plastic gift card or, in the case of online merchants like Amazon.com, a voucher with a redemption code.

In addition to the coin exchange service, Coinstar owns and operates amusements such as crane games, arcade games and "kiddie rides". The company also produces machines that provide prepaid credit cards and cellular phone cards as well as e-payment kiosks.

[edit] Competition

In some sections of the U.S., regional banks have begun offering free and unrestricted coin-counting services in competition with that at retail stores.[citation needed] Refunds are often given in cash rather than in the form of a gift card. In some cases it is not even necessary for the customer to have an account at the bank; the free service is offered as a way to attract new business from individuals who are not current account holders.

[edit] Advertising

To generate publicity, Coinstar offered to cash in over 1.3 million pennies collected over four decades by Flomaton, Alabama resident Edmond Knowles after Knowles's bank refused to cash them in. The armored truck sent by Coinstar to Knowles's home sank into the mud in his yard after being loaded with the 4.5-ton collection, and needed to be rescued by a tow truck.[2]

[edit] External links

  • Coinstar website
  • StartupStudio In depth interview with Jens Molbak covering the story of how Coinstar began, recommendations for entrepreneurs, childhood experiences that helped Jens succeed, etc.

[edit] References

  1. ^ Rise of redbox. Selfserviceworld.com, Bill Yackey,20 Aug 2007.
  2. ^ Donn, Jeff. "Do Pennies Still Make Sense?", In The Loop, Washington Post. Retrieved on 2007-10-28.