A recent episode of eMarketer’s Behind the Numbers podcast focused on retail media and this tidbit jumped out:

Yeah, I am super excited for Ulta Beauty’s Smart Vending Machines. They are piloting them currently in 10 cities across the U.S and essentially all people have to do, if you’re a rewards member, you just put in your phone or your email. If you’re not a rewards member, you can join right at the machine and you can claim a free travel size beauty product every week, which I think is really interesting.

So that’s a great incentive to keep coming back to get new things. They’re constantly refreshing the assortment, and again, you get a little travel size and you like it, you’re going to buy the full size. So it really is just its own little ecosystem which keeps people coming in, trying products. And for Ulta, it’s driving rewards member signups, and you’re getting additional customer info on their preferences and how often they’re coming in-store. So it’s really a win-win all around.

This is smart.

It’s a defensible moat. It’s not cheap to roll something like this out, which means all their competitors won’t have their own version live next week.

It’s unique. Any competitor that tries it now will be seen as a copycat. (I don’t know much about beauty, but if being “on trend” is part of the draw for customers, they’ll likely want to shop with the trendsetter and not the trend follower.)

It’s a retail media opportunity. There are a finite number of slots. If it takes off and they can prove the conversion from try to buy, companies will pay to put their product samples in the vending machine. It could even get to the point where certain spots command higher rates due to increased selection frequency from their position in the browsers eye line. (a.k.a. the grocery store model.)

It’s shareable. This is an experience people will talk about. I can see people posting videos of their trip and reviews of their trial products. To increase its potential as UGC machine, (and again, not a beauty expert) I would add a random/surprise slot and/or random double rewards giving loyalty members 2 free products. My thinking here is similar to the Pret A Manger loyalty program and slot machine psychology. (And my love for the mystery Airhead experience.)

It’s sticky loyalty. Any business with a high returning customer rate has pivoted from growth to retention in the post-free money era. A new free product each week gives people incentive to return and each return increases the likelihood of a purchase. Lock in likelihood also increases as loyalty members have more chances to become brand and product loyal.

All that to say, I like this idea. Well done, Ulta.

Now Liquid IV or LMNT needs to a do a smart gumball machine in gyms and retailers dishing out random flavors.