COINSTARS IN 3,500 STORES OFFER AMAZON CERTIFICATES

Michael Garry

BELLEVUE, Wash. -- Coinstar here and Amazon.com last week announced a program that makes it possible for supermarket customers to exchange coins and bills at Coinstar machines -- with no transaction fee -- for a gift certificate redeemable at Amazon.com.

Coinstar said the program launched Sept. 13 in 3,500 of the 12,100 supermarkets that have Coinstar machines, which are typically used by consumers to convert loose change into cash or store credits for a 8.9% transaction fee. Coinstar expects the program to expand to 5,000 stores by the end of the year. Currently, machines in about 2,500 stores are equipped to accept bills as well as coins.

Among the food retailers who are offering the Coinstar/Amazon program are Albertsons, Bashas', Cub Foods, Gerland's Food Fair, Giant Eagle, Stater Bros., Weis Markets and Winn-Dixie.

The Coinstar/Amazon agreement creates one of the first self-service methods for using cash to make purchases on the Internet, Coinstar said. The program is an extension of Coinstar's "Coin to Card" program, launched in February, which allows shoppers to exchange coins and bills for gift cards from retailers like Starbucks, Pier 1 and Hollywood Video. The gift card program also charges no transaction fee.

Of the 5,000 stores offering the Amazon program on its Coinstar machines by year's end, half will also offer the gift card program, said Gretchen Marks, vice president of marketing for Coinstar.

In the Amazon program, which requires a minimum input of $5, Coinstar machines print a receipt with a redemption code. Shoppers can purchase books, CDs and a myriad of other products at Amazon by entering the redemption code during the checkout process; unused funds can be applied to future purchases.

In conventional coins-into-cash transactions, retailers and Coinstar share the transaction fee paid by consumers. The Amazon and card programs are funded solely by the retailer partners, with stores and Coinstar again sharing the revenue. Coinstar declined to disclose its revenue distribution to retailers.

At Houston-based Gerland's Food Fair, which operates 15 stores, the gift card Coinstar program was launched in April. "It started out slow but continues to grow," said Kathy Sweidel-Caton, the chain's vice president, customer service. Gerland's machines also offer prepaid MasterCards.

The absence of a transaction fee has been a key selling point for the gift cards, said Sweidel-Caton, who expects the same effect on the Amazon program. "Some customers who wouldn't use Coinstar in the past because they didn't like the fee are more prone to put money on the cards." Coinstar has found that many shoppers use the cards for themselves rather than as gifts, Marks said.

Sweidel-Caton expects the Amazon program to appeal to shoppers who may hesitate to use their credit card on the Internet due to "security concerns." In addition, some initial users said they'd "send Amazon certificates to their kids at college who could use them to buy textbooks," she added.