Further, you're basically operating a vending machine at that point, but with limited inventory, space losses, undesirable packaging and an undesirable location. (low foot traffic)
The obvious improvement is to just make a proper "redbox for things" vending machine, designed around a few optimized packaging dimensions and start leasing more-visible/accessible spaces to host it.
But what is that, if not just a (small) robotic convenience store? If you could pull off such a machine, why not just build a larger version and outright compete with 7-11?
http://www.deseretnews.com/article/525037492/Redbox-kiosks-c...
"They also said that while the DVD rentals also did a brisk business, it was rare to see anyone buying the other items"
At least they pivoted successfully!
The one aspect that I'm a not a huge fan of is that this ads a whole new layer on top of the delivery process.
Interesting that Google has chosen not to brand the boxes, though -- they look just like they did in YC!