USA - The vending industry enters the 21st century with a broad spectrum of proven technology for delivering a diverse range of products. Its logistical systems have evolved over half a century to keep these machines stocked with merchandise, much of it perishable, and functional: "clean, filled and working."
In 2001, a variety of concepts are being rolled out that unite this product delivery technology and service infrastructure with new hardware and software developed by the telecommunications and financial services industries. These include both remote monitoring of vending equipment in the field, reporting on transactions, functional status and security threats, and remote transaction processing for cashless payment. These capabilities have the potential for the application of vending to a wide variety of entirely new retailing ventures.
One such application is being deployed by photographic giant Eastman Kodak and e-Vend.net. These companies have entered into a strategic alliance that will use high-tech vending machines and the Internet to expand the number of locations at which consumers can buy film and one-time-use cameras.
The alliance links Kodak, the world's leading imaging company, with Maytag Corp., Maytag's Dixie-Narco vending machine division, and e-Vend.net, a Pennsylvania company that has developed a payment and reporting system enabling vending machines to accept credit and debit cards, and to be monitored remotely over the Internet.
Called "Kodak Max," the program has been tested successfully for more than a year in a variety of test markets, including resorts, amusement parts, zoos, and the post exchanges on military bases. Plans call for installing the machines around the country, primarily in travel and leisure locations at what Kodak calls "the point of picture." Kodak research has shown that vending sales are 90 percent incremental, i.e. sales that would not have been made otherwise.
"Pictures are what make people celebrate life's memories, but more than one-third of these pictures are missed due to not having a camera on hand," said Steve Hallowell, general manager and vice-president, Cameras and Sponsorships, Eastman Kodak Co. "Through e-Vend.net's state-of-the-art technology, we are now able to put film and cameras in the hands of consumers right where they're going to take pictures, fulfilling our continuing strategy of growing the market."
The "point-of-picture" concept has proven popular with consumers. "Our visitors to Penn's Landing like the availability and convenience of our vending system," said Sharon Tice, director of sponsorship and promotion at Penn's Landing Corp. (Philadelphia, PA). "It's always open for sales. And the additional revenue that is generated through our participation in the program is a great bonus."
The vending machines are manufactured by Maytag's Dixie-Narco vending division (Williston, SC), and are climate-controlled to keep film in optimum condition. e-Vend.net's technology connects them to the Internet, so sales anD inventory can be tracked from a central location. The network feature allows them to accept credit and debit cards; they do not accept cash. This reduces exposure to loss and reduces security concerns.
Wireless connectivity will allow the machines to be placed in high-traffic areas and wherever consumers will have the most need for Kodak film or one-time-use cameras, including scenic locations where a telephone connection would be impractical. Long-term plans call for offering the machines to retailers of Kodak products as well.
"e-Vend.net's technology demonstrates the promise of wireless Internet connectivity in a common-sense, real-world application," said David H. Goodman, chief executive officer and president of e-Vend.net Corp. "Our venders deliver Kodak products where they are needed most, at the 'point of picture.' We are building a national network of venders that will offer customers self-service convenience, and will expand the impulse purchase opportunities for Kodak products at key picture-taking venues."
Dixie-Narco president Tom Briatico observed, "This creates a new opportunity to expand our business beyond traditional soft-drink vending machines and to reach consumers through 'life-style' vending. It also is a good example of how we can work with key partners to take innovation to the marketplace."
Maytag and e-Vend.net formed a strategic alliance late in 1999, under which Maytag acquired a minority ownership position in the privately-held company (see V/T, January 2000). Maytag has the exclusive rights to use e-Vend.net's Internet connectivity technology in its vending equipment, which is sold under the Dixie-Narco brand.
The e-Vend.net system also is slated for use in monitoring the Dixie-Narco "Beveragemax" machines that will vend milk-based drinks in modern plastic packaging, under a test program designed by the dairy industry to gauge demand in middle and high schools for the new generation of dairy drinks (see story, this issue).
Another initiative designed to apply vending technology with remote monitoring and cashless payment authentication capabilities has been announced by Self Serve Centers (Duluth, MN), a sister company of Luigino's that manages all Luigino's vending business including the "Michelina's" program. SSC is conducting a test under which restaurant-quality frozen entrees, in large "home meal replacement" portion sizes, will be made available through vending machines at high-traffic workplaces.
The machines also will be identified as a source of excellent food for workplace consumption, especially at odd hours when alternative sources are not readily available. One object of the test is to determine what portion size, at what price point, is optimal for the largely untested vendible home meal replacement market.
SSC chief operating officer Joel Kozlak explained that the machines used in the test are Automatic Products international's "À la Carte" food venders. The test will assess factors affecting consumer demand for high-quality take-home/eat-in food from vending machines. Transactions will be made with credit or debit cards, not cash.
USA Technologies (Wayne, PA), developer of the "e-Port" Internet-based card-actuated device, has announced the signing of a three-year agreement with Self Serve Centers under which SSC will incorporate "e-Port" systems into its APi frozen food machines.
Introduced late in 1999 (see V/T, December 1999), USA Technology's "e-Port" is described as a "non-PC e-commerce device" designed to be embedded into vending machines (or gasoline pumps, or office equipment, or anything that can serve as a point-of-sale terminal). It offers both telemetry, vending machine monitoring function, and cashless transaction processing capability , patrons can make "self service micro credit card transactions" in values as low as $1, among card-based options. And it can support an interactive video screen able to display rotating banner advertisements as well as other content, such as local news and weather. It obviously also can support a wide range of interactive promotional programs.
"Signing this important contract with Self Serve Centers is an exciting milestone event," said USA Technologies vice-president of sales and marketing Michael K. Lawlor, Sr. "We're commercially launching our unique technology in the vending industry, with a prestigious partner. We have total confidence in Self Serve Centers' attaining or surpassing their distribution objectives, per our agreement, with their 'home meal replacement' vending machines."
Lawlor emphasized that the agreement also represents another step in the convergence of new point-of-sale technology and the evolving vending industry. "'e-Port' has the ability to fundamentally change the way we buy and sell products, advertise and market them."
Lawlor also hailed the contract for its original equipment manufacturer ramifications, since the "e-Port" is being built in collaboration with APi for incorporation into that company's equipment. This is expected to smooth the path for operators in general who wish to take advantage of networked vender opportunities.
Already rolling out are Coca-Cola vending machines fitted with Marconi Online Systems "Intelligent Vending" technology, the result of last year's five-year alliance between Marconi and The Coca-Cola Co. (see V/T, May 1999).
Marconi reports that some 65,000 Coke machines now are online with "Intelligent Vending" technology, 20,000 in the southeastern U.S. (Florida, Georgia, Louisiana and Tennessee) and 45,000 in Australia and New Zealand.
The networked Coke venders transmit marketing, management and maintenance reports overnight to the bottler's operations office. Inventory, cash and damage information are handled securely by a wireless network. This is a basic implementation of a technology that can be expanded in many ways.
"The future of vending is here today with our intelligent vending solution," said Marconi Online president Brian Quarendon. "By giving consumers real confidence that machines are always 'clean, filled and working,' this technology already has made a huge difference for our customers in two critical areas: increased sales and brand loyalty."
Cited advantages of "Intelligent Vending" not only include improved customer service, machine reliability and shorter repair response times, but also "just-in-time" stock information that maximizes sales by eliminating sold-out and correct-change-only conditions. Theft, damage and fraud are reduced through online alarm and status monitoring capabilities, and product distribution and other logistical costs are reduced. Moreover, sales are increased through automated space-to-sales and optimum product placement information.
Other capabilities of Marconi's "Intelligent Vending" system include a wide variety of cashless payment options that increase consumer convenience, reduce security overhead and enable vendors to log and analyze critical consumer purchasing habits. These include "m-commerce" (payment by cellular telephone) as well as debit, credit and smart card payment choices.
Also available are interactive media screens, loyalty/coupon promotion services and even Web browsers. Marconi predicts that consumers in the United States will see these elements before the end of 2001.
There certainly will be more retailing projects designed around the intersection of merchandise vending , the application of robotics to retailing , and today's increasingly streamlined, reliable and affordable telecommunications technology. There may be value in viewing these developments in context.
First, the ability of self-service devices to report their status to a central hub, and to receive instructions from that hub, is not new. Pay telephones have been able to do it for a long time, at least a quarter of a century. Automated teller machines do it now; so do prepaid phone card venders that accept credit cards, or that provide point-of-sale card actuation.
MAKING THE CONNECTION
The key here, of course, is a telephone line to the machine. Payphone providers have a reason to run wires through the location's walls; vending operators do not, and are reluctant to ask for permission. Thus, widespread adoption of telemetry and remote verification of cashless payment media awaited reliable, affordable wireless data transmission systems. The hardware at either end is readily available, and proven.
Second, there are real analogies between vending machines and computers. A modern beverage or snack vender is a programmable interactive device. And the payment, selection and delivery systems are functional modules that only are grouped in one cabinet for convenience. It is possible to imagine other arrangements.
Michael Kasavana, Ph.D., National Automatic Merchandising Association Endowed Professor at The School of Hospitality Business, Michigan State University, recently described the Internet as "the world's largest vending machine." Speaking at NAMA's first-ever "Better Business" Summit in San Antonio, TX, Dr. Kasavana predicted that the Internet will revolutionize the vending industry.
Not only will cashless payment systems find increasing favor, he said; but the retrieval of information captured and stored by vending machines will become even simpler than it is now (perhaps accomplished by a "wearable" computer, entirely automatically).
Most importantly, he emphasized, the Internet might develop into a new marketing mechanism using vending equipment as the delivery system. Customers could find, identify and order products over the Internet, then collect their purchases from a convenient vending machine.
Among products that might lend themselves particularly well to this sales and delivery model are movies and books, and perhaps gourmet dinners too, Dr. Kasavana suggested. "Imagine an arrangement where a well-known restaurant offered the same food through a machine," he instanced. "Customers could order dinner via the Internet, and then pick it up from the machine, at their convenience."
Long-time industry observers recognize this as a new refinement of the definition of a vending machine as a "labor storage device," coined by the president of The Vendo Co. in the late 1960s. It does not take much imagination to make a list of all the things one might need when the retailer who sells them over the counter is closed. With the vending machine "storing" the retailer's labor, i.e. stocking the product, until it is convenient for the customer to pay for that labor by selecting the product and transferring funds to the retailer's account, each party can operate on the most efficient schedule.
The value of this is becoming apparent to retailers outside the vending industry, too. A trade show called GlobalShop 2001, described as the world's largest store design and in-store marketing exposition, will showcase a number of futuristic retailing concepts designed to free the customer from the need for attendance by a salesperson.
In one of them, Herschmann Architects' "Store of the Future" prototype, customers patronizing a clothier will have their profiles scanned upon their entry into the store. They then will view a gallery of displays and use virtual shopping carts to make selections from individual touchscreens. Their selections will arrive in canisters when it's time to try on the items in a dressing-room. And a video camera, e-mail link and display monitor will allow the shopper to get immediate "real-time" reactions from friends.
This sounds very much like buying something from an Internet-enabled vending machine. Michael Fant, design manager for Herschmann Architects in charge of the "Store of the Future" project, said; "Our goal was to create a shopping space that combines the outer high tech world and the indoor retail environment. We've stretched the barrier of the typical retail outlet by eliminating the need for sales associates. This 'Store of the Future' prototype will be enticing to consumers for its convenience, excitement and bold new approach to the shopping experience."
The full-line vendor, selling beverages and snacks in the established vending marketplace, may view this sort of thing with a certain skepticism; for years, it has been believed that the absence of a human "sales associate" has made it more difficult for the operator to get market price for an excellent sandwich or cup of coffee.
It is possible that much of this criticism of vending machines as "impersonal" is held over from the attitudes of two decades ago, and does not apply to today's young consumers who appreciate high technology that works. Perhaps the "Store of the Future" will help make this change in consumer perception more evident.
It is more likely that the "impersonality" of yesterday's vending machines was an aspect of their isolation. A networked machine that interacts with its operator to avoid out-of-stock conditions and mechanical failures, and with the customer to offer a wide range of options, record personal preferences and conduct promotions, will be a different proposition.
"Nearly everyone has experienced vending machines that were out of product or out of change," said Marconi Online president Brian Quarendon. "Marconi Online has solved those problems for consumers and vendors. We like to say that the future of vending is now."
"Everyone is mobilizing to leverage the power and promise of the Internet and e-commerce with small, feature-rich, application-specific wireless computing devices," said Brock Kolls, senior vice-president, research and technology for USA Technologies. "These devices are changing the way we get information, buy, sell, market and promote goods and services. This is the future, the 'next-generation' Internet."