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Issue Date: Vol. 44, No. 4, April 2004, Posted On: 4/8/2004


Ready Or Not, Bulk Vending May Retail Latest Technology


Hank Schlesinger
swag@earthlink.net

NEW YORK CITY - The future may be closer than you think. No, we're not any closer to the flying cars we were all but promised on the covers of those slick science magazines 50 years ago, but we may just be entering a new technological age for bulk vending. Innovations outside the industry, coupled with trends within it, provide a convincing argument that operators will sooner or later begin offering increasingly sophisticated and technologically advanced merchandise.

Out of gumball machines? You bet! And, ironically, this merchandise will be more advanced than the machines that vend it.

In the past, two factors , price and size , prevented the introduction of new-technology products into bulk vending. However over the last few years, both factors increasingly have become non-issues. Merchandise has been miniaturized to the point where size is no longer a barrier, and prices are rapidly falling to levels that make these products not only viable, but also desirable for bulk vending.

For many industry veterans, the introduction of anything even remotely categorized as "technology" may seem a bit far-fetched, almost as outlandish as the idea of finding use for a computer at home appeared 20 years ago. But such is the nature of the technological age, where the impossible, unlikely, and seemingly nutty ideas become staples of our lives and industry. Ready or not, electronics are poised to enter the industry.

Of course, electronic-based merchandise is not new to bulk vending. The industry has already seen the first tentative steps toward the introduction of electronics with Toy 'n Joy's diode-lit necklaces and What's Up's "Blinkie" ring collection. However, even before these breakthrough items, many operators were utilizing digital watches and simple video games as so-called sales motivators in many of their machines.

There have also been changes within the industry itself that have shown the potential for hi-tech and higher priced items. Over the last several years, bulk vending has made successful inroads into the older marketplace. Teens and tweens, who at one time wouldn't have even considered approaching a bulk vender, fearing the merciless wrath of peer pressure, have taken to "shopping" select venders with premium merchandise.

A new generation of high-quality toy fashion accessories, stickers and collectibles has not only expanded bulk vending's market demographic, but in many cases also expanded the prices operators can charge for merchandise. A $1 vend for an item offering the perception of high value is no longer out of the question.

Added to a dramatic drop in prices in the technology sector and rise in the viable price per vend is the simple fact that operators are now open to new concepts in merchandise. Just as a bulk vending operator no longer defines his business by the type of machine he offers to locations, so too, he no longer constrains himself to the type of merchandise offered in those machines.

A BRIGHT IDEA

What shape these new items will take has yet to be seen, but there is speculation. light emitting diodes, those small crystal light sources that provide light for everything from watch faces to power indicators on computers, will no doubt play a role. The little "worker bees" of the silicon age, LEDs are currently employed in every conceivable device, from children's toys to heavy industrial equipment. They have become so ubiquitous in their usage over the past decade that many of us have stopped noticing them.

Inexpensive, long lasting and requiring a minimum amount of energy (electricity), LEDs are, essentially, semiconductors. Far from the tiny incandescent light bulbs they appear to be, LEDs generate virtually no heat and owe their light not to a vacuum-sealed filament, like an incandescent lamp, but to the interaction between electrons when low levels of power are applied.

Because they are widely considered a commodity item, the prices of LEDs have been rising and falling for years. However, with capacity for LED production currently gearing up to create light sources for applications in everything from medicine to the auto industry, experts are predicting further price reductions.

Farther out on bulk vending's technological horizon is the use of actual memory chips. Like LEDs, memory is a commodity item subject to price fluctuations. Price trends, however, have been heading substantially downward over the past several years despite the growing sophistication of memory chips.

Audio chips, or similar easily programmable circuitry for controlling diodes and other devices, are already dropping in price on the wholesale market. Many consumers have already gotten a glance at some of the first products sold via point-of-purchase displays in convenience stores. Typically, these have taken the form of inexpensive toy fashion accessories that light up, or key chains that play a short audio message at the push of a button. In one notable example, a company offered working, radio-controlled micro cars stored magnetically on the side of a thick pen, which also acted as the controller. These items, which range in price from a few dollars to just over $10 at the retail level, are still significantly more expensive than bulk merchandise. However, as their prices continue to drop, they may soon come in line with the bulk price point.

Aside from advances in the actual technology that makes diodes and chips smaller, more sophisticated and easy to integrate, is the fact that they are now easier to produce, purchase and program. Just a decade ago, items that were perceived as expensive or available only as custom-made specialty devices, are now being produced and sold as commodities. Like sugar, wheat or any other agricultural crop, the prices of these little "worker bee" components can fluctuate dramatically as factories turning out nearly identical units compete for business. These fluctuations, of course, may soon bring them within the reach of bulk vending.

Powering all these devices will no doubt be a new generation of batteries. When Duracell recently introduced its new "CP1" lithium prismatic battery, it was hailed as a breakthrough by those in the electronics industry. Retailing for over $10, the new batteries, while not applicable to bulk vending, will allow manufacturers to design smaller, flatter products. If big firms like Sony or RCA get excited about batteries, it's with good reason.

Technology-based products, which are dependent on readily available batteries, have been constrained by their power sources' size. Batteries, say the engineers, exert far too much influence over style, if not features. Smaller and more powerful batteries mean more features and advanced design for consumer items such as cell phones and digital cameras. Yes, it is possible to design an MP3 player as small as the typical AA battery , but the device would require two AA batteries to power it. In many respects, this is like designing a car around the gas tank.

This is now changing. As power sources grow smaller, more efficient and readily available, end products will follow suit. This is, of course, true in the consumer market of spiffy electronic gizmos, and soon it will be true in bulk vending.

Surprisingly, the first breakthrough in technology and new-style batteries that bulk vending may be able to tap into may be in the form of flat vendibles.

One Japanese firm recently introduced a prototype of a sticker machine similar to photo booths run by music and games operators. However the difference here is that the machine prints out a sticker with an image that a patron has captured on their cell phone. The patron brings the image up on his or her phone, dials the machine's access number, and uploads the picture file. Within a few minutes a sticker with the image appears.

One emerging technology that holds a great deal of promise is "thin film" batteries. Thin film technology has the potential to provide a paper thin, flexible power source with enough juice to run diodes, audio chips and even LCDs for a limited time.

With the development of thin film technology will come what the tech-savvy have dubbed "smart paper." Well into the future we might be seeing paper products, such as book covers or labels, which feature graphics that change shape or glow. With smart paper, innovators may be able to embed small calculators into receipts that automatically provide totals, then "lock" that final figure on the page. How about a credit card that records purchases and then displays them on a small screen or downloads them onto a desktop computer?

And, while all that may be in the distant future , one company is moving quickly into the thin film consumer arena. An Israeli firm called Power Paper Ltd. has partnered with Hasbro's Tiger Electronics to launch three Power Paper-based products, which may provide the best look yet into the future of bulk vending.

Licensed under the firm's "PowerNovelties" division, the first of these products is a series of stickers that offers a 12-second sound bite featuring a different musical instrument. Each sticker, said company officials, is good for up to 2,000 plays.

The company also launched an "LCD Watch Assortment" that is comprised of thin, digital timepieces, similar to "slap bracelets," that provide date and time functions and have a battery life of one year.

The firm has also created "Slap Message Bands," which offer young consumers the ability to record a 10-second message on a slap bracelet's embedded audio chip. The bracelets are said to have a power life of up to 1,000 recordings.

What could the creativity, marketing know-how and massive distribution network of the bulk vending industry do with such products? In an industry where a single item can sell into the millions, it doesn't take a great deal of imagination to visualize a steady stream of "best sellers." Nor does it take a great deal of imagination to see such technology changing bulk vending forever.

Now, if someone would only get to work on those flying cars.

Topic: Bulk Vending

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