Thursday, January 18, 2018 | Today's Vending Industry News
Trading Ideas Can Enhance Profitability

Posted On: 11/16/2012

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TAGS: vending, vending industry, coin machine business, office coffee service, vending machine operator, micromarkets, Alicia Lavay, Vending Times editorial, telemetry, TouchTunes, jukebox operator, vending operator, vending machine planogram, pre-kitting, prekitting

At a recent "media day" client conference I was asked to discuss the latest trends in the industry. Developments in technology have called new attention to the attractive value proposition offered to consumers (and suppliers) by our industry. But just because something is "trending" does not mean that everyone in the industry is taking full advantage of all the available tools by using them effectively. Some operators may not know where to start.

Case in point: at a TouchTunes partners' conference I attended, a seminar was devoted to "Using Compass to Increase Revenues." Compass is an online tool that shows operators how each location is performing. The session explored the value of this tool for gaining a comprehensive view of jukebox activity, and pinpointing opportunities for revenue enhancement. Compass is just one example of how remote monitoring and management software can work together to help operators compete with other "convenience" outlets -- including those in the entertainment market. I was surprised to learn that only 1% of operators were taking advantage of it.

In vending, telemetry's great value to sales stimulation is the detailed information it provides on the contributions of individual units, through frequent real-time reports. These give operators a clear picture of the financial performance of their assets, identifying successful initiatives and flagging issues that need attention.

Telemetry is finding favor more rapidly than most people had thought, a decade ago. The unexpected catalyst was the advent of "smart" mobile telephones which wanted access to the Internet, and so expedited the rollout and improvement of broadband wireless networking. The Internet, when accessed across a wireless network, becomes "the Cloud" in which all sorts of hosted services can be made available, from remote audit and diagnostics for vending and entertainment machines to processing cashless transactions -- even the opportunity to play Angry Birds.

Another emerging tool is warehouse automation, which is finding swift acceptance in merchandise vending and surely is applicable to amusement operators' prize redemption business, too. Integrated with management software that can be fed real-time information from remote monitoring devices, warehouse automation improves efficiencies by making drivers more productive -- and, arguably, more effective at implementing a merchandising plan.

The not-much-discussed structural difficulty about vending is that, to date, everything still depends on the driver's getting the right product into the right slot. If the driver does, the operator can get tremendous benefits from today's best management software. "Prekitting" certainly can help here; it is much easier to be certain that route drivers are following the planogram if all they have to do is carry prepacked orders to each machine, instead of picking their own stock. And if the warehouse stock-pickers are guided swiftly to the right bin on the right shelf, they work more quickly and make fewer errors.

But people can and do make mistakes when standing in front of a machine. The missing link remains some way for the machine to know what is in vend position at each spiral, and this capability is getting closer and closer. While RFID labels may make possible a self-inventorying vender, Vendors Exchange International has exhibited an elegant system that can work right now: a digital camera travels down the inside of the machine front, scanning each shelf and sending the images to a central computer for pattern-matching to identify every item in vend position.

All of these advances are interacting, in one way or another, with a more "mobile" public that demands convenience. And, of course, convenience always has been the great advantage offered by "coin-op" -- now also "bill-op" and "card-op" (soon, even "payment-app-op"). Here, too, technology is our friend, and the vending and amusement segments have valuable experiences to share.

Those with long memories will recall that some jukeboxes were available with banknote acceptance (up to $5) at a time when no vending machine could accommodate $1 bills; and that the interconnection of machines in wide-area networks seems first to have been considered by large amusement arcade operations almost four decades ago. Those arcades used a stored-value cashless payment system -- the token -- to remain competitive and keep customers coming back. Today, more and more games and jukeboxes use Internet connectivity to deliver new services.

What can each industry segment learn from the other, and what might both be doing with all those network connections out there where people congregate, that is not being done now? If you usually don't read the entire issue of Vending Times, I encourage you to take advantage of this useful resource. The exchange of ideas might be beneficial to your business.