Five Ways Connected Vending Machines Will Drive Profits

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Vending has seen a few blips of excitement over the years. In the '80s, dollar bill acceptors were introduced and quickly embraced. Cashless vending got a start in the late '90s, but little adoption. Around 2005, we began to explore the idea of connecting vending machines to the Internet. Suddenly, vending took on a new form. We found that by connecting machines and adding cashless payment, we could dramatically change the business model. Not only could we reach new customers -- namely, millennials -- with flexible ways to pay and a better overall experience, but we could also give owners and operators the means to improve management, open new revenue streams and increase profitability.

Today, there are more than 200,000 connected vending points of sale in the U.S., and operators are continuing to build out their networks. At the same time, technologies purpose-built for vending have exploded. Several companies have developed vending management systems (VMS) that use telemetry to collect data -- such as inventory levels, machine status, temperature and cash amounts -- to improve merchandising, routing and overall business operations.

Now, the International Vending Alliance, which encompasses an installed base of 1.7 million machines in 70 countries, is working with Intel, an electronics manufacturer and a global M2M organization to bring a new solution to market. At its core sits an Intel-based device that replaces the vend management controller and contains a 3G GSM modem. For the U.S. market, this device presents an immediate opportunity to upgrade older equipment at a cost that provides a quick financial return. The global market presents a bigger challenge. There are hundreds of machine types, all with their own firmware and limitations. The Intel reference platform provides a single system that can operate every vending machine -- from a specialty coffee machine to a 64-select snack or drink vender -- and connect them all to the Internet.

One of the more exciting features of this solution is that it was designed to future-proof the electronics of any vending machine. Because the device is driven by a PC, new software can be uploaded as needed, cashless transactions can be sent via the modem, and new peripherals can be added. With this level of flexibility, we can continue to add features far into the future that we can't envision today.

A connected vending machine network, along with a good VMS, fundamentally changes your business model. You should begin to see results in five key areas upon building out three or four routes (300-500 machines).

#1: Improved inventory
By knowing what's selling in each machine, you can improve product selection location by location. Using the same data, you can pre-kit for product deliveries and cut your truck inventory by half.

#2: Fewer trips and routes
Pre-kitting allows you to achieve one-trip location product fills. In addition, you can adjust delivery routes to service only machines that have a specified amount of usage. As you adjust your delivery schedules, you may be able to eliminate routes -- all while generating the same weekly sales.

#3: Better servicing
Thanks to machine malfunction alerts, operators can proactively service machines instead of waiting for them to create problems.

#4: More payment options
Millennials want to pay with their smartphones. With the addition of a low-cost bezel, you can quickly and easily add cashless vending. Most cashless bezels also accept NFC payments.

#5: New revenue streams
A high-quality VMS allows you to add consumer promotions and even target them by location. This is a great way to engage your customers directly.

The Intel-based solution offers truly competitive features, including a cloud-based fiscal compliance solution to manage the collection of global value-added sales tax (VAT). Machine component monitoring allows you to replace key components, (think compressors on cold and frozen food equipment), before they wear out. And with support for a touch screen, you can display nutritional information and product promotions, as well as perform remote pricing. You can even add large digital screens to advertise in public locations.

The status quo may be your biggest competitor. The pace of vending innovation has accelerated tremendously, and great years are ahead for those who adopt change. With connected vending, you have a practical way to rebuild your business into an efficient, management-centric and more profitable venture.