Article

Vending comes of age

Can a marriage between the kiosk and the tried-and-true vending machine produce a better shopping experience for the consumer, while putting more money in the operator's pocket?

June 28, 2005 by James Bickers — Editor, Networld Alliance

If you look hard enough, you might still be able to locate an old-fashioned soda-vending machine: a row of glass bottles down the left-hand side, each of their bottlenecks held in place by a metal latch that slides out of the way when you deposit your coins. Somewhere on the front of this rugged machine is a bottle opener, to help you pry the cap off.

Bottle cap? Glass bottles? An entire generation of mall-walking kids probably has no idea what these things are.

Things change, some of them faster than others, and the next-gen soda machine looks nothing like the comfortable old workhorse. Tomorrow's vending machines sport bill acceptors, interactive displays and pricing controls based on ambient temperature. Tomorrow's vending machine operator can change prices from his desk and look at product inventory through a Web browser.

Slow, steady change

According to David Murphy, a Canada-based vending industry consultant who has worked in the business for more than 30 years, change comes to the vending business just like any other, even if the operators are not always enthusiastic about it.

"Vendors are really slow to jump into newer technology," he said, "partly because they have a lot of equipment out there. It's a slow process."

Murphy said that vending professionals tend to be entrenched - they've heard one too many promises of the next great technology, and are skeptical.

"I always feel that vending is almost a generation behind - we want to make sure it's going to work first," he said. "There is a lapse of time before somebody is going to get into it in a big way."

Dorn Beattie wants to get into it in a big way. His company, Solara Technologies, is working to marry the vending machine with the kiosk, creating a device that not only dispenses product but displays advertisements, allows user input and invigorates the entire purchasing experience through a colorful, high-tech interface.

But what's wrong with the way vending machines already work? Nothing, but Beattie sees ways they could work better. He's particularly bullish on allowing users to pay with plastic, eliminating the frustrating fumble to find sufficient change.

"Consumers are prepared to pay a premium in order to have the use of credit card operation," Beattie said. "If existing vending companies add our technology, they're into a cashless transaction." Solara's offering, which is available in new products as well as retro-fits for existing machines, boasts a bill acceptor that recognizes 82 different national currencies, and is compatible with any credit, debit or loyalty card program.

Beattie also thinks there is big potential for on-screen advertising, an additional revenue stream for the machine owner. "POS advertising is something that advertisers will pay a significant number of dollars for," he said. "And it also provides product reinforcement."

"The video is DVD quality - we have our own standards that we work to," said Richard Pitt, Solara's chief technology officer. "It's very high quality." He added that the video is encoded with digital rights management, meaning that if the machine should fall into the wrong hands, the media within would be useless.

Then, you have the administrative benefit - operators can have unprecedented control over their inventory, and remote management makes planning refill routes simpler than ever. "The moment the product is vended, the inventory control realizes that particular product is decremented by one item, and that the transaction has taken place," Beattie said. "The machine thanks you for your patronage, and after a few seconds, the advertising will resume from the point where it was interrupted."

"The way our back-end works is we categorize machines by location types, and deal with content by category," Pitt added. "We take machine administration from the point of view of minimizing individual interaction, and maximizing the work that the machine does."

Is it worth it?

Murphy, for his part, is skeptical of the hybrid of kiosk and vending machine. He thinks that people who want a soda, want a soda - and they don't care about the other bells and whistles.

If he's right, then traditional vending machines will continue to thrive, especially if the price differential is significant. But Murphy acknowledges that the display capability of these new hybrid machines has some exciting potential when it comes to augmenting the vending business itself: branding the machine in a fashion that makes it more appealing to the owner of the floor space.

"In schools and places I'm in with digital readouts, I've been advertising the local school team," he said. "In a factory, I'd (use the display to) promote the social clubs or their social events. It's an add-on to help get the account." One of his customers, a marina, is thrilled to have vending machines bearing its logo and branding messages rather than displaying generic ones.

As for advertising dollars, Murphy said that not all locations will benefit, but certain placements are good fits, and might generate some substantial income.

"Advertising revenue will most likely come from airports, train stations, and other high-traffic places where people might be spending a fair amount of time," he said.

About James Bickers

---

None

Connect with James: