As the vending industry struggles to adapt to a changing business environment, signs of the future can be detected on the retail landscape.
While most vending operators have yet to invest in cashless readers and remote machine management, some machines being placed in traditional vending locations contain these features and more. Machines have been placed that offer digital thumbprint payment, interactive video touchscreens that include advertising, and promotional coupons printed at the point of sale – all in addition to cashless readers and remote machine management.
Hundreds of “Quickstore24™” machines have been placed in the past four years by a company with a strong track record in developing new technologies and bringing them to market.
Quickstore24™ consists of a glassfront beverage machine and glassfront snack machine connected by a colorful green enclosure that features point-of-sale graphics. The divider between the two machines contains the payment modules. Quickstore24™ has been popping up in different parts of the country for four years. It uses technology developed by Walker Digital LLC, a Stamford, Conn.-based company that was involved in developing priceline.com.
Industry sources note the Quickstore24™ machines are built by an established manufacturer and equipped with Quickstore24™ proprietary hardware and software.
Besides being technologically advanced, Quickstore24™ uses an unconventional vending business model. Instead of selling machines and software to operators, the company provides machines to operators in exchange for a fixed percentage of sales. The company is also active in soliciting accounts.
A knowledgeable source noted that the system is still in development, and the methods of going to market thus far are intended to meet development needs. Once the system is completed, the source said, it will be licensed.
The system uses a cellular network.
VendingMarketWatch.com first reported on Quickstore24™ in the fall of 2004 when a unit was placed at the Stamford, Conn. police department. A local newspaper reported that the machines offered two snacks, two drinks or a snack and drink combination for one dollar. The report noted that customers could get an “EZ™” code card so that they can have a prepaid account. They could register their code number online, in case they forget it.
Quickstore24™ officials did not wish to divulge information, but Automatic Merchandiser interviewed several operators who have used the machine and were willing to discuss their experiences. There is also a Website, www.quickstore24.com, that explains the system.
Operators like the visual merchandising
Vending operators who have seen the machine are impressed by its visual merchandising. They were less than enthusiastic about the “2 for $1” pricing and held mixed views on the business arrangement, whereby they must pay a set percentage of sales on a continuing basis and never own the machine.
Those who have used the system say it is easy to use, but it does require its own management software.
Some features, such as the interactive video touchscreen, the digital “Thumbpass™” and the promotional coupons printed on site, have not generated a lot of enthusiasm among operators who have used it. Most said these features are more beneficial as selling tools than in stimulating purchases. It must be kept in mind, however, that new features require customer education.
Multiple payment options
The Quickstore24™ Website explains that customers can check their credit Thumbpass™ or EZ Code™ balance online at the machine. Cash or a credit card can be used to recharge the account at the machine. The Website also explains that customers can set their account to recharge when the balance falls below four items.
Foley Food & Vending Co., based in Norwood, Mass., currently operates 13 Quickstore24™ machines, noted Ken Foley, route manager and buyer. He said he was impressed by the company’s association with priceline.com. “It was pretty apparent that this person was a serious entrepreneur; he had a track record,” Foley said.
User friendly software
Foley said it has been fairly easy to work with the system’s software since his company was already using Crane Streamware’s VendMax and was already pre-picking machine deliveries. The Quickstore24™ orders are printed automatically, based on machine sales. The software generates user friendly reports.
Foley said the Quickstore24™ is most successful in common areas of buildings. The machines are not always part of the main vending bank. His average population for an account with Quickstore24™ is 400 people.
Foley said he pays Quickstore24™ a set percent of the machines’ gross sales. If he can keep his product costs at 50 percent of gross sales, his profit margin is acceptable. The machine needs high traffic, which in his situation, means at least 400 people.
Foley didn’t have figures on the percent of sales that are cashless, but he believes that the cashless acceptance is popular with customers.
Foley further believes the system has helped the company win customers. “It’s very impressive,” he said.
FoodPro, a 7-route operation based in South Windsor, Conn., has used the Quickstore24™ for more than a year and is very happy with it, according to Mike Pohorylo, owner. He especially likes the ease of tracking inventory and the useful sales reports.
Pohorylo was surprised to learn, for instance, that 16.9-ounce Poland Spring bottled water accounts for 65 percent of his beverage sales, and that all of the top five selling products are beverages.
Because of the pricing required, Pohorylo buys his Quickstore24™ inventory at membership warehouse clubs. This does necessitate an extra weekly shopping trip.
Pohorylo said Quickstore24™ secured about half the machine’s 30 placements for him while he placed the rest himself.
Quickstore24 brings additional sales to locations
Pohorylo said the system works best in factory break rooms just outside the main vending bank. “Where we’ve put the Quickstore™ we’re extracting an extra $200 a week,” he said.
Pohorylo said the cash and merchandise giveaways are popular with customers. Customers get a coupon with a number printed on it with every purchase; winning numbers are then redeemed for prizes. “Every purchase is eligible for a prize,” he said. The prizes are paid for by both the vending operator and Quickstore24™.
So far, Pohorylo’s prizes have included a laptop computer and cash.
Quickstore24™ has carried some advertising for an insurance company on the video touchscreen, Pohorylo said.
Another operator who did not want to be identified said he has used Quickstore24™ for more than a year and has been pleased by the amount of credit purchases. This operator, who has tested a variety of credit card readers for years, said 7 to 8 percent of Quickstore24™’s sales are credit, compared to 5 percent for other machines equipped with card readers. He said the digital Thumbpass™ typically generates about 4 percent of the 7 to 8 percent credit sales.
This operator said most consumers still aren’t accustomed to cashless vending.
Unconventional business model raises questions
The operator further noted that the Quickstore24™ has been a good sales tool, but he’s not sold on the business model. “I think we’re better off operating the way we (traditionally) operate,” he said.
Jim Kelly, who operates P & J’s Vending in Hopkington, Mass., said he lost two accounts to Quickstore24™, including one that was a long-standing account. “I think it’s the ‘gimmicks,’” he said, referring to the giveaways and the digital Thumbpass™. “It intrigued the location.”
Kelly said the “2 for $1” pricing also appealed to the location. “Somebody must be subsidizing them,” Kelly said, noting that an operator in his market cannot offer prices that low and make a reasonable profit.
Ivan Schultz, owner of Havco Services Inc., based in Croydon, Pa., saw the Quickstore24™ machine in a private suite during the recent National Automatic Merchandising Association (NAMA) expo in Chicago. He went as far as to ask one of his beverage bottlers if they had any problem with him using this machine for their products instead of the standard branded machines, and they had no problem.
But Schultz opted not to go with it. He said his prices are already above “2 for a $1.” In addition, he questioned how profitable the business arrangement would be. He was among several operators interviewed who noted Quickstore24™’s cost to the operator is 28 percent of gross sales. “You can’t make money at 28 percent, even if they give you the equipment,” Schultz said.
“They’re trying to position themselves as both a solution to the industry as well as an advertising outlet to generate advertising dollars,” commented Richard Wyckoff, former NAMA chairman and former president of Aramark Refreshment Services who is now a consultant.
Wyckoff said the “2 for $1” allows the vending operator to price products in other machines at higher prices. Hence, the pricing scheme can be beneficial. “The pricing is dynamic in that sense,” he said.
“I’ve been intrigued by it,” Wyckoff said. “If you can drive revenue, you’re going to be a valuable resource.”
Walker Digital, LLC Identifies Vending as a Growth Opportunity
Quickstore24™ is among several innovations by Walker Digital, LLC, which according to its Website solves business problems by studying human behavior and designing solutions utilizing modern information technologies. Company Chairman Jay Walker holds more than 200 patents in multiple fields and with his team created the innovations behind the interactive Website, priceline.com.
Quickstore24™ is a brand name of Vendmore LLC, which is a licensee of Walker Digital.
Regarding vending, the Walker Digital Website notes the following: “…the gap between what American consumers have come to expect in a retail system and what vending machines actually deliver keeps getting wider and wider. We’ve reimagined vending machines as networked stores that can do much more.”
