Instead of cold food machines, they offered frozen food machines. Van Hazel said most customers who want food can be convinced to accept a frozen machine, which also offers ice cream.
Instead of hot beverage machines, they offered countertop coffee brewers, an offering that eventually grew into a separate OCS division.
Machine planograms early on
Being newcomers to vending, the partners did not follow established industry practices, such as paying drivers based on commissions or having drivers pick products in the warehouse. Instead, they reasoned it made more sense to have a planogram for the driver to follow, and to have the truck loaded in the warehouse by the lower paid personnel.
“Why would I have a salaried guy spend part of his day loading his truck when I could have an hourly guy do it?” Van Hazel asked. “I want him out collecting money as much as possible every day.”
This system proved fortuitous when the partners sought vending management software.
Starting the business in 1998 had a key advantage; DEX was just coming on the scene with vending machines. In learning about DEX, Ace Vending was able to attack the market with state-of-the-art management software designed by Van Hazel, a college math major. By using DEX data, they were able to gather item-level sales data from the machines, which made product inventory easier to manage. It also enabled them to develop planograms that more accurately matched deliveries to machine needs. “We were very lucky getting in (the business) when we did,” Van Hazel said.
Focus on route management
By 2002, the company had four routes and moved to a larger warehouse. The partners recognized that route management was key to profitability, so they began to research DEX handhelds.
Where many vending operators become interested in DEX handhelds as a way to improve cash accountability, Van Hazel saw it as a way to make the route planning system more efficient. The company was already using a planogram for its routes and was pre-kitting the loads for drivers.
DEX handhelds, in providing item-level tracking, gave Van Hazel a tool to make the planogram more accurate.
After researching industry specific software, Van Hazel felt Streamware offered the best system. Streamware was one of the first software suppliers to offer DEX-based management. In addition, it was the only company that responded to a request for an onsite visit.
“I think we made the right decision,” Van Hazel said of Streamware, which is now part of Crane Merchandising Systems. “Their product pretty much does what it always says it can do.”
In 2004, they began pre-kitting routes using DEX data.
In 2007, right before the recession hit, Ace Vending expanded into OCS. That was a fortuitous move, since the OCS business has weathered the recession better than vending. Recognizing the unique needs of OCS, they established a dedicated OCS truck.
“The office coffee business is really what has kept us profitable over the past five years,” Van Hazel said.
The company was also ahead of the curve in its market with cashless vending, which it introduced three years ago. The company began testing the USA Technologies Inc. system. “We thought it was finally ‘plug and play,’” Van Hazel said.
Customers weren’t asking for cashless at the time, and most were not aware that it was available. But Van Hazel wanted to be ahead of the demand before it hit, and in retrospect, he made a wise decision.
Ace Vending started with 10 cashless readers on a test basis in existing locations with a lot of public traffic and younger consumers. These included hotels and telemarket call centers. The results were immediately positive. Those first 10 machines experienced sales increases of 10 to 15 percent.
The USAT readers and telemetry system worked reliably. The system also interfaced seamlessly with the Streamware server.
They also tried some cashless readers in blue collar accounts, and the response was not as good. However, that has changed in the last year.
In three years, Ace Vending has installed card readers on half of its 3,000 machines. In addition to USAT, Ace Vending has used some Streamware readers.