Make an old machine new again

As the number of millennials continues to grow, so has the emphasis on innovative technology. Consumers want to be wowed with new and exciting equipment, and will be more inclined to do business with a company willing to provide that flare. The same is true for the vending industry. With a number of innovative solutions available for new and existing machines, operators have to decide what to invest in. One thing is for sure, after speaking with industry leaders, it became apparent that embracing new technology is a must to stay ahead in vending.

Telemetry evolves in new areas

Telemetry is a term around which all other current innovations seem to be focused. Touchscreens, payment systems and even locking mechanisms all use telemetry; meaning real-time data for operators at the push of a button, and wireless capabilities for consumers at the point of sale.

According to Poch Ceballos, online solutions product project manager at Crane Merchandising Systems, Telemetry suggests a wireless platform, like Android or Linux, that can instantly stream important data such as malfunctions and product shortages to the operator — alerting him or her of the problem.

Brent Garson, CEO of Vendors Exchange International Inc. (VEII) believes telemetry and wireless connectivity will be a main-stay in the industry for years to come.

“I think telemetry and interactive screens are going to become a de facto phenomenon,” Garson said. “We don’t sell a Connect [VE Connect] unless it’s connected to the network. So I don’t think connectivity will continue to be a novelty, I think it’s going to become a reality.”

When operators fit their vending machines with telemetry, they’re often preparing their machines for future innovations. Andrea Ihara, vice president of marketing and business development at VendScreen uses the VendScreen Revolution as an example of a device that adds telemetry and includes software that can be updated every few months as new innovation is brought to market. Updates are seamless for the operators.

“Wireless connectivity allows the operator to be in touch quickly and efficiently with what is going on at their machine level,” Ihara said.

Telemetry also opens the gate for mobile payment. Mobile wallets such as ISIS or Google Wallets utilize NFC contactless technology communicated through a telemeter in the vending machine to make payments. Telemetry devices use the cellular networks from providers such as AT&T, Verizon Wireless and T-Mobile as their communication network.

“Many payments experts forecast that our mobile phone will become our primary payment device and a repository for basic identification details” Chuck Reed director, marketing and sales operations support at MEI Inc. said. “How big will mobile payment be? Eventually, it will be the primary way we pay for things.”

Veronica Rosas, vice president of communication and investor relations at USA Technologies, Inc. (USAT) sees telemetry as a way for operators to streamline their business, without making a huge financial commitment.

“Investing in a whole new machine isn’t at the top of operators’ lists when they have the opportunity to drive incremental returns without making such an investment,” Rosas said. “Having a reliable, flexible and value-add service partner will, in our opinion, drive faster returns.”

A report published by Transparency Market Research entitled “Mobile Wallet Market-Global Industry Analysis, Size, Share, Growth and Forecast, 2012-2018,” suggests that the mobile wallet market will reach $1.607 billion by 2018, with 30.7 percent compound annual growth rate. Meaning, if the market grew steadily each year it would equate to $267 billion in annual sales.

Cashless is the future

Cashless payment options are a large part of the vending industry and an important retrofit technology. Less people carry cash today and without a cashless alternative, vending operators are missing out on potential sales. Plus, as Crane’s Ceballos, points out, cashless solutions encourage spending.

“When consumers pay with cash they are limited to the amount of cash they have in their pockets,” Ceballos said. “A consumer is less likely to add more money for an item that costs $1.35, than they would be if they were using cashless payment methods.”

As Ceballos suggests, having a cashless solution allows operators to more easily increase prices without seeing a decrease in sales. Cashless also markets to a younger generation who is less likely to carry cash.

Culinary Ventures Vending in Union, N.J. has just begun implementing cashless solutions on their machines. Tom DiNardo, co-owner of Culinary Ventures Vending, got involved because of the impact it has on college campuses.

“Many colleges are implementing payment methods on students’ identification cards,” DiNardo said. “So it’s important that we have cashless solutions on the machines at these locations.”

DiNardo sees the long-term impact of cashless integration. He believes that operators who neglect cashless payment options will suffer going forward.

“The reality is people just don’t have cash anymore and the vending industry will just have to adapt,” DiNardo said. “You can either get on board or you drown in the wave. That’s what makes us front-runners in the industry is we’ve committed to adapting.”

MEI’s Reed reports that the most popular locations for cashless solutions are college campuses, large call centers, public sites and hospitals because of the likelihood of inadequate cash due to the unplanned nature of purchases. Having multiple payment options like cashless bezels that also accept cash increase the likelihood that the consumer will be able to make a purchase with whatever payment method they choose.

Rosas of USAT anticipates a demand in contactless payment in the future. “Loyalty, couponing and prepaid programs are likely to be the next big thing and are a focus of USAT and partners such as Verizon and Isis,” she said.

According to Ihara from VendScreen, the industry statistics have shown a 20 to 25 percent lift in sales due to cashless payment solutions.

Nutritional data is important

One of the complaints about traditional vending machines is the disconnect between product and consumer. People like to see what they’re buying. With telemetry and touchscreen technology, it is easier than ever for consumers to connect with products.

When vending operators adopt a touchscreen for their machines there are a lot of benefits. It is a bright and interactive display designed to grab the attention of consumers. Additionally, once consumers have engaged the screen, they have access to a product database filled with descriptive nutritional facts and high-definition photos. Ihara believes this will help lure customers who have otherwise given up on the industry.

“Consumers walked away from vending because it didn’t fit their nutritional needs,” Ihara said. “Be it because of allergies, intolerances or caloric restrictions or fat restrictions, nutritional display gives the consumer the ability to make educated decisions before vending. This brings people back to the vending marketplace.”

Databases that feed touchscreen with nutritional information can be simple or advanced. The VEII’s MIND™ (Make Informed Nutritional Decisions) breaks products into categories to further enhance the user experience.

“A consumer can walk up to a MIND and sort products by categories such as gluten free, peanut free or low fat,” Garson said. “The MIND™ will recognize those categories, and the products are tagged by us so the operators aren’t driving themselves crazy trying to figure out the technology.”

Third party advertising

Touchscreen technology also lends itself to alternate sources of revenue for operators. Touchscreens allow vendors to display advertisement videos and photos on their vending machines. These videos can promote products inside the machine, or third-party content.

Garson has seen vendors successfully use promotional videos, games or even targeted advertising based on a concept called anonymous analytics, where the machine uses a camera to identify the user’s age and gender, and then uses algorithms to try to determine what that person might be interested in purchasing.

“The value of having a camera on the machine is that you know who is using the machine,” Garson said. “We key our ads based on who is in front of the machine. So if it’s a 50 to 60 year old male, we may want to play a trail mix ad rather than an energy drink spot.”

New locks enhance security

Along with consumer and merchandising retrofit technology, advancements are also being made in vending machine security. Bill Denison, CEO at TriTeq Locks, has developed a locking mechanism that deters vending theft and is entirely electronic — no keys required.

The mechanism replaces the existing T-Handle locking mechanisms many snack and beverage vending machines feature. It is operated by a key fob, much like the locking mechanism on new cars and is therefore immune to drilling and picking.

“What we’ve done is completely eliminated the lock plug altogether,” Denison said. “It gives on that benefit of quickly being able to retrofit, and having the added security of the anti-theft qualities.

What really make the locking system worth it is the electronics that go along with it, according to Denison.

“The security that you’re getting today with mechanical keys and lock cylinders is very antiquated,” Denison said. “There are instructions that describe exactly how to attack mechanical lock plugs. So to stay ahead of the curve, is to go with electronic locking systems.”

Denison hopes to tap into the telemetry market as well. He feels mechanical locks are holding back the telemetry process, by not allowing operators to dynamically route their drivers. The example Denison uses is one of route switching.

“Say there’s a banquet taking place on a location for one of your routes and the driver is tied up,” Denison said. “An operator using telemetry will want to re-route other drivers to the first route to ensure that their routes are being serviced. With mechanical locking mechanisms, those drivers may not have keys to the machines on another driver’s route, thus slowing down the process.”

By installing the electronic locks complete with telemetry, route drivers will be able to route their drivers on the go.

Retrofit technology is a worthwhile concept for vending operators to explore. It allows operators to take advantage of current technology without having to completely replace an entire fleet of vending machines, and has long-term revenue and security benefits as well.