A few weeks ago, ABI Research announced that by the end of this year there would be 10 million vending machines connected to the internet, expanding to 24 million by 2021. This seems like a big number considering that in the U.S. workplace refreshment vending industry, we estimate not quite 5 million vending machines, only 15 percent of which are connected. Research Director at ABI Research, Jeff Orr, spoke with VendingMarketWatch to answer the specifics about the 10 million and how the research was done.
Q. What types of equipment were counted for these 10 million connections?
A. The 10 million includes many different vending machines on a global scale, including your more traditional consumer packaged good (CPG) machines that you would get a food or beverage from as well as non traditional vending machines that dispense products such as toiletries or office supplies. In addition, we counted what you might call fulfillment kiosks such as lottery ticket machines, coins to cash, DVD rental kiosks, theater tickets, etc. The thought is that fulfillment kiosks perform the same general dispending behavior we see with vending machines, but rather than CPG items, it is more about fulfillment of a purchase or transaction.
The majority of those 10 million connections, however, were within the traditional CPG vending machine segment. The majority of connections today are occurring in establishments that are indoors where there is already an internet connection, generally an ethernet. Usually there's some sort of data sharing agreement in place between the various parties as well.
Q. How was the research conducted?
A. The methods we used to gather research are pretty diverse. They range from direct research with companies in the marketplace, individual conversations with customers, press releases and other ad hoc behaviors such as conferences and events. It's any and all of those activities that allow us to put the research together. We also have a strong base knowledge of methods of connections and companies that allow for those internet connections.
Q. Were there any unusual findings that really stood out to you?
A. One number that wasn't high that I expected to be was stand alone vending machines being retrofitted for internet. Few outside machines or those with 24/7 public access or event specific access, such as a concert hall were connected. There's a certain amount of complexity with connecting those machines. One is whether the placement allows for an antenna and good coverage by the preferred network provider, and the associated costs.
In addition, we saw few solutions that tracked operational efficiencies. The bottlers have what I would call an end to end solution. They have the ability to track quality of the service being offered at the location, the status of the equipment and other data surrounding operational efficiencies such as how long a cooler door is open. Few other vending companies were using connectivity to gather that sort of data.
Q. What are some take-aways of the research?
A. It can be hard for mom and pop companies to understand what the benefits of connected vending machines are because they really have optimized their businesses for a specific solution. By contrast other companies without perhaps the nostalgia for a specific vending machine experience are taking older machines and refurbishing them, adding a digital interface and providing a different, more modern experience.
Also, in terms of expansion of connected machines, CPG machines won't show huge growth. Instead emerging markets on a global scale, is where we expect to see a higher percentage of these connections emerging.
