Kiosk Technology Will Give Vending New Capabilities

Dec. 7, 2007
The evolving self serve kiosk industry identifies itself by its functionality.

Back in October, I examined the emergence of self serve kiosks in the U.S. and attempted to define how the full line vending industry will be influenced. The self service kiosks are defined by their functionality, which to a large extent has separated them from traditional vending. This does not mean that vending won’t be affected by these new technologies.

Some possible changes to the vending industry, as a result of the convergence of self-service technologies, are identified in the table on the opposite page.
Following is a description of some of the anticipated advances in vending technology:

Hybrid payments – Since consumers are becoming accustomed to self-service devices capable of processing both cash and cashless transactions, vending will likewise adapt this range of settlement options, including open system (bank clearinghouse payments with a fee), closed system (private in-house payments without a fee), and payroll deduct (or similar processing) with no external fees.

Dynamic digital displays – The ability to place digital screens on a vending machine or alongside the machine (networked to the machine) can provide unique and powerful product information/promotions. Dynamic content can be loaded at the machine or downloaded to the machine for displaying. In addition, commercial or public service information can also be displayed on the screens as an additional source of revenue or for customer service broadcasting.

Touchscreen activation – The placement of an intuitive touchscreen display on a vending machine allows the customer to request detailed product information via screen navigation. Nutritional data, diet considerations, product expiration date and pricing, and related information are readily displayed upon inquiry.

Avatar – The term “avatar” is used to describe a virtual actor or online personality usually reserved for Website interactivity. Giving a vending machine a personality (voice and on-screen image) will significantly alter the customer experience. This feature has entertainment value but is also capable of up-selling and cross-selling products and bundled products.

Product information display – Regardless of whether there is a digital display or touchpad activation, vending machines will have some form of product display. The displaying of nutrient content, expiration date, pricing, promotional features, etc. are important factors to consumers.

V-engineering – This is similar to the popular foodservice industry software entitled, “menu engineering.” The application of category management and product mapping techniques have been effective in identifying product offerings based on sales mix and trend analysis. V-engineering represents the next stage in the progression from product mapping to category management. V-engineering blends sales data with item profitability to produce a powerful evaluation.

Technology platform – Less than 20 percent of the installed vending machine base reports using DEX capabilities. Microsoft Windows, although it may carry an unreasonable incremental cost, or Linux are two possible operating systems for replacing DEX.

Machine topology – Vending machines will be built with remote machine monitoring and networking as standard component parts. Machines will be networked across a venue, route, and company. Data will be aggregated for enhanced operational efficiencies and ‘best practices’ comparisons.

Affinity programming – Development of a location, supplier, distributor, and/or machine manufacturer system that encourages repeat purchasing and rewards customers for selecting vending as a preferred automated retail location. Consumer reward points, discounts, e-coupons, or free vends based on purchase patterns would be available.

Product packaging – Some machines will possess the ability to customize or personalize machine-based products as well as support new product introduction. The ability to build-to-order product offerings (sandwiches, salads, meals, entrees) will be a reality. Might an automat format return?

Transaction basis – Consumers will be able to make multiple purchases with the presentation of coin, currency, or cashless payment media. Operational preferences that prohibit multiple products purchasing with arbitrary cash and currency escrow limits, or credit or debit card authorization, will be configured to enable multiple selections.

Operational data – The availability of real-time data will be a regular occurrence. Machines will be configured in a network that will provide a basis for data collection, analysis, and display on the Web, PDA, cell phone, or elsewhere.

Remote purchasing – The ability to order items from a vending machine from a handheld PDA, cell phone, desktop PC, or other communication device. It allows product purchasing without having to be physically located at the machine. Product is placed in reserve and an item purchase code is provided. The customer uses the touchpad to enter the code and complete the pre-arranged transaction.

Intranet marketing – For vending operations in an office, factory, or other closed venue. The application of intranet marketing can be effective. Intranet marketing involves having access to the clientele at the location and using the company’s network or email server to communicate product promotions, incentives, introductions, discounts, specials, and the like. It is often a powerful push technique.

Product tracking – The idea of product tagging with RFID or NFC technology may soon be a reality. Product tagging will allow operators to know exactly what is available and sold in each spiral or column and have greater access to sales specific data for efficient replenishment and v-engineering analysis.

Concierge connectivity – Consumer interface through a touchscreen display hung on either side of a traditional vending machine to be used to access an online concierge for external, remote shopping (products not in machine) for remote delivery. It is akin to Web shopping, but through a dedicated, machine mounted screen featuring a shopping agent (concierge) capable of accepting orders, payment, and delivery data.

Consumers use the screen to send restaurant foods, personal products, flowers, gift cards, and an array of premier goods and service options. It is a way to increase machine revenues without more products or space.

Social networking – The concept is similar to and social networking; online connectivity to self-service location information, product promotions, and downloadable e-coupons. A Website for information related to products and consumer affinity rewards.

Dynamic pricing – The ability to change prices remotely or at the machine using LCD or LED displays at each product location.

Industry certification – An industry technology certification program, supervised by the National Automatic Merchandising Association, could be developed and implemented to ensure compliance with industry standards and that innovation and emerging technologies would be monitored.

Such a program would provide assurance to consumers, operators, and distributors that proper handling, processing, and reporting procedures are followed.

An industrywide certification program governing hardware, software, and netware are appropriate as more self-service technologies evolve.

Technology investments – Perhaps the most effective means to achieve increased industrywide technological advancement is through a technology investment partnership (TIP).

In this arrangement, technology providers and industry practitioners would work together to develop a working model for wider industry consideration and adoption. A TIP program has the potential to provide systematic applications that support healthier industry performance.

Transformation of the vending industry

Vending may well be revolutionized into a unique version self-service retailing. The image of the industry as a legacy operation dependent on cash and labor may give way to new technology implementation. Given the experiences gleaned by Web-based and kiosk hosted self-service operations, there are several important points for the vending industry to keep in mind.

Consumers expect similar cash and cashless transaction settlement
options to be available at all business venues (including vending machines).

Special capabilities including upselling, purchase tracking, customer relationship management, affinity monitoring, and cost savings are important to the customer experience.

Customer satisfaction with reasonable return on investment (ROI) statistics are compelling reasons to implement self-service.

Nearly 70 percent of shoppers research products online before making a purchase. This may be an effective channel for promotion of vending products away from the machine (social networking, intranet marketing, etc.).

Basically, vending technology is most useful when customers perceive benefits, convenience, quality, reliability, and possibly personalization.

Concierge and in-wall machines

Just for fun – might there be two new versions of traditional vending machines: 1) a concierge machine? and 2) an in-wall machine?

A concierge equipped machine will feature side-mounted touch screens connected to a dedicated shopping avatar Website. The avatar will act as a shopping agent and locate products and services anywhere available on the Web.

Order entry, settlement, and shipping information will be collected and the sale completed on the screen. This will provide an avenue for additional revenues without machine expansion and could also provide remote machine purchase access from a desktop, handheld device, or cell phone.

Second, vending machines may transform into kiosk-based interface devices connected to an in-wall delivery mechanism capable of holding a large product inventory to minimize replenishment frequency.

In addition to products, the in-wall machine, like the concierge machine, will have the non-machine based shopping agent capable of performing a multitude of services (banking, retailing, and search engine applications).

Consumer perception will drive the future

As the vending industry considers the implementation of advanced self-service technologies to reinvent itself, three key items need to be addressed.

First is the issue of clarity: will customers know what to do? Second is ability; will customers have the ability to use the technology? And third is motivation; will customers perceive a benefit for using the technology?

If the convergence of self-service technology is to be effective, the vending industry must be willing to change the customer experience, enhance its image, and improve its operating margins. Technology is an investment that, if made wisely, can provide a competitive advantage in the marketplace.

The old vending motto of “Clean, Filled, and Working” may soon be supplanted by “Cashless, Flexible, and Wireless.”