Three Factors To Consider When Purchasing Product For Vending

Nov. 14, 2013

In my last blog post, I wrote on how operators should not allow personal preferences to affect purchasing decisions. In this post, I’ll share some of the factors we used for product selection.

We developed monthly menus for our snack vending machines. We began each month with a “broker meeting day.” In these meetings, the brokers would present us with new products, discuss rebates, share promotions and recap how we’re doing on their product lines. For us, the most important part was evaluating new products to determine what we were going to consider for the next month.

Often we would be informed of how well a particular new product may be doing at the distributors and while we paid attention to this, we would not base our decisions on this fact alone. Some people may take performance at distribution as an indicator of how well a new product is selling, but movement through distribution is simply an indicator of how well a new product is being stocked, not sold.

Clearly there is no science to picking new products. In fact, by the time any new product makes it to the market, it has already gone through extensive development and review processes by the manufacturers, and still, only a portion of the new products perform well in the market. Therefore, we must be judicious in our selection. There could be hundreds of factors to consider, but we focused on three key factors in our decision.

The first, and arguably most important, is packaging and branding. As I mentioned in my last blog post, consumers at the vending machine are making their purchasing decision based on how the product looks through the glass. They don’t have the opportunity to touch, taste or sample in any way. They only see the front of the package.

I took a picture of every new product and incorporated the pictures into my notes so I could review later and share with my team. In packaging and branding, we looked at package colors, attractiveness, size, presence and even what text was on the package all relative to the other products in the same category.

The second factor we considered was product mix. This is not a factor specific to that product, but how that product fits in our menu relative to the other products. For instance, if we already have a popular package of peanuts, we’re not going to take on another package of peanuts. In fact, the bar gets set very high for similar products. There would have to be a compelling reason to switch.

We also looked at which items are complementary. Sometimes having complementary products can improve overall sales. It’s not really about optimizing sales of each spiral, but rather optimizing the sale of the machine. This means we can pick up items that may add incremental sales, especially if the sales of the replaced item can be transferred to another product in the machine.

The last factor we would consider would be promotions and pricing. If there were substantial promotions on an item, or if the manufacturer was doing advertising and promotions in the marketplace (like when a product was themed after a popular movie), this would help entice us to stock an item. Pricing, of course, is important as we need to ensure it is profitable to stock and maintain margins and that it fits in an established price slot.

Rarely, if ever, did we consider taste to be a factor in product selection. New products have gone through many hurdles before getting to market – there have to be people that have liked it for it to get this far. So we took taste off the table and made our decision on other factors that were more specific to our business.

Ultimately, product selection is more art than science. The factors we considered were still subjective, but we had guidelines that helped us in making decisions. More important than the actual factors is that the operator is using a system and not relying on one purely subjective criterion, such as taste. Once the product is in the machines, data takes over and it in fact becomes more science.