The Overflowing Bandwagon

June 16, 2015
There are more technology companies in vending than ever before. Is that a good thing for the operator?

Recently, I had a thought-provoking conversation with a reader. The owner of a large, urban vending company, he had been at the NAMA OneShow and keeps apprised of the latest products and services. It struck him that more and more companies offering vending management service solutions were entering the marketplace. I had to agree.

In fact, I looked back and four years ago at the 2011 NAMA OneShow there were arguably only eight companies offering the service. At the 2015 show, there were 13. The vending operator I spoke with wanted to know why when very few small operations (which start up frequently) opt to invest in systems like a VMS and when there is continued consolidation of vending companies.

While consolidation among operators has slowed, it is still happening. Our 2015 report shows a decrease in the number of small operators while medium operators have stayed the same.

Focus is on the small vendor

Many of the new VMS entrants focus on the smaller operations, trying to entice them with a smaller financial burden and good benefits. Perhaps technology companies view the low penetration of technology, including VMS systems, adopted by our industry and see potential. Our own State of the Vending Industry data supports this idea that adoption of everything from VMS to credit card readers have room to increase.

However, there is a downside to many new entrants to a market. What if they fail, and the investors pull their financial support? Will the operators who chose to take a chance on these companies be left with no support and hardware that doesn’t work? I suppose that is always a danger with the new and untried solutions — probably one of the reasons vending has been historically slow to adapt technology. Many operators are worried about making a financial error and choosing the wrong technology for their operation.

Silver lining

One nice thing about all the new players in the technology realm is that prices of the service will surely go down. There is more competition among providers — more companies competing for the same dollar. Of course, will lower prices actually cause technology companies to drop out of the industry at a higher rate? How are the current technology providers doing in terms of revenues? There continues to be the worry hardware or software providers will be here today and gone tomorrow.

Still, it’s clear that a technology such as VMS can help operators reap many benefits in their operations. It’s worth the research. It is also a commitment, and part of the due diligence in making that commitment is getting to know and trust the provider as you’ll be partners in a long-term vending relationship.