Not Your Grandparents Vending Machine

It is a universal human experience to have stood in front of a vending machine eagerly anticipating the advent of a hot steaming cup of coffee, a decadent chocolate bar, or a savory bag of chips that seemingly loomed so tantalizingly close and yet so far away.

The crumpled dollar bill that you had just stuffed into the bill-acceptor is now being spit back out at you like the projectile spittle of a Peruvian lama, rejected like a teenage crush. However, this is no longer an issue with IoT connected vending machines.

Yes, many have claimed the cloak of intelligence yet, so few are. So what really makes a vending machine intelligent?

Intelligent Vending

An intelligent vending machine is the response of an industry that is looking to decrease cost, increase revenue, and continually adapt to ever-changing market demands. By the end of 2019, the FDA will require that vending machines are able to display nutritional information to the purchaser prior to the transaction.

This means that for a consumer to make an educated decision prior to purchase, the correct information will need to be displayed for the product of choice. Since vending operators need the flexibility to change certain vending items by month of year and often on the fly if certain items are not selling, the nutritional information displayed needs to be able to change dynamically and many times remotely.

The move to healthier food alternatives at the vending machine is leading to an increase demand for healthier alternatives. The needs of consumers to have cashless payment options has also increased the need for a vending machine to be connected to a remote payment processor.

Vending machines that can accept debit/credit card payments, contactless payment, loyalty cards, and even social media enabled payment options (e.g. paying via Twitter) need to be connected to the internet via a wireline or wireless connection.

The days that a vending route operator would visit a vending machine every Monday morning as part of their weekly route is almost completely over. Now, IoT connectivity allows for continual updates as to machines inventory, environmentals in the machine (temperature, humidity, etc.) and real-time data on parts wear and tear.

IoT Innovations in Vending

Vending machines in Japan can now recognize gender and age proximity and thereby give purchase recommendations or identify the customer via facial or voice recognition. IoT connected vending machines in the same country suggest to consumers where the nearest alternative vending machine is located if the machine they are standing at is out of an item.

IoT connectivity allows customer identification through fingerprint scanners, iris scanners, and other biometric identification methods. Camera enabled intelligent vending machines and micro markets prevent theft and vandalism.

The increased diversity of consumer items offered through intelligent vending machines or ARMs (Automated Retail Machines) allows for even high priced ticket items such as phones, tablets, high priced electronic gear, pharmaceutical items, etc. to be sold.

The machines are often located in shopping malls, airports, and other high trafficked areas has also increased the need for kiosk-like vending machines to have constant connectivity, mostly when the operator is not able to take advantage of the local are network (LAN).

Berg Insight, a leading IoT/M2M research firm estimates that currently 50% of the approximately 6.5 million vending machines in North America are IoT connected in some way and 16% of the 16 million vending machines worldwide are IoT connected.

The move to more and more IoT connected intelligent vending machines is inevitable. North America is anticipating a 13.75% CAGR (Compound Annual Growth Rate) in revenue growth between 2018 and 2024 – wouldn't it be nice if your savings account could do that?

An Ever-Increasing Market

The worldwide vending market was worth $3.79 billion in 2017 and is anticipated to be worth $9.31 billion in 2024. Key factors are the expanding base of young professional who have a high technology adoption rate, the increasing cost of service labor, increasing urbanization, and the ever increasing need for ready-to-eat products.

Telemetry allows for increased efficiency through route optimization, using various vending management systems (VMS) which has led to significant saving in operational expenses. Nearly 70% of vending operators in North America use some kind of telemeter connected to hand held devices of back-office dashboard.

Sensors can communicate a vending machine being down or predict anticipated maintenance down to a part level before it is needed, thereby improving the customer experience and maximizing revenue per hour. An important subset of the VMS is the data exchange protocol (DEX) that collects data from the vending and is then communicated back to the vending operator via its telemetry.

Telemetry is the technology that allows for remote measurement by sending information to the systems operator. The word “tele” being the Greek word for “distance” and “metron” which means “measurement”.

Because of onsite stringent network security requirements, this telemetry data needs to often be communicated via cellular signal. IoT connected vending machines allow you to monitor inventory levels to ensure vending machines are well stocked with products consumers want, use real-time data to adjust pricing and maximize profitability, track temperatures and monitor environmental conditions to ensure that perishable food items are safe, and improve the security of the machine to avoid tampering.

Digital Signage

Lately, digital signage is taking the world by storm and many vending operators are looking to increase sales with the use of digital signs that are located within the proximity of the vending machine or now take of the closed front of the vending machine itself.

Content for the digital sign is often stored on a local device, however, content refreshes and updated need to be downloaded remotely onto the device requiring needed internet connectivity.

North America is expected to see the highest number of intelligent vending machines added between 2018 and 2024 since it has the highest number of vending machines in the world (6.5 million in 2018) and will see one of the highest CAGR number of any other place in the world (14.28%).

It is an industry that will be going through rapid and extensive change in the next five years, and no doubt, be a large part of OptConnect’s continued success in the world of IoT connectivity.

One thing is for sure, it will not be your grandparent's vending machine. My crumpled dollar bill says “thank you”.