I don’t know about you, but when I walk by a vending machine and see one of my favorite snacks, I immediately have a snack attack. Often times these attacks go unanswered because I typically don’t carry cash in my pocket, or for the times when I do, the machine is broken.
Well, enter smart vending — and the answer to my vending machine woes!
Today, thanks to recent developments in what’s called the Internet of Things (or IoT), I will now be able to use my smartphone to satisfy my Doritos craving — from a machine that is almost always working and fully replenished with my favorite snacks.
Using big data, cloud, mobile and analytics technologies, a smart vending machine scans my smartphone and wirelessly bills me for my chips. Sensors embedded in the machine will collect a wide array of data, not only about my choices and preferences, but also about the machine’s inventory and working status. This data can then be analyzed by operators to create a better, more engaging experience for me, as well as other customers, in the future.
And, for the operators, insights into this data will help increase operational efficiencies and drive greater profits.
Real Time Response to Customer Demands
Traditional vending machines have never been able to track what has been sold, what a customer prefers or if it is broken, so vending machine operators typically replenish and service machines on a set schedule. Not only does this disappoint customers like me when our favorite brands are out or if a machine is not working, but it also results in costly operational waste and ineffective inventory management.
A smart machine collects a tremendous amount of data — such as customer purchases, inventory levels, machine temperatures and operating functions — that operators can use for real time decision making.
The consumer purchasing information alone is highly valuable, as operators now have the opportunity to proactively engage with customers in highly personalized ways. With data that is collected via smartphones, operators can build extensive profiles based on personal preferences and transaction histories.
Using this information, the next time I visit one of these machines, a unique experience can be created for me, with promotions and loyalty offers tailored specifically based on my historic purchases and favorite choices. Operators can send me discount coupons to encourage more frequent purchases, or they can create other promotions, such as gift certificates that I can send to friends, which further expands an operator’s base of customers.
With data collected from the machines and other related information, smart vending machines can also adjust prices and inventories based on a multitude of factors, such as outside temperatures, local preferences or limited-time discounts. Additionally, operators can build in ad sponsorships for other brands that I’ve indicated I use or offer discounts and special promotions for events and local happenings that I typically attend.
Smart vending can even help support health regulations, such as a proposed United States Department of Agriculture (USDA) rule that seeks to ban food with high fat, sugar and sodium from schools in America.
Smarter Operations and Improved Efficiencies
A stronger connection with customers like me is just the beginning of how IoT is impacting the vending machine world. Smart vending powered by in-memory computing provides operators with real time management dashboards and visualizations that up-to-the-moment sales and maintenance information.
With visibility across the entire network and at each individual machine, inventories are automatically tracked and operators know when machines need to be replenished so restocking visits are based on real time product demand. On an unexpectedly hot day, a machine can be restocked with cold drinks based on current demand rather than on a stocking plan that was developed months ago. And when inventories are low, a smart machine can send an automated signal to a truck driver carrying the needed products and ask for replenishment. By using IoT technology like this, retailers can avoid out of stock occurrences and increase customer satisfaction.
Embedded sensors also report machine failure when it happens, and when used with predictive maintenance and mobile workforce automation, missed sales due to machine malfunction will become a thing of the past.
Not only will smart vending help increase sales, but operators will also experience cost efficiencies associated with reduced fuel usage, more efficient personnel utilization, and less damaged or spoiled inventory.
Smarter Operators and Happier Consumers
Now that I can purchase my Doritos with a swipe of my smartphone, I’m a happier customer. And thanks to the IoT, operators of these smart vending machines are happier too, as they create cost effective opportunities for better customer engagement with each interaction.
This example is just a taste of what the future of retail will look like as IoT technology advances. You can expect to see it in future applications across the retail industry to help completely transform replenishment, inventory management, customer experience and maintenance.
About the Author
Dinesh Sharma is Vice President, Cloud Marketing at SAP. Dinesh is an experienced technology executive in both enterprise and startup domains. His experience spans leading engineering, marketing, all the way up to running worldwide business units for large technology companies.
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