Automatic Merchandiser

APR 2014

Automatic Merchandiser serves the business management, marketing, technology and product information needs of its readers including vending operators, coffee service operators, product brokers, and product and equipment distributors in print.

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nology shows such as the Consumer Engagement Technology World Show was that vending and micro market operators do not have the necessary IT and marketing infrastructure to develop, and most importantly, to support these smartphone apps. Vending and micro market operators should seek out companies that will provide the technology and market- ing support to initially register con- sumers, develop reward programs and, most importantly, support a relationship of "Constant Content Change." If a vending or micro mar- ket company does not constantly and effectively engage the consumer, the viability of its smartphone apps will quickly diminish. After a year, only 4 percent of smartphone apps are retained by the consumer, see Chart 1. Yet, if your company does not start planning now, where will your company be in the year 2020, just six years from now when mobile payments will achieve 50 percent penetration in retail? Vending and smartphone apps Technology in the past decade has focused on the operational side of vending. Remote machine moni- toring (RMM) units were invisible to the consumer. The units were installed to improve vend operator effciency. Consumer engagement was secondary to making sure the vending machines were not out of product. Recently such companies as Air-Vend, VendScreen and Ven- dors Exchange have added a video display to the RMM units to encour- age consumer interaction and to pro- vide FDA nutrition information. The companies are and will be develop- ing smartphone apps to interact with their respective devices. The installation of credit/debit card readers, of course, has expanded consumer interaction. Steps have been taken to try to engage vending consumers through the use of loy- alty cards and programs sponsored by buying groups such as USConnect supported by Sprout, and USA Tech- nologies' relationship with Isis. It is, however, unclear, as to the extent that such programs have effectively engaged the vending consumer and the number of vending consumers participating. New companies such as BYNDL, LikeUs, PayLab and PayRange are and have developed smartphone marketing and payment apps to be integrated with vending machines. Apriva is featuring its newest version of Apriva Pay Plus, a mobile point-of- sale application at the NAMA One- Show. Shelfx and VendCentral are also featuring their smartphone apps. While it is unclear at this time which platform will be acceptable to the consumer, vending has a further complication. To add another pay- ment option to cash and credit/debit card readers will only complicate the consumer experience at the vending machine — there will now be three forms of payments. In my opinion, the smartphone mobile wallet will only be successful if the vend operators go completely cashless. Last September, Vending- MarketWatch.com hosted a webi- nar, "How to Increase Sales — A Technology Roadmap." During the Webinar, Professor Michael Kasa- vana asked, "What is the cost of han- dling cash in vending today?" There were no responses. Vend operators should now start considering the "cost of handling cash" compared to the benefts of cashless. See "7 benefts to a completely cashless vending environment." In addition, smartphone apps will provide the consumer with the nutrition information required by the Food and Drug Administration. Smartphone marketing apps offered by BYNDL will engage the vending consumer 365 24/7. What Does App Retention Look Like? iOs & Android App User Retention, Months Since Acquistion (%) 7 benefts to a completely cashless vending environment 1. Sales tax (where applicable bottle deposits) can be added to the vend price as in all other retail channels 2. Product price increases can be made in cents, not just nickel and dime increments 3. No change is needed in the machines 4. Cash shortages disappear 5. Cash fow improves 6. Out-of-orders will decline 7. Servicing the machines will be more effcient 100% 0 4 8 2 6 10 1 5 9 3 7 11 12 38% 29% 24% 20% 16% 14% 11% 9% 7% 6% 5% 4% Source: Flurry Analytics & Estimates April 2014 VendingMarketWatch.com Automatic Merchandiser 45 M O B I L E & V E N D I N G autm_44-51_0414SmartphoneVending_F.indd 45 3/21/14 12:08 PM

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