The essence of any business comes down to what it is they sell. Vending is no different. The heart of most vending businesses lies in their products. Putting the right products in the right place is key to maximizing sales and more importantly; keeping the customer happy. However, how is it possible to know precisely what the right products are?
Keeping track of product performance can be tough, and finding high-selling vending machine products for a machine isn’t easy. Using pen and paper to track machines sales can be difficult due to the sheer number of machines and the amount of products inside. As a result, vending operators can find themselves stocking products that aren’t selling which often lead to losing money thru spoilage. However, if product sales could be accurately tracked, it’d be obvious which products were worth stocking. When the right products are in the right machines, product sales can increase, product costs can decrease, and a vending operation can capture success far into the future.
Minimize Hefty Costs of Vending Machine Products
Finding the best products for customers is imperative for success in any operation. However, product costs can be very expensive. In fact, as reported by IBISWorld’s 2015 Industry Report, 52% of a vending operator’s revenue is spent on vending machine products.[1]
For a 3 route operator with $1 million in revenue, this can account for over $500,000 in costs annually. Often seen in the business world, high product expenditure is passed onto the customer through increased product prices, which can hurt overall sales and inhibit a company from success.
A Vending Management System (VMS) can help decrease inventory costs instead of passing them onto the customer. A VMS tracks sales figures for every product in every machine and presents them in an easy-to-read format. Products shown at the machine level plan-o-gram are color-coded by sales performance, so it is easy to tell which products sell well and which products sell poorly.
A VMS also provides the insights to reduce or completely remove low selling products and replace them with higher sellers. The resulting product optimization can decrease product spoilage up to 30%. When this 30% reduction is applied to a 3 route operator with a 5% spoilage rate, it can account to over $75,000 in savings a year. Instead of wasting money on vending machine products that sell poorly or eventually spoil, money is smartly invested on products that fly out of the machine.
Drive Sales with Valuable Insights
Even if an operator invests in the right products, it can be difficult to know which machine will sell them the best. It can be incredibly frustrating to visit a machine and see rows and rows of products that are not selling. Products can be swapped in and out of the machine in an effort to jump start sales. However, which product would be the best substitute? With such a large variety of products in hundreds of machines, it is almost impossible to know for certain.
A VMS tracks product performance of every machine in real-time, so it is easy to keep track of sales. Even more, a VMS can actually recommend products to increase, decrease, or remove entirely. In addition, a list of the top 10 best and top 10 worst selling products is readily available, so it is easy to find a good substitute for a struggling product. With these helpful tools, product optimization easier than ever. When product merchandising is optimized, sales can jump as high as 15%. For a 3 route operator, that can amount to over $100,000 in extra sales per year.
Successfully Prepare for the Future
We’ve covered how a VMS can optimize machines for current demand, but what about demand down the road? The right vending machine products today might not be the right ones tomorrow. Furthermore, customer preferences are changing more than ever – fresh food products are projected to generate more than 10% of industry revenue in the next year, and customer dietary habits project to move toward healthier foods.[1] That 10% isn’t a drop in the bucket either – fresh food will amount for $750 million of revenue next year alone. If a vending company wants to stay competitive, it is important to stay on top of evolving trends in the industry. However, how can operators stay ahead of the curve and achieve success in the future?
Testing new products is a great way to stay on top of evolving customer trends. Statistics show that the most successful vending operations provide a diverse offering of products to their customers.[1] The more diverse the offering, the better chance a customer has of finding something they want to buy. However, most of the time only large operations can afford to offer a variety of products to customers. After all, larger operations have more money to invest in a variety of vending machine products. Smaller operations, on the other hand, may not have enough capital to invest in many different products. However, there is a tool out there that levels the playing field.
A VMS can be instrumental when diversifying vending machine products. It can let an operator try out different products in different locations without large investment costs. Operators can access product sales data anytime, so there is little cost in trying out new products. The product is selling well after a week? Keep offering it. The product isn’t selling? Pull it. It is that simple. Now, anyone can reap the benefits of diversifying products and staying on top of changing customer preferences. With more products to choose from, customers’ satisfaction can skyrocket, and sales can boom. Because at the end of the day, a happy customer makes a happy vending operator.
[1] “Vending Machine Operators in the US: Market Research Report” IBISWorld, http://www.ibisworld.com/industry/default.aspx?indid=1113 , (February, 2015)
