Let's first look at some of the global market data. The install base of vending machines deployed globally at the moment reached about 16 millions units, of which 84% are conventional vending machines that are not connected. From year 2017 to 2022, the compound annual growth rate of connected vending machines is 16.2%, which is expected to reach 5.4 million install base in year 2022 (Data source: Berg Insight). These figures also mean a huge business potential: The large number of conventional non-connected vending machines will be gradually upgraded to or replaced with smart vending machines, which will be a huge potential market.
From Silkron's global market reach in over 45 countries around the world, I have roughly crunched and analyzed the data and experience to categorize the use case and applications of smart vending into 7 categories, and at the same time, investigate some of the main key factors that drive the market of smart vending machines globally.
First of all, the first use case is to replace the conventional vending machines to sell beverages, snacks, coffee, hot drinks and so on. From the global market data above, the existing vending operators have been operating large number of conventional vending machines. Therefore, they will only slowly and progressively replace their old machines and upgrade to smart vending machines. In contrast, for those new comers who are just entering the market as vending operators, they will be directly deploying smart vending machines at much fast paces.
Secondly, smart vending technology has enabled the possibility of selling unconventional merchandises, such as higher-value products, nutritional food, special drinks and so on. Smart vending machines allow the consumers to view the details of the products clearly from the touch display of the machine, such as the product specification, nutrition facts, and even the product demo video. In the United States, Silkron has customer selling gifts, jewelry, decors and so on, while in Philippines, customer sells printer ink cartridges from smart vending machines. Our Australian customer also designed the smart smoothie vending machines, while in United Kingdom, there are customers selling nutritional and health products via smart vending machines.
Another use case, is for marketing and promotion, mainly for the consumer brands to promote new products, perform brand engagement and interactivity with the consumers while collecting consumer data via smart vending machines by means of surveys and so on. Most of the time, after users performed these interactivity, the smart vending machines shall dispense free gifts to the users as a token of appreciation. For instance, a well-known franchised fast food restaurant using a social networked vending machine powered by Silkron smart vending platform dispensing free burger sauce upon sending Tweets with specific hashtags. Another sports brand also collected user data via smart vending machines dispensing free gift of the sports brand including sports shoes. A coffee brand use dancing vending machines to promote their new coffee products. In United States, there is a premier automotive brand performed consumer surveys with free gifts via vending machines.
Secondly, smart vending technology has enabled the possibility of selling unconventional merchandises, such as higher-value products, nutritional food, special drinks and so on. Smart vending machines allow the consumers to view the details of the products clearly from the touch display of the machine, such as the product specification, nutrition facts, and even the product demo video. In the United States, Silkron has customer selling gifts, jewelry, decors and so on, while in Philippines, customer sells printer ink cartridges from smart vending machines. Our Australian customer also designed the smart smoothie vending machines, while in United Kingdom, there are customers selling nutritional and health products via smart vending machines.
Another use case, is for marketing and promotion, mainly for the consumer brands to promote new products, perform brand engagement and interactivity with the consumers while collecting consumer data via smart vending machines by means of surveys and so on. Most of the time, after users performed these interactivity, the smart vending machines shall dispense free gifts to the users as a token of appreciation. For instance, a well-known franchised fast food restaurant using a social networked vending machine powered by Silkron smart vending platform dispensing free burger sauce upon sending Tweets with specific hashtags. Another sports brand also collected user data via smart vending machines dispensing free gift of the sports brand including sports shoes. A coffee brand use dancing vending machines to promote their new coffee products. In United States, there is a premier automotive brand performed consumer surveys with free gifts via vending machines.
Smart vending technology also enable selling controlled and regulated merchandises, such as beers, cigarette and even cannabis that has been legalized for recreational use in certain states in United States, Canada and European countries. Integrated with smart technology, these machines can perform age verification and identification to ensure the users fulfilled the minimum age restriction as well as to monitor and control the respective user consumption.
Unmanned shops can be implemented by combining and integrating multiple various types of smart vending machines to sell more variety of products and merchandises. For example, in Singapore, our clients leverage Silkron's machine-agnostic platform integrating various different kinds of machines to operate automated retail shops and cafes selling merchandises, gifts, souvenirs, snacks, drinks, food and coffee. In Malaysia, there are also cashless smart convenience store operating under the same concept. In the Kuala Lumpur International Airport, there are also numbers of automated stores selling travel kits, toys, gifts and electronic gadgets.
Health care will be another sector that will drive smart vending machines, primarily to sell or regulate the dispense of heath care products and medicine, to operate 24-hours unmanned pharmacies, as well as to dispense medications verified on doctor's prescriptions and personal identification. Silkron's customer in South Africa also operates 24-hours pharmacy while in New York, there are also smart vending machine that sell first aid items and medicine. Besides, in Belgium, Slkron's customer also operate smart vending machines that sell dental care products.
The last use case category is industrial vending. These machines are deployed to dispense spare parts, personal protective equipment, employee meals and so on, so that the employees and workers at the workshops, production floors, work sites or any other industrial locations to collect those items using their employee badges as the identification. It also allows the corporate management to control and monitor the consumption of their employees according to their respective roles, to reduce wastage and to improve productivity and to reduce operating cost.
According to the real-time big data dashboard of our smart vending cloud platform - Vendron Cloud, among all the deployed machines by the customers around the world, the cashless transactions are about 65% of the overall transactions while cash transactions are 35%. Currently, besides China, the fastest growing regions for smart vending machine deployment are South-East Asia, mainly due to that this region is heavily influenced by China which also aggressively promotes the use of mobile payments. Other regions like North America, Europe and Middle-East shall be going through the same trends as well.
Nevertheless, based on the overall global install base of vending machine including conventional vending machines, cash payment in the global vending market is still the primary payment method. However, cashless payment is the main driving factory of smart vending machines. Cashless payment methods are credit cards and debit cards which are already very popular, as well as all different types of membership reward cards, and mobile wallets that are getting more and more popular around the world. Generally in many countries globally, the transactional costs for cashless payment is relatively higher, which is one of the resistance to its popularization. Besides as opposed to the couple of mobile wallets that are dominating in the China domestic market, the mobile payments in the other countries globally are mostly highly competitive with many players in the market without obvious dominant leader, yet.
Global Market Needs and Expectation on Smart Vending Machines
First of all, reliability of software and hardware. In some of the countries especially in Europe and Americas, the cost of mistakes is very high, which means when anything faulty or unexpected event occurred, the risk and the price of the consequences is prohibitively high. For example, sending a personnel to maintain or repair the machine, which involves labor cost, transportation cost, parking fee and so on are much higher, added up with loss of sales opportunities, the overall loss in operation is very significant. Moreover, in some of the cases, the operator might have to bear legal responsibilities. Besides, even if the cost to purchase the machines are low initially, the long-term operation cost must be seriously considered. Sometimes I would hear some of our clients feedback positively that, the quality of the vending machines made in China are getting better and better (relatively) while the pricing is getting more and more competitive over the years, which means the cost-effectiveness is increasing gradually! In terms of vending machine hardware, it should provide more hardware real-time status, equipped with more variety of sensors, door switch, motion detector, temperature sensors and so on for more effective remote manageability and big data collection. The vending software and cloud backend must also provide comprehensive remote manageability, route planning, content management, digital signage management as the total solutions of remote manageability.
In this era, artificial intelligence (AI) is something that must not be ignored. Smart vending must also make use of AI to push to the next level, to provide more intuitive, personalized and highly intelligent experience and functionality. Smart vending machine is a source of huge data, where big data analysis will result in more effective sales strategies, higher productivity and lower operation cost, higher profit margin and so on. Moreover, new technology will also enable more different applications, such as face recognition that leverages the user experience, dispense control and verification, or age, gender and emotion detection for product recommendation, targeted ads and audience analysis.
Nevertheless, based on the overall global install base of vending machine including conventional vending machines, cash payment in the global vending market is still the primary payment method. However, cashless payment is the main driving factory of smart vending machines. Cashless payment methods are credit cards and debit cards which are already very popular, as well as all different types of membership reward cards, and mobile wallets that are getting more and more popular around the world. Generally in many countries globally, the transactional costs for cashless payment is relatively higher, which is one of the resistance to its popularization. Besides as opposed to the couple of mobile wallets that are dominating in the China domestic market, the mobile payments in the other countries globally are mostly highly competitive with many players in the market without obvious dominant leader, yet.
Global Market Needs and Expectation on Smart Vending Machines
First of all, reliability of software and hardware. In some of the countries especially in Europe and Americas, the cost of mistakes is very high, which means when anything faulty or unexpected event occurred, the risk and the price of the consequences is prohibitively high. For example, sending a personnel to maintain or repair the machine, which involves labor cost, transportation cost, parking fee and so on are much higher, added up with loss of sales opportunities, the overall loss in operation is very significant. Moreover, in some of the cases, the operator might have to bear legal responsibilities. Besides, even if the cost to purchase the machines are low initially, the long-term operation cost must be seriously considered. Sometimes I would hear some of our clients feedback positively that, the quality of the vending machines made in China are getting better and better (relatively) while the pricing is getting more and more competitive over the years, which means the cost-effectiveness is increasing gradually! In terms of vending machine hardware, it should provide more hardware real-time status, equipped with more variety of sensors, door switch, motion detector, temperature sensors and so on for more effective remote manageability and big data collection. The vending software and cloud backend must also provide comprehensive remote manageability, route planning, content management, digital signage management as the total solutions of remote manageability.
Smart vending ecosystem, must enables the participation of various ecosystem partners in the operation, to interact with each others on the same platform. It should also encapsulate multiverse of functionalities to fulfill the needs of various perspectives. For example, the smart vending ecosystem allows various partners like machine manufacturers, landlords (the owner of the locations where the machines are deployed) , restock personnel, service team, retailers, advertisers, consumers and so on through various different channel interact and operate with different roles and access rights, which makes up the whole smart vending ecosystem, including various payments and identifications, social medias, interactive content, advertisement and all variety of existing and new functions in the future.
When the operator would like to expand their business to achieve higher revenue growth, to sell more different types of products and to explore more different types of locations, they would need a machine-agnostic platform, a platform that can support all different types and makes of vending machines and hardware, which gives them the freedom of choice to find the machines that fit their desired requirements, budget, quality expectation and so on. Meanwhile, smart vending platform must also be scalable continuously, be able to support customization by the operator or 3rd party developers, such as development that is more sensitive in terms of intellectual property and so on. From a long-term perspective, machine-agnostic platform will give the operator unlimited space of expandability and scalability.
When the operator would like to expand their business to achieve higher revenue growth, to sell more different types of products and to explore more different types of locations, they would need a machine-agnostic platform, a platform that can support all different types and makes of vending machines and hardware, which gives them the freedom of choice to find the machines that fit their desired requirements, budget, quality expectation and so on. Meanwhile, smart vending platform must also be scalable continuously, be able to support customization by the operator or 3rd party developers, such as development that is more sensitive in terms of intellectual property and so on. From a long-term perspective, machine-agnostic platform will give the operator unlimited space of expandability and scalability.
The global market would also require the smart vending software platform and hardware that are continuously developed and upgraded, that are continuously maintained and supported with after-sales services, so that they can grow their operation without concerns. Besides, they would also require the continuous development and integration of new technology, new hardware and to support new functionality in order to meet the market demand and challenges, and to improve their profit margin.
In this era, artificial intelligence (AI) is something that must not be ignored. Smart vending must also make use of AI to push to the next level, to provide more intuitive, personalized and highly intelligent experience and functionality. Smart vending machine is a source of huge data, where big data analysis will result in more effective sales strategies, higher productivity and lower operation cost, higher profit margin and so on. Moreover, new technology will also enable more different applications, such as face recognition that leverages the user experience, dispense control and verification, or age, gender and emotion detection for product recommendation, targeted ads and audience analysis.
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