Oyster Bay, New York - 06 Dec 2016

The vending machine ecosystem is evolving as leading companies like Coca-Cola, PepsiCo, and VE Global Vending look to expand distribution offerings and connect their machines to the Internet to increase operational efficiencies. The newly connected machines will allow operators to gain new insight into metrics on inventory management, foot traffic, and automatic maintenance requests. ABI Research finds there will be more than 10 million network connections to vending machines by the end of 2016 with growth estimated to reach nearly 24 million connections in 2021 for a CAGR of 17%.

“The vending machine isn’t dead—it’s just reinventing itself,” says Jeff Orr, Research Director at ABI Research. “There is a point in the near future where the physical and digital worlds will blend to create new experiences. And it’s vendors that optimize their supply chains that will best succeed in this market.”

VE Global Vending is one company that continuously adapts its strategy to keep pace with evolving technologies, refurbishing used vending machines into digitized versions that include touchscreens, sensor technologies, and flexible payment methods. ABI Research suggests that there remains room in this market for new players that mirror this methodology and optimize the supply chain to focus on everything from machine manufacturing, placement, and payment solutions to restocking and service.

“New market entrants have to be creative so that they do not become immediate acquisition targets for brands with broader ecosystem investments,” continues Orr. “For instance, the simplest method to connect a vending machine is to use an Ethernet cable to connect it to the building. But new players would be wise to take advantage of the abundance of wireless technology on the market. The question of which party pays for the recurring mobile service costs would still need answering, though.”

As the connected machines continue to automate services that humans historically addressed, such as key duplication, opportunities will emerge for enterprises to become involved in customized manufacturing and 3D-printing on a small scale.

“We’re starting to see this trend today; for example, personalized ID tags created on-the-spot in a retail pet store,” concludes Orr. “In the coming years, as manufacturers perfect 3D-printing and small-scale machining operations, new services will be possible for producing custom items through a vending and fulfillment experience. The physical and digital worlds are converging—and it’s only a matter of time before their intersection leads to new experiences and opportunities for businesses.”

These findings are from ABI Research’s Connected Vending Solutions: Business Models & ROI report.