How is the Smart Vending Machine Market Performing?

Eseye

IoT Hardware and Connectivity Specialists

LinkedIn

The vending machine industry has always embraced new technologies as a way of providing a more efficient service and improving the customer experience. It’s no surprise, then, that today the smart vending sector is one of the most well-established adopters of IoT, with some of the most large scale and mature device fleets in the market.

In Eseye’s third annual State of IoT Adoption research, more than a quarter (27%) of respondents from the sector reported that their estate sizes ranged from between 5,001 to 10,000 devices, the highest percentage among all five industries we surveyed. Three quarters (76%) expect the number of devices they currently have in the field to increase over the next 18 months, with 20% planning to double or even triple their IoT estates, again the highest percentage compared to other sectors.

The investment these smart vending businesses have made in their IoT capabilities appears to be paying dividends, too: 53% say that IoT has enabled them to increase revenue.

An investment gap?

However, despite the strong return on investment they’re achieving, only 65% of smart vending respondents are expecting to increase their IoT budgets in the next two years; the lowest of all the industries surveyed. Overall, the businesses in this sector are only planning an 8% budget increase compared to the previous year.

This is a significant change from 2022, where smart vending had the most ambitious targets, with 58% of respondents planning a budget rise of between 51% and 100%. 2023 tells a very different story, with only 11% of respondents planning rises of the same magnitude.

It will remain to be seen in light of this forecast whether the sector can sustain the commercial advantages it has won through its successful IoT initiatives.

The struggle to keep smart vending machines connected

Vending machines are typically located in places where connectivity can be hard to achieve, such as an underground car park or petrol station that’s off the beaten track. This is reflected in the biggest challenge smart vending operators are facing, with 71% of respondents reporting connectivity issues that are caused by the IoT hardware.

This aligns with our belief that most IoT issues stem back to the device. Looking at all the industries surveyed in Eseye’s IoT research, only 4% of respondents said they’ve never had to deal with any device challenges, while 64% admitted they have at least sometimes run into issues connecting their IoT devices because of a problem with the underlying hardware.

Achieving as near to 100% connectivity as possible is essential for the smart vending business case. Even a 1% reduction in connectivity levels will have a major impact on customer satisfaction and profitability, if the process breaks down and the consumer can’t get the product they want or pay for it. This will prevent businesses from harnessing the true potential of IoT.

Given the prevalence of hardware issues, this makes it essential to take a ‘device-first’ approach to IoT projects. In total, 81% of respondents to Eseye’s survey agreed that getting the device design right is the route to success.

Higher than average security concerns face smart vending

Security of the devices was cited as a top IoT challenge by 23% of smart vending operators. This is higher than the average across all sectors surveyed, with only 17% of respondents overall agreeing it was a major hurdle. This level of unease could partly be due to where vending machines tend to be located, in public places that are managed by a third party.

Looking at the big picture, security has remained a consistent challenge for the businesses surveyed by Eseye over the past three years, although this has dropped from the number one challenge in 2021 and 2022 to number three in 2023.

Achieving robust end-to-end security from the physical device hardware to the network is essential – and it also involves multiple layers of protection, and a great deal of work.

To derive lasting value from their IoT projects, smart vending operators must ensure that the level of investment they commit to their initiatives matches the scale of their objectives Above all, they must prioritise optimal connectivity.

To mitigate their anticipated minimal budget increases, businesses may be tempted to settle for cheap connectivity providers, but this is likely to be a false economy. Despite 95% of respondents to Eseye’s survey saying that the cost of connectivity is an important factor in the decision-making process when choosing a provider, 71% of respondents had found that lower cost vendors don’t deliver long term value.

If smart vending operators compromise on this front, that 100% connectivity goal is likely to remain elusive.

Eseye

IoT Hardware and Connectivity Specialists

LinkedIn

Eseye brings decades of end-to-end expertise to integrate and optimise IoT connectivity delivering near 100% uptime. From idea to implementation and beyond, we deliver lasting value from IoT. Nobody does IoT better.