Modern Day Industrial Vending: Big Risk or Big Reward?

By Mark Hill

When talking with independent distributors about offering industrial vending to their customers, many are fearful that the risk outweighs the rewards. Many distributors have had less than ideal experiences with larger vending sources that came with higher price tags and still couldn’t successfully accommodate their customers’ needs. The truth of the matter is that industrial vending and software has changed. Today’s options can be easy-to-use, cost-effective and require simple maintenance.

Here are just a few ways that modern industrial vending solutions have changed how distributors can serve their customers.

Advances in technology make implementation easy and cost-effective.

Software and technology have come leaps and bounds. Cloud-based vendor-managed inventory software is powerful and easy to set up. In fact, with the right software, you should be able to have customers up and running within hours of installation. That being said, some vending providers still have complex software that is difficult to learn and difficult to use. Cloud-based software has lowered the cost of technology allowing smaller distributors the opportunity to compete against their larger competitors with vending and inventory control services.

Value-added services are today’s table stakes.

In today’s competitive market, value added services should no longer be considered an optional offering. For distributors serious about retaining current customers as well as obtaining new business, value-added services like inventory management and vending solutions can help secure a strong foothold in the account. Proactive approaches like these can minimize the risk of competitors encroaching on their current accounts. What’s more, Amazon can’t do it.

Distributors can potentially reduce their taxable income.

The recently passed Tax Cuts and Jobs Act (TCJA) doubled the amount that businesses can write off for equipment purchases and that includes vending machines. That means the year you purchase equipment like vending machines you could reduce your taxable income, offsetting some of the cost of the machine. (Be sure to speak to your CPA.)

Distributors and customers can improve operational efficiencies.

Thanks to cloud-based vendor managed inventory and vending solutions, distributors and their customers see significant improvements to operational efficiencies. The customer experiences improved productivity, fewer stockouts, fewer unplanned purchases and decreased carrying costs while the distributor can reduce time doing manual inventory counts, allowing them to spend more time securing new business.

Distributors grow wallet share with sales in and out of machine.

When distributors place vending machines in a customer location, they not only increase sales from products that run through the machine directly, but they capture additional customer spend from products that may have been sourced elsewhere. The more versatile a vending configuration, the more items the customer will consider vending. These items may include commonly dispensed MRO items or even larger, returnable items like power tools. Distributors may also be able to move spend from items not going through the vending machine.

When customers experience inventory savings first-hand, they are more likely to hand over business that they may have been spending elsewhere. With a little communication and a little finesse, the distributor can help the customer consolidate their suppliers. And that sounds like a win-win for both the customer and the distributor.

Distributors don’t have to fear vending. They should look at it as an effective way to improve customer stickiness, increase revenue and compete on more than just price. Visit 1sourcevend, a NetPlus Alliance supplier, to learn more about industrial vending and inventory control solutions for your distribution business.

Contact Mark Hill at mhill@1sourcevend.com.