Want to Succeed with Industrial Vending? Stop Making These 5 Mistakes

The global industrial vending market surpassed $2.2 billion in 2019 and is expected to grow significantly over the next seven years. Yet, despite this, some distributors are still struggling with how and when to offer this value-added service to their customers or whether they should dip their toes in the water at all.

Below are five common mistakes that distributors make when considering and offering vending and inventory control solutions, and how to overcome them.

Vending Mistake 1: Being More Reactive than Proactive

Vending machines are a popular sales tool among distributors whose customers are looking for onsite solutions to their inventory control problems. Still, distributors are often surprised when they lose a loyal customer to a big-name competitor that offers vending.

They shouldn’t be. Tight margins, slower markets, less staff and fewer onsite resources are causing many companies to rethink how they manage their inventories. Few small to mid-size companies can afford to hire dedicated inventory personnel. More and more industrial customers appreciate the ease and simplicity of industrial vending machines and inventory control software that not only dispenses commonly used items such as cutting tools, PPE MRO supplies, but also tracks demand patterns for these items to ensure an optimal balance between high service levels and low working capital costs.

By proactively offering vending as a value-added service, distributors can ensure they won’t walk into a customer’s location someday only to find a competitor’s machine installed.

Vending Mistake 2: Expecting Customers to Pay for Machines

One of the biggest mistakes that distributors make is trying to approach vending machines as another product to mark up and sell. This tends to backfire as competitors are already placing vending machines for free. Distributors have better and more sustainable results when they approach vending as a value-added service and install machines at no cost to customers. With the rise of more affordable technologies and systems, this is a no brainer when it comes to customer retention and satisfaction.

To compensate for the cost of the machine, distributors should ask for additional spend from customers, such as categories that have been going to competitors. Be sure to include additional spend on vending items as well as products purchased by other means, not just through the machine. Not only is this a win for the distributor who gains additional market share, but also for the customer who is then able to consolidate their purchases.

Vending Mistake 3: Controlling Which Products and Brands Are Dispensed

Some distributors look at vending as an opportunity to lock customers into strict contracts that control not only the products that can be dispensed but the brands as well. This can scare away both loyal customers and prospects who are looking for more control over their inventory, not less.

In my experience, distributors are better off giving customers more freedom and flexibility in the brands they vend, as long as those customers agree to increase their overall volume of purchases in exchange for the machine. Vending contracts should be in writing, but they don’t have to be restrictive.

Vending Mistake 4: Failing to Provide Top-Notch Uninterrupted Service

Vending is not a “set it and forget it” proposition. If the distributor doesn’t keep a close eye on stocking levels (through the use of real-time inventory control software), customers are at risk of the same stock-outs and work stoppages they experienced before implementing vending. Only now you’re to blame. This is a frequent complaint with some of your competitors and a chance for you to differentiate your company.

Distributors should be vigilant in keeping machines stocked and adjusting minimums and reorder-point settings as customer needs change. Service should always be the top priority and distributors can take advantage of these regular check-ins to uncover additional sales opportunities or find solutions to other customer problems.

Vending Mistake 5: Thinking Vending is Only Appropriate for Large Customers

In the past, the cost of entry was so high it didn’t usually make sense to offer vending to smaller customers. Today, the price tags with some providers are so reasonable that distributors can feel confident offering it to their small to mid-size customers. That also means vending increasingly makes more sense for slower-moving and lower-margin products.

Now more than ever, distributors need to get over their fear of vending and dive in, as social distancing drives demand for services that keep business moving—but with fewer onsite resources. The benefits of vending far outweigh the risks if you learn from the mistakes other distributors have made.