In 1982, when three graduate students and an engineer at Carnegie Mellon University developed a surefire way of getting a cold Coke from the department’s drink vending machine, no one knew that they were inventing the first example of what would one day be called the Internet of Things (IoT).

The first intelligent vending machine used the ARPANET, a rudimentary version of the internet, to share whether the machine had Coke in stock. On the machine’s end, it tracked the indicator lights that flashed when someone bought a Coke or lit up continuously when the machine was empty. 

Anyone connected to the ARPANET could see the status of those lights and know whether they could access a cold Coke. The system became immensely popular with thirsty graduate students who didn’t want to walk all the way to the machines only to find them empty or the drinks warm.

The system stayed active for years, but in time, Coke changed the design of its bottles and the machine became obsolete. No one thought about it again for 30 years, until people began introducing internet connectivity to industrial and everyday objects. 

Now, there are billions of “connected things” in the world, and vending machine and IoT technology have merged once again. Today, the functionality of the internet-connected vending machine has gone way beyond what a team of thirsty grad students ever thought possible. 


1. Smart inventory management

IoT usually starts where it can make the biggest impact, and that’s exactly what happened with intelligent vending. Grad students needed their caffeine and sugar, so they invented a way to track soft drink availability from their desks. 

Years later, as the IoT world began to take off and commerce started to look at vending machine and IoT technology on a broader scale, this functionality helped drive adoption on the manufacturer and distributor side. Today’s connected vending machine partners — Novotech, VendSoft, VendMAX, Supply Wizards, and many others — use smart tracking technology to keep customers’ favorites in stock without over-delivering product.

IoT technology also allows distributors to monitor stock in individual machines, making sure that the product mix matches what consumers want to buy. Sensor data and built-in analytics can:

  • Collect usage information to optimize resupply
  • Track contributing sales factors, like time of year, geography, and more
  • Predict sales for more accurate resupply plans
  • Prioritize restock to more profitable machines
  • Track resupply shipments

By introducing IoT technology into its network of vending machines, one global food and beverage company achieved a 15% reduction in supply chain costs along with a 5% revenue increase in a single division.


2. Theft and downtime reduction

For the food and beverage company referenced above, this technology has reduced the cost of theft by a projected 5%. Theft, along with mechanical failure and vandalism, can significantly reduce the profitability of vending machines. By tracking the function and structural integrity of machines, IoT technology can reduce the incidence and impact of these losses. If the software flags a possible malfunction or theft pattern, it can issue an alert to schedule vending maintenance.


3. Energy conservation

Intelligent vending can also save money by reducing the amount of power used to cool products, without a negative impact on customer experience. One way to do this is with occupancy sensors, which turn off the display and active cooling for a machine in a climate-controlled room when no one is around. These sensors can turn the machine back on when someone enters the room, or at predetermined intervals, to keep the product cool. 


4. POS content marketing

In the days before IoT, customers would give a snack vending machine some coins or a banknote and it would give them a candy bar. Today, someone can walk up to a vending machine and get the latest entertainment news, take advantage of a promotion, and even play a game.

These interactive content experiences make for more engaging interactions between consumers and the brands that run internet-connected vending machines. Companies can even change up their content based on consumer responses or align content delivery with a new campaign, thus building more meaningful relationships with customers. As part of the right strategy, intelligent vending can become one of the most responsive delivery channels in the marketing department’s arsenal.


5. Personalized commerce

“Extreme personalization,” as Forbes magazine calls it, is the driving force behind marketing today. More than 90% of customers prefer to shop with brands that personalize their experiences and 74% appreciate the ability to create dynamic profiles that support those experiences.

By combining vending machines with IoT technology, merchants can offer personalized experiences that consumers might not expect from a vending machine. Today’s vending machine customers can create user accounts, save individual preferences, and receive promotions and announcements targeted to their buying behavior. 

Coca-Cola’s Freestyle vending machines are the perfect example. These machines — now a feature of movie theaters and fast-food restaurants across the country — let customers blend their own drinks using Coke products and flavored syrups. 

Anyone can use Freestyle machines without an account, but there's also the option to create a more personalized experience. All a customer has to do is download the Freestyle app and they can save their preferred blends, see promotions, and earn rewards. With a single tap on their phone, a consumer could have Freestyle pour them a half-Coke, half-Dr. Pepper blend with a little bit of strawberry flavor — among more than 100 other options.


6. Data-powered marketing

In the early 2010s, Coca-Cola reserved 16 million unique network identifiers for its Freestyle network. These identifiers let Coke find out what blends people are making, as well as where and when they’re making them. The company can use that data not only to restock its machines but also to find out which blends it might want to promote and where.

It’s possible for a company like Coke, or any other with a good intelligent vending setup, to conduct comparative A/B testing. By comparing one setup option with another, given similar buyer profiles and circumstances, the results could tell the company which merchandising arrangements, display styles, or price points lead to the most sales. 


7. Cashless vending

Most adults today remember the classic struggle of vending machine payment. You’d put your money in and the machine would send it back to you, possibly because the paper was wrinkled or because of some problem with the scanner.

Now, with advanced vending POS software, those crumpled notes are yesterday’s problem. Payment services companies like Nayax make it easy to pay with a variety of payment apps, such as Venmo, PayPal, Apple Pay, and Google Pay.

In the U.S. alone, four out of every five consumers use at least one of these apps. Adoption is highest among millennials — 94% of whom use payment apps. Even among baby boomers, the least likely to use cashless payment, adoption of payment apps is close to two-thirds.

Thanks to built-in internet connections, today’s vending machines can give customers the option to buy using these apps. That means customers don’t have to worry about carrying cash with them for the vending machine. That’s important, especially since only 16% of consumers still carry cash.

Convenience for the customer means higher sales for two reasons:

  • Customers can buy whenever they want, not just when they have cash available
  • Customers see the vendor as more relevant and in touch with their needs


8. Touchless ordering

Cashless payment isn’t the only way intelligent vending is serving customers’ needs. In the summer of 2020, when many people were afraid of touching shared, public surfaces due to coronavirus, Coke added a contactless QR-based ordering system to its network of Freestyle vending machines. Now, all customers have to do is scan a QR code on the machine and they can use their smartphone to order without ever touching a shared surface.

Coke was able to make this innovation quickly because of its existing intelligent vending operating system. Just a few changes to the software's code, done from the home office, and thousands of Freestyle machines could start using this new technology.

You don’t have to be Coke to incorporate this kind of up-to-the-minute user-centric functionality. All you need is a connected vending solution like Novotech’s and you can build a network that adapts to what your shoppers need and want in a vending machine.


Your vending machine and IoT technology: Getting started

Because intelligent vending is still in the innovation phase, it can easily sound like something that’s out of reach for all but the largest companies. Fortunately, thanks to distribution partners like Novotech, even smaller vendors can combine their machines with IoT technology to connect with customers.

Novotech’s mobile internet lets you connect your vending machines no matter where they are, even in places where there’s little wired internet connectivity. It’s industrial-grade internet at the cost of consumer-grade, and you can use it no matter who your wireless provider is.

Adding IoT technology to your vending machines is a win-win, and it's accessible even to small vendors. For more information, check out Novotech's mobile internet information page and learn how to take your vending services to the next level at a cost you can afford.