Distribution: Vending

Unlike most of the other services discussed, vending services are mainly applicable to urban localnets - specifically those in multi-tenant buildings such as high-rise apartment blocks.

This section discusses:

• the Existing provision of this service: What, How, How Often, Costs, Providers and Trends
• the Proposed provision with localnet: What, How, How Often, Costs, Providers and Evolution
• how the existing and proposed services compare

Existing Provision

What

Building in which many families live and/or work often have long had one or more vending machines providing:

• confectionery - chocolate bars, crisps and nuts
• bottles or cans - typically water, carbonated - often chilled.
• hot beverages - coffee, tea, hot chocolate etc.
• ice (more so in the U.S. than the U.K.)

More recently, chilled or refrigerated units have become more widespread and offer:

• ice creams
• sandwiches and other snacks.

How

Vending machines are invariably mains powered, often need connection to a water supply and require regular visits to top them up and remove cash from them. They are typically:

• vulnerable to vandalism and theft of takings
• prone to break down
• often out of stock

They therefore require frequent visits from service personnel who need access with boxes of supplies to replenish them and are vulnerable to attack if carrying cash takings from several machines.

Most vending machines have somewhat limited range of items that they can carry.

Volume and Frequency

Vending machines are located in places where many transactions a day are expected (though may not actually occur).

Financial Model

Small value cash transactions result in a heavy and vulnerable pile of loose change to be collected, bagged and banked.

The high costs of keeping the machines running ensures that prices are typically well above those charged in even a corner shop for the same item and often several times more than the same item can be found for in a supermarket.

Providers

A large building may have many different vendors, each maintaining a different type of machine. Often these are franchisees that service a number of machines in a district and survive on the margins made by “their” machines.

Trends

If we want to achieve higher density dwellings then reliable affordable vending services that give instant 24 x 7 access to a wide range of goods could be an important benefit of living in a well-designed apartment block.

With Localnet

What

If a localnet SmartWaiter system is installed in a multi-storey building, it already has much of the technology and mechanics needed to double-up as a very impressive vending machine. Such as system would offer all of the items currently expected from vending machines:

• confectionery and cold snacks
• hot and cold drinks
• ice cream, ice
• chilled ready meals
• hot micro waved snacks

In all categories, the range of items available will be significantly greater than would be offered by any single vending machine it replaces.

How

While LocalHubs may well have similar vending machines complementing the normal business hours operations of the retail outlets there, we are primarily concerned with vending from the SmartWaiter access points that will typically be on every floor of a multi-storey building.

These already have touch pads and sensors capable of

• identifying residents (not just of the building but anyone from the area with their localnet card on the)
• showing them choices and accepting instructions via a touch-screen
• calling up their personal preferences to make selection easier (mine's always a Crunchie!)
• charging them via their home localnet account

Behind the panels, the localnet collection and delivery system has:

• small elevator and box movement systems capable of storing and retrieving items in the vertical stacks behind the access panels.
• chiller and freezer compartments for storage of goods awaiting collection

It is therefore relatively simple to add one or more mechanisms derived from existing vending machine internals that:

• put individually selected items into a standard PaperBox sized container.
• deliver this container to a vending slot on the floor where the customer requested it. This slot, unlike the normal collection slots will allow the customer to remove the contents of the box but not the box itself.
• dispense hot drinks
• microwave the contents of the box for the appropriate time

Because the stock and components of the system can be distributed throughout the vertical shaft of the SmartWaiter:

• they do not take up room on each floor
• two or more mechanisms can be provided for most functions - so that if one fails, the system still functions albeit potentially with a slightly longer wait if the remaining unit is busy.
• they are hidden from view and less easily vandalised

The integrated nature of the vending within the localnet system also:

• removes cash from the system - improving security while making it more easily available to users who don't have to find the right change each time they need something.
• saves space on every floor of the building where vending machines used to be sited.

Sharing stock across all floors also allows a wider range of items to be available than could be justified in a single vending machine.

As the system is linked back to the LocalHubs, the deliveries which will be several times a day for a large building will automatically include boxes containing replenishments of whatever has been sold in the previous few hours.

Volume and Frequency

With a wider range of goods available; no need to hunt for cash and more competitive pricing, the volume of items sold from such a system should far exceed the sales of the vending machines it replaces.

Financial Model

This approach slashes direct maintenance costs for the machines and allows equipment costs to be spread across all floors of a building. There will still be a premium to be paid for the immediate accessibility and the costs associated with that but this should be much less than currently needed for standalone vending machines.

Providers

There is little role for the independent franchisee in this model. Vending becomes a part of what localnet provides in these buildings.

Evolution

It may be appropriate for localnet vans to perform servicing of more “standard” vending machines on their routes. If the machines in large buildings are replaced by SmartWaiter systems then the rounds previously done by franchisees may no longer be viable if only the remaining machines are stocked and serviced by them. localnet vans will be passing each machine many times a day so probably could maintain the few each one passes on its short round at lower marginal cost than a dedicated franchisee could trying to cover enough machines in a day to make a living - and hence travelling much further and without the journeys being shared with other goods..

 

Comparison

The table below assesses the impact of localnet on this service on a scale of -5 to +5 (details here)

	Existing services	As part of localnet	Score
Scope	Wide range of items available.	Wider range in tower blocks.	+1
Frequency	Need to have cash, limited range and high prices deter use.	Hassle-free payment, better range and lower prices encourage use.	+3
Security	Goods easily reached. Cash present and accessible with a crowbar.	No cash held. Goods far from access point. Vandalising one access point does not prevent delivery of any item via other access points on neighbouring floors.	+3
Convenience	Only convenient when it is in stock and you have change.	More likely to be in stock, billed to your account.	+3
Cost	Service costs keep prices high.	Shared system with localnet delivery and across floors reduces overhead.	+2
Quality	Variable. Slow turnover stock could be stale, high turnover quickly leads to out of stock.	Better, automated stock control ensures better turnover and fewer outages.	+2
Carbon Footprint	Dedicated servicing visits inefficient.	Shared transport much more efficient.	+2
Time	Quick to use when in stock and you have change.	Slower if goods not on correct floor already.	-1
Resources Used	Dedicated vending machines.	Components within shared framework.	+1
Reuse & Recycling	Machines scrapped when obsolete.	Maintained for longer, modules repaired and replaced.	+!
Landfill Waste	As above.	As above.	+1
Other Differentiators