7. Enabling Vends Simple example at $1 vend price To enable a vend at $1, the consumer must either possess: $1 in Coins OR $1 Note Probability Of Success * 20% 80% Probability Of Failure 80% AND 20% * Note: From MEI Survey Data Lost Sales 16% (80% x 20%)
8. Bill Recycling value to vending patrons Current Bill Acceptance and Change $2.00 Vend Price $5 inserted Increase sales by allowing consumers more payment options. $2.00 Future Bill Acceptance and Change… Bills In Bills Out $5 inserted $20 inserted
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11. Improving the Consumer Value Experience As a consumer, do I want to shop at a “store” where I currently can’t buy anything between one in six and one in three visits? Note recycling can greatly reduce those negative consumer experiences.
17. Sales Lift Results 2 Case a Week Machine at $1.25 Vend Price MEI Company Confidential
18. Sales Lift Results 2 Case a Week Machine at $2.50 Vend Price MEI Company Confidential
19. Business Case - Bottling Analysis at $1.25 Vend See Details Category Cash Only Cashless Recycling Cashless and Recycling Hardware Costs $375 $223 $598 Monthly Fees $9.95 $9.95 Cashless Fees 5% 5% Increase to Sales 16% 15% 20% Annual VPO Cases 104 121 120 125 Cases per Week 2.0 2.3 2.3 2.4 Cost per case $3.10 $1.86 $4.80 Cost per unit $0.13 $0.08 $0.20 % of business cash 100% 77% 100% 90% % of business cashless 0% 23% 0% 10% Payback Period (months) 46 11 42 Annual Sales Lift $507 $470 $615 Annual Margin Lift $98 $235 $172
20. See Details Business Case - Bottling Analysis at $2.50 Vend Category Cash Only Cashless Recycling Cashless and Recycling Hardware Costs $375 $223 $598 Monthly Fees $9.95 $9.95 Cashless Fees 5% 5% Increase to Sales 32% 30% 38% Annual VPO Cases 104 137 135 143 Cases per Week 2.0 2.6 2.6 2.8 Cost per case $2.74 $1.65 $4.18 Cost per unit $0.11 $0.07 $0.17 % of business cash 100% 61% 100% 87% % of business cashless 0% 39% 0% 13% Payback Period (months) 6 3 7 Annual Sales Lift $1,970 $1,859 $2,349 Annual Margin Lift $745 $929 $1,015
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Editor's Notes
Our goal of this training is to provide an in depth understanding regarding why bill recycling can drive increased same location revenue . We will analyzie the underlying factors of consumer purchase behavoir and compare cash and cashless payment options. We’ll conclude with suggestions as to where recycling could best drive higher revenue to help guide operators in their placement decisions.
A positive repetitive experience is what drives consumers to a retail ‘outlet’. We’ve designed the HVB to work with the VNR as a strong visual reminder that this vending machine takes higher denom bills. MEI is helping merchandise the machine and it’s capabilities to drive sales growth for the operator.
There has been a fundamental shift in vending patron demographics. Gone are the large blue collar plants where patrons carried exact change each day because they always bought the same snacks and drinks. Consumers carry less cash, and the cash they do carry is largely higher denomination bills. Machines that only accept $1 bills and coin are unable to complete the sale in a surprising large % of the time. Enabling more vends increases sales and as importantly, positions vending as a strong alternative to other retail channels such a convenience stores.
There has been a fundamental shift in vending patron demographics. Gone are the large blue collar plants where patrons carried exact change each day because they always bought the same snacks and drinks. Consumers carry less cash, and the cash they do carry is largely higher denomination bills. Machines that only accept $1 bills and coin are unable to complete the sale in a surprising large % of the time. Enabling more vends increases sales and as importantly, positions vending as a strong alternative to other retail channels such a convenience stores.
MEI research into what typical consumers carry in bill denominations shows 80% carry at least $1 in bills or coin. That percentage drops quickly when they would need $3 to make a $2.50+ vend purchase. Note that 60% or more carry at least a $5 bill or $20 bill. If your machines are unable to accept at least a $5 bill, you are missing sales.
The math is fairly simple in determining how much sales revenue an operator is missing by only enabling $1 acceptance. Approximately 1 in 5 customers that approach a vending machine are unable to complete a vend because they do not have the correct change. Imagine how other retail channels would respond if they knew 1 in 5 of their customers were turned away by somehting within their control!
Building upon the fact that vend price is a key driver in the benefits of recycling, we need to understand that vend price is scenario based. 2 kids wanting a $1.25 drink creates a $2.50 vend for the mother. Maybe she has enough to make the first $1.25 vend but 3 of 10 times she won’t be able to make both purchases. By enabling $5 bill acceptance, we can ensure ourselves of making 9 of 10 mom’s able to make both vends. The sales lift resulting from enabling that second purchase is over 24%!
So we’ve established that consumers do not carry more than a few $1 bills or loose change. As we exceed a $2 vend price, the probablility of a vending patron having exact change goes down quickly. At a $3 vend price, fully 1 in 3 consumers won’t have the exact change to make the purchase. We’ve all heard operators who have tried recycling experience a 15% sales lift. Our analysis confirms sales lifts of over 12% by just enabling $5 acceptance. We approach 20% sales lifts when we take up to a $20 note at a $3 vend price.
Consumers have choices. If a vending machine is unable to take the money they have, then people will simply switch to an alternative ‘store’ where they are confident a purchase can be made. If nothing else, enable $5 acceptance and enjoy the double digit sales lift.
Sales lift is clearly a function of vend price. As price points approach $3, enabling $20 bill acceptance becomes a worthwhile consideration.
A positive repetitive experience is what drives consumers to a retail ‘outlet’. We’ve designed the HVB to work with the VNR as a strong visual reminder that this vending machine takes higher denom bills. MEI is helping merchandise the machine and it’s capabilities to drive sales growth for the operator.
Bill recycling and cashless each of their place in vending. While cashless does carry higher fixed costs, there are clearly site and demographic considerations that can make recycling, cashless, or both a good investment. Particularly if an operator has implemented telemetry for other reasons, the addition of cashless has a much quicker payback.
When comparing recycling to cashless at a $1.25 vend price, you see that both drive a similar increase. The combination of both, a unique MEI solution, drives higher sales growth but not significantly higher.
At a $2.50 price point, the numbers are dramatically higher. And now you know why. The consumer simply doesn’t carry enough exact change to make the purchase. Enabling both payment types is a great way to maximize capturing any payment type a consumer brings to the machine.
The fixed costs from cashless clearly impact the payback period negatively. Even though the cashless payback of 12mos is good, recycling’s payback of half that is what has operators so excited.
The higher vend price has a dramatic impact on payback period. Either solution could easily be justified and a combination solution makes perfect sense as well.
Operators often ask about recycling’s impact on machine float levels. By using consumers $1 notes to keep the recycler filled, operators can remove the $1 coin tubes, saving over $80/machine!
Current vending machines will properly report total cash in when using a recycler. The only change when using a recycler is understanding that the bills going into the recycler and coming back out will be reported as coins. The split between bill and coin upon the drivers return requires interpretation. MDB level 4 eliminates the interpretation required. MEI recyclers will auto detect which MDB rev is in the VMC and adjust it’s output.
Current vending machines will properly report total cash in when using a recycler. The only change when using a recycler is understanding that the bills going into the recycler and coming back out will be reported as coins. The split between bill and coin upon the drivers return requires interpretation. MDB level 4 eliminates the interpretation required. MEI recyclers will auto detect which MDB rev is in the VMC and adjust it’s output.
Recycling $1 bills has very little impact to an operator in terms of their operation. Field data validates that it is very rare a VNR would require a driver re-fill. The VNR replaces any $1 coin need and drops capital deployed by over $80/machine. $5 recycling, if an operator isn’t already dispensing $1 coins, would require the operator to begin $1 coin dispensing. Although this increases their capital deployed, the low cost of capital as well as the increased sales should make the decision more focused on vend price and site demographics.
Open sites remain a great cashless opportunity. Closed sites might be a better fit for recycling where consumers have the chance for repeat use. MEI is unique in providing a modular solution that allows the operator to invest in the right solution for each site.
MEI has a recycling solution that is modular in approach, elevates vending to a retail experience, and is proven to provide high reliability in demanding sites.