Is Vending Worth the Cost for Distributors?

Vending has grown significantly this past decade as a distributor service, especially amid the pandemic. Here's how to determine if it's right for your customers' needs.

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More and more small-to-medium size enterprises and manufacturing facilities are adopting industrial vending solutions for their cost-savings benefits. Accordingly, Grand View Research predicts that the industrial vending market will exceed $4.6 billion by 2027. This suggests that those companies reluctant to embrace vending as a value-added offer for their customers will likely be left behind by the competition. What’s more, the onset of the COVID-19 pandemic has led companies to place a stronger emphasis on employee safety, making the PPE market among the fastest-growing product segments in distribution.

Curious if vending is right for your customers’ industrial supply needs? Wondering if it’s worth the investment? When considering value-added solutions like vending, it’s easy to focus on the price of the individual vending units. You may ask yourself questions like:

  • “How much is this going to cost me?”
  • “Will I recoup my investment?”
  • “Am I going to lose sales?”

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The Hard and Soft Costs of Industrial Vending

The initial investment for an industrial vending machine can range from $5,000 to over $20,000, but a higher price does not always correlate with superior quality. Often customers will favor a simple design that they can quickly master and implement. Distributors looking to offer vending should look for options that are simple to use, easy to configure and intuitive to their customers’ changing needs. 

When selecting a vending provider, it is critical that distributors ask exactly what is included with the purchase. Be skeptical of fees not included in the cost of the unit itself. Ask about startup and continuation fees such as machine rental costs, software leasing fees, cellular connections, feature add-ons, training costs, delivery charges, operating fees and functionality upgrades when considering your budget. 

Beyond utilizing a vending machine to help regulate the flow of safety and industrial MRO items, a robust inventory control software allows you to better track inventory usage, reduce shrinkage and reduce errors from manual tracking. Previously, software of this caliber was expensive and complicated to use. Today’s advancements in cloud technology have made inventory control software accessible and affordable for businesses of all sizes, removing the barrier to entry for many smaller distributors.

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Industrial Vending: Calculating Risk vs Reward

Many businesses struggle with ineffective inventory control and overspend thousands every year on supply costs. Your customers often complain of:

  • Excess or obsolete inventory tying up capital that could be invested elsewhere
  • Employees hoarding items for fear of running out of mission-critical supplies
  • Decreased production due to employees searching for items
  • Missing inventory items that halt operations, leading to expensive spot buys
  • Carrying costs on unused inventory items

Inefficiencies like these interrupt your customers’ schedules and cost them money. What begins as a small oversight can snowball over time and threaten your customers’ profitability. When this occurs, customers are forced to evaluate their vendors. They will recognize the partners who solved their inventory challenges and saved them money over the long haul. And they will notice who didn’t. 

Rather than focusing on the cost of the machine, you should ask yourself: Will this investment help my customers achieve better inventory control and streamline their purchasing? Will it establish me as the preferred supplier for that customer, gaining greater market share than before?

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6 Ways Vending Benefits Your Customer

Why vending? According to a recent Supply Chain Dive brief, manufacturers and other industrial customers consider inventory availability, lead times and product cost to be among the top three factors when considering new suppliers. Strained supply chain activity has been a major driver in rising supply costs for both distributors and their customers. The only way to assuage that difficulty and mitigate expenses is to use data to track trends and forecast future needs. Vending machines combined with inventory control software can help you do that. Vending offers your customers key benefits including:

Company-wide view of inventory.
Cloud-based technology allows multiple machines and even inventory crib supplies tracked by bar code scanner to be aggregated and reported in real time, giving distributors and their customers greater insight into their usage. 

Improved accountability and reduced shrinkage.
Increase accountability by tracking usage data at the employee level and limit quantities vended to assist management in correcting usage problems like hoarding. 

Lower carrying costs.
Customers achieve precise inventory control through enhanced visibility of inventory items. No more carrying unnecessary or unused supplies. 

Improved regulatory compliance.
Customers achieve consistent organization, storage, tracking and documentation of safety and PPE usage. 

Timely, automated ordering.
Distributors can offer customers peace of mind with vending options that automatically trigger a purchase order, reducing or eliminating costly stock-outs or production downtime. 

Flexible configuration.
As customers’ inventory needs change, their vending solutions can change with them. Locker units, helix coil and combination units can be adjusted to vend a variety of disposable and returnable inventory items of various sizes. 

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Where the Distributor Benefits

Vending profitability isn’t a given; you must design a suitable program for each customer and partner with the right vendor to generate the desired results for all parties involved. When done correctly, distributors can expect to see quantifiable benefits across multiple levels.

Increased customer spend: For the customer, cost savings can encourage them to shift more spend to distributors. You may be surprised by how much new business your customers will commit to in exchange for access to a vending machine and VMI capabilities. We have seen some independent distributors gain significantly in additional business each month.

Labor cost reduction: The most sophisticated vending machines available today can trigger a purchase order when item counts hit a designated minimum, Mark HillMark Hilleliminating the need for in-person inventory counts and quote generation by distributors. How much can you expect to save on labor – and earn from your reps' improved focus on actual selling activities – as a result?

Customer stickiness: Offering vending is a great way to protect your business from the competition. How many times have customers installed machines from competitors without telling you about it? Retaining customers is always cheaper than finding new ones.


Mark Hill has 40 years of experience in industrial distribution and vending. He is the founder of vending machine and inventory control software company 1sourcevend. Learn more at 1sourcevend.com or contact him at mhill@1sourcevend.com.

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