Vending machines and American marketing

Definition Mechanical devices that dispense commodities (often food, beverages, or cigarettes) in return for money

The popularization of vending machines as a means of selling a variety of products revolutionized American marketing in the twentieth century. As vending machines, and the security surrounding them, evolved, the variety of products distributed increased manifold.

Early History

The first vending machine in recorded history was invented in 215 BCE by the ancient Greek mathematician Hero. That first machine was a coin-activated device that dispensed holy water in a temple. It was eighteen hundred years later that the next recorded vending machines were made. In 1615, snuff and tobacco vending boxes appeared in English taverns. These tobacco machines were less sophisticated than was Hero’s, since they left much to the honesty of the customer. All an inserted coin did was open the box. Once the box was open, customers could take out as much tobacco as they wanted. One of the first US patents on a vending machine, used to sell postcards, was issued in 1886 to Frederick C. Lynde.

If any one person can be considered the father of vending machines in the United States, it would be Thomas Adams, the founder of the Adams Gum Company. Adams began the first successful vending operation in America in 1888, when he placed gum machines on the elevated railroad platforms in New York City. Other early vending machines included scales (which vended a service), strength testers, and hot water vendors (which served people who had no other source of hot water). These were followed around 1900 by cigar vending machines in Chicago and an automatic divorce machine in Utah. Soft drink machines were also introduced just before the turn of the twentieth century. By 1906, the improved models would dispense up to ten different flavors of soda. The drinks were dispensed into a drinking glass or tin cup that was placed near the machine (there was usually only one glass or cup to a machine because paper cups had not yet been invented). Health officials were concerned that everyone using the machine drank from the same cup. Then, vendors began setting buckets of water next to the machines, so each customer could rinse the cup before drinking from it.

The first completely coin-operated restaurant in the United States, the Horn & Hardart Automat, was opened in Philadelphia in 1902. Gumball vending machines were introduced in 1907, at the same time that the round gumball was invented, and proved highly popular. Candy quickly became one of the major products offered by vending machines, as many types of candy have long shelf lives and relatively high profit margins and the machines do not require electricity. In 1926, the American inventor William Rowe invented the cigarette vending machine. Cigarette vending machines remained popular until the 1980s, when state laws began restricting the sales of cigarettes to minors. The machines fell out of use, because there was no way to keep children from purchasing cigarettes from them.

Growth and Innovation

During the late nineteenth century, coin-operated gambling machines (slot machines) became popular. The vending machine industry does not consider gambling machines to be a part of the vending industry, because they do not vend merchandise. They are also much more heavily regulated than are vending machines, so the logistics of placing them are considerably different. The machines nevertheless affected the vending industry through technological innovation, particularly by increased attention to the dangers of fraud. During the early twentieth century, a nickel with a string tied to it or a lead slug could be used fraudulently to trigger a slot machine or a vending machine. It was not until the 1930s that the slug rejector was perfected.

The invention of the slug rejection device led to major growth in the vending machine industry during the 1930s and 1940s. In addition to boosting the slot machine industry, slug rejectors prevented children from stealing gum or candy from machines. As a result, machines offering inexpensive candies became commonplace. By the 1960s, soft drink and coffee machines proliferated with improved refrigeration and heating capabilities, and newspaper machines and even stamp machines at post offices were ubiquitous. Some specialty machines also appeared; fishing enthusiasts could occasionally find vending machines next to their favorite fishing holes that dispensed cans of worms on the deposit of a coin. A leading manufacturer of vending machines was the Vendorlator Manufacturing Company; its machines of the 1940s and 1950s, primarily for bottled soft drinks, later came to be considered classics.

Following World War II, there was another surge of innovation in the vending machine industry, largely due to the discovery of vending machines by industrial management. Before the war, the management of most factories had been merely tolerant of vending machines, but they soon discovered that the machines could be a low-cost means of keeping workers happy. They kept workers on the premises during breaks, and the easy availability of candy bars and soft drinks increased productivity. As a result, the demand for vending machines exceeded the supply during the late 1940s. Some businesses essentially replaced cafeterias for workers with full-line vending services offering a wide range of foods in various machines.

Despite advances made by the vending machine industry during the 1950s, one major limitation to the industry’s growth remained until the early 1960s: vending machines could sell only low-priced items, because machines could accept only coins. The early 1960s witnessed the invention of vending machines that would accept and make change for paper currency, paving the way for the industry’s expansion into more expensive grocery items, as well as various kinds of tickets. The first use of vending machines to issue tickets was at an Illinois racetrack, where pari-mutuel tickets were dispensed on deposit of $2. Penn Central Railroad became one of the first transportation companies to sell tickets by means of vending machines. These machines, used in high-traffic areas, permitted passengers to buy train tickets without the need to interact with a person. They accepted one-dollar bills and five-dollar bills as well as coins.

Advances in telemetry made possible the use of credit cards to operate vending machines beginning in 1985. Such devices were initially most common in locations that also had human cashiers with credit card machines. Thus, one could use a credit card at a machine to purchase transportation tickets, motion-picture tickets, or copies at a copy center. However, increasing numbers of vending machines in accept credit cards no matter where they are located or what products they sell. In 1993 wireless technology allowed vending machines to transmit data to warehouses for the first time. The technology behind these machines is related to that behind automatic teller machines (ATMs). The latter devices are not considered to be part of the vending machine industry proper, but swift, secure verification of financial information is necessary for both devices to operate. Computerization of vending machines throughout the late twentieth and early twenty-first centuries also allowed vendors to collect more detailed data about how machines were being used. This led to another revolution in vending machine technology that saw the introduction of "smart" machines and the spread of specialized vending.

Specialized vending refers to the use of machines to sell products other than items such as candy, drinks, and snacks that are traditionally associated with vending machines. Some specialized machines are fairly common, such as those dispensing feminine products or condoms in restrooms, but the twenty-first century saw increased interest in the United States for ever more novel or luxurious items available from machines. Often driven by innovations from Japan, vending machines have provided such good as live lobsters, gold, shoes and other clothing, electronic devices, and medicinal marijuana.

Often connected to specialized vending is the smart vending machine. This refers to technology allowing detailed monitoring of a machine's performance as well as the capability to offer customized services to individual patrons. Touchscreens, wireless communication between machines and cell phones, and even facial recognition software allows customers to pay without cash or credit cards, or can potentially restrict the sale of certain products to minors. Smart machines are able to perform self maintenance, coordinate efficient restocking, and prevent or report theft and vandalism.

Vending Machine Industry Issues

The main advantage offered by vending machines is their convenience. Machines are not restricted to an eight-hour workday; they can provide goods and services around the clock. Moreover, they are much cheaper than paid labor. Machine owners must still pay employees to restock and maintain machines (or do it themselves), but they do not need to pay an hourly wage to a salesperson.

There are problems involved with the use of vending machines. Primary among these are mechanical failure and vandalism of the machines. Because of the threat of vandalism as well as the use of special equipment, vending machines are typically large, bulky, and heavy. This can pose a danger if a machine is destabilized and falls, and such accidents have caused death and injury. Moreover, not every product can be successfully sold by machine, although specialized vending is closing that gap. Several requirements make some goods more suitable to machine vending than others. First, the most successful products will generally be those that consumers are predisposed to purchase, such as those already supported by national advertising campaigns. Second, products must typically enjoy a high turnover to justify the costs of purchasing, deploying, and servicing machines. A third factor is the relationship between the location of machines and the location at which products will be consumed or used. Usually, products must be usable within a short distance of the machine; otherwise, consumers might prefer buying them at dedicated stores.

Some groups have objected to the sale of unhealthy foods in vending machines, especially in schools. The early twenty-first century saw several US states and local school districts prohibit junk food and soft drink vending machines from public schools, sparking significant debate. In response, vending companies have introduced so-called healthy vending machines that dispense more natural snacks with less sugar, fat, salt, and artificial ingredients.

Although tangible merchandise is the most commonly sold category of vending machine commodity, services are also offered. Coin-operated laundries are among most common service vendors. Other machines that sell services include scales, parcel lockers, and pay toilets. Some motel beds include a coin-operated massage feature, and coin-operated telescopes and binoculars are located in national parks, on the roofs of major skyscrapers, and at other tourist locations. Coin- and card-operated copying machines have experienced a large boom, particularly in libraries and at twenty-four-hour copy stores. Change machines are not generally considered a part of the vending machine industry, although they are often found next to machines that take only coins. Change machines thus contribute to vending machine sales, but like gambling machines and some machines offering services, they form a separate but related category.

The United States is not alone in the development of vending machines. In fact, the United States is not as advanced as some other nations of the world. For example, in Japan, credit-card-operated machines have been used widely since the 1960s. The future will see a broadening of product lines offered in vending machines, as marketers recognize the opportunities that exist in automatic retailing, especially with the expansion of smart technology and increasing acceptance of specialized vending.

Bibliography

Amann, Fred. “Automated Cashless Services: A Trilogy.” Vend 15 Mar. 1970: 19–20. Print. This article from the leading journal for vending machine operators discusses the role of vending machines that accepted credit cards in 1967.

“From Peanuts to Panties.” Sales Management 3 June 1960: 38–42 and 116–118. Print. Provides highlights from the history of vending machines and includes an extensive discussion of the variety of products being sold via vending machines during the late 1950s.

Hanna, Charles. The Vending Industry: History, Trends, Secrets, Opportunities, Scams. Kearney: Morris, 2001. Print. The sections on history and scams are particularly useful.

"History of Vending." NAMA. NAMA, 2014. Web. 10 Mar. 2015.

Klobucher, Derek. "Why You Won't Recognize Vending Machines In a Few Years." Forbes. Forbes.com, 6 Mar. 2015. Web. 10 Mar. 2015.

Manning, W. J., Jr. “Automatic Selling: A Business in Billions.” The Management Review Oct. 1960: 15–21. Print. A history of the vending machine industry that emphasizes technological breakthroughs.

Schreiber, G. R. A Concise History of Vending in the U.S.A. Chicago: Vend, 1961. Print. Short history of vending machines published by the leading journal in the industry.

Segrave, Kerry. Vending Machines: An American Social History. Jefferson: McFarland, 2002. Print. Traces the influence of the vending machine in American culture from its beginnings through the end of the twentieth century; includes an extensive bibliography and index.