Why retail giant Coca-Cola is using IoT connected vending machines

Why retail giant Coca-Cola is using IoT connected vending machines

Why retail giant Coca-Cola is using IoT connected vending machines
Image: CNW Group/Coca-Cola Canada

Drinks giant Coca-Cola is on a mission to introduce ‘intelligent’ vending machines. Here, in an interview with IoB, they explain why.

Retailers today face numerous challenges, from the conundrum of how to redevelop their struggling physical bricks-and-mortar store in the face of competition from Amazon and eBay, to the development of their Omni-channel strategy. Then there’s also the struggle of maintaining brand quality and positioning in a retail market hell-bent on a race to the bottom on price.

They realize that there’s a fight for customers’ attention, and their wallets, and that customer loyalty is a dying concept in a world of cheap and readily available goods.

However, all is not lost for the retailers of today and tomorrow.

New and existing technologies offer them an opportunity to reinvent themselves, to get closer to the customer, and to offer more relevant, targeted products. By doing this, retailers stand to gain not only from increasing sales (from customers now being shown the products that are right for them), but also from a more efficient supply chain and business as a whole.

Internet of Things (IoT) sensors, Bluetooth beacons and RFID tags, coupled with business intelligence (BI) and cloud-based data analytics solutions, can drive much of this business transformation.

Indeed, the supply chain is where much of this innovation is going on, with the relatively low-tech vending machines leading the way.

Whilst vending machines are often derided as being unimaginative, basic and temperamental (we’ve all had to give them a kick every now and then to get the goods – Ed), increasingly brands see an opportunity for customer engagement, measuring stocks and much more.

The International Vending Alliance (IVA) recently partnered with Intel to develop a ‘smart black box’ solution for vending machines (introducing cashless payments, touchscreens, as well as enabling vendors to respond more rapidly to consumer tastes), with Costa Coffee one of the first brands to jump aboard. But this is just one of many examples that are starting to appear in an evolving market.

Related: Whitepaper – What is the future of IoT in retail?

Coca-Cola leads the way

But smart vending machines is not new, especially for one drinks giant. Coca-Cola introduced the first IoT-like vending machine in the 1980s, and now has a range of machines enabling cashless payments, notifying managers when stocks are low and providing more personalized communications and loyalty rewards to customers through ‘My Coke Rewards’.

Coca-Cola CTO Jane Gilmour referred to the 1982 Carnie experiment at a conference late last year, explaining how a third of vending machines are now Internet-connected. In the supply chain world, there are further possibilities;

“I think the IoT is very useful in things like supply chain management and we’re doing some work on more efficiently delivery systems,” Gilmour said.

“It’s not the sexy headline but it’s a big driver. In some parts of Africa and India we use elephants and canoes to deliver Coca Cola. Can we Internet an elephant and would we want to?”

Coca-Cola has also connected a third of its vending machines to the Internet so it can tell which machines are busiest, and which varieties of the drink are selling the most (through facial recognition and contactless payments technology). Gilmour said that, in developing countries, the machine might even be connected via satellite and act as a Wi-Fi hotspot for local communities.

The Interview

To find out more, IoB spoke to Derek Myers, group director, channel strategy & development at Coca-Cola:

IoB: What is Coca-Cola doing with ‘intelligent’ vending machines?

“We utilize intelligent vending machines to enable our digital strategy for vending. That strategy is comprised of three key elements: a smart connected fleet, empowering digital path to purchase, and seamless payment & loyalty.”

How does IoT help with these intelligent vending machines? Why bother to connect these machines to the Internet at all?

“The connection is key. Vending machines are essentially our retail stores but one unique characteristic of vending is that each location is not attended by a person. Without a human element to ensure the store is open and able to sell, having a consistently connected fleet is critical to ensure our stores are always ready to refresh our consumers.”

What ROI have you seen on these vending machines? Saving costs, better inventory management?

derk-myers
Derek Myers is speaking at next month’s Internet of Retail

“Our returns have been very strong as we are making the most out of our investment. The same technology that powers acceptance of mobile wallets and My Coke Rewards also powers our ability to understand inventory levels and machine health.”

How does My Coke Rewards work to provide personalized communications and loyalty rewards?

“We are very excited about the mobile wallet launch of My Coke rewards that brings a seamless experience of payment & loyalty.

“Consumers in the United States can visit select vending locations and in a single tap, instantly pay and earn or redeem loyalty points with compatible Apple and Android devices providing one of the fastest and value-added transaction experiences in retail today.

“We are also building the ability to deliver messaging to consumers that is contextually relevant and immediately useful at the point of sale — where it matters most.

“For example, I rarely board a flight today without smart water to ensure I stay hydrated at 30,000 feet in the air. Sometimes connections are tight at the airport and I may forget to pick up a bottle as I’m sprinting to the next gate. My Coke Rewards platform can push a message reminding me to pick up a bottle before I board to ensure I’m not left thirsty en route to my next destination. Consumers can text ‘wallet’ to 2653 to register and download their card.”

These machines offer cashless payments – what systems do they connect with? (Apple Pay, Google, PayPal etc.?)

“Yes, our cashless capability has industry leading acceptance from Visa, MasterCard, American Express, Discover, JCB, Union Pay and mobile wallets like Android Pay, Apple Pay, and Samsung Pay.

“In fact, we have over 100,000 vending machines that accept mobile wallets today, which represents the largest retail fleet that accepts mobile payments in the world. We are also rolling out capability to accept student ID cards at vending locations across our colleges and universities. That feature will bring highly-desired utility to students who most often pay with their student IDs at other locations on campus.”

In what other areas of business is Coca-Cola looking to use IoT, VR, AR or any other emerging technologies?

“We see a lot of application for many emerging technologies. For IoT, we have tens of millions of assets from vending machines, coolers and displays that represents unparalleled scale in retail today. The intelligence gathered from connecting our fleet can empower us to ensure our in-store experience is best positioned to earn our way into consumer’ hands.

“We are using augmented reality (AR) as a selling tool so our sales teams can show our customers how new equipment like our Freestyle machines will appear in their locations bringing more tangible selling beyond just using imagination today. Those are just a couple examples of our broader vision for our digital strategy and we’re very excited to share our innovation over the next few years and beyond.”

Derek Myers is speaking at the Internet of Retail US, which takes place in NYC this October.