As interest in vending has spiked, small and mid-sized distributors are under increasing demand from customers to supply the service. But for some, the cost to begin can be prohibitive. Vending machine and software suppliers have responded to the demand for a lower-cost option to help these distributors serve smaller customers profitably. SnapVend is one of these solutions. The company was developed by a safety supplies distributor, Mallory Safety & Supply, who worked with VendNovation to integrate its cloud-based technology.
Marketing group Affiliated Distributors recently adopted SnapVend as one of its preferred vending suppliers. This article looks at the place of SnapVend in the market, and how distributors are using the vending solution as one part of a total inventory management service offering.
Industrial distributor Rocket Supply in Cincinnati, OH, expects to have 19 vending devices installed in 2013. Greg Losey, general manager, says almost a third of those machines are from a new low-cost vending provider, SnapVend.
The SnapVend offering is new for Rocket, having launched in late summer. Losey says the program has changed the way the company approaches vending. It’s opened up new opportunities. “We’re able to take SnapVend into customers who couldn’t justify a vending expense prior to,” Losey says.
Tim Loy, president of safety distributor Mallory Safety & Supply, collaborated with affiliates of marketing group Affiliated Distributors, AD executives and others to create SnapVend. Loy says the idea was borne out of a desire to help independents compete more effectively in vending against larger national distributors.
In the past few years, national chains have pushed hard to place vending machines with customers at little to no direct cost to them, a push that Mark R. Higgins, vice president and managing director of Affiliated Distributors’ Industrial Supply Division, says has disrupted the market. Higgins says AD affiliates and executives recently began looking for a way to better educate members on the value of vending and to offer them more options for machines.
“I think Fastenal cracked the code a bit by going with free machines, realizing that most buyers can say ‘yes’ to who they buy from, but can’t say yes to a capital purchase,” Loy says. Before SnapVend, Mallory was offering a much more robust vending solution at a much higher cost. “We needed something we could afford to put in for customers for free,” he says.
Initially, Loy says AD looked for a supplier from which the marketing group could make a group buy. “Ultimately, we realized that our peers within AD could not sign on to a group buy without taking one machine first and really working to formulate a sales strategy. Someone had to proactively sell the solution to other AD distributors and work with them on their sales process for this to take off,” Loy says. So Loy, through a separate sales and support arm Mallory created for the purpose, developed a solution called SnapVend.
This summer SnapVend joined CribMaster, which serves the middle to high-end of the market, as a preferred vending supplier for AD. Higgins says reception to the program has been “overwhelmingly positive.”
The addition of the SnapVend program “filled a void,” Higgins says. “Tim had the right software people. He found the right hardware people, and he put his own resources together to solve a need for independents and AD.”
SnapVend, which Loy says has a drawer and RFID solution in development, currently offers coil- and locker-based machines. Vending equipment manufacturer Seaga produces the machines, which are powered by a control board that connects the machine to cloud-based software from vending technology provider VendNovation.
Loy says the machines run about 30 percent below market for comparable machines from other suppliers in part due to that cloud-based software. Eliminating the need to attach a computer to the front of the machine, Loy says, avoids complexity and database syncing issues and reduces maintenance needs.
Cal Bauer, vice president of marketing for VendNovation, says VendNovation worked with Winona, MN-based industrial distributor Fastenal when it unveiled its own vending program. Fastenal is broadly attributed with sparking the current boom in industrial vending.
“The Fastenal system that they trialed with and launched their program with was actually our
controller and our software,” Bauer says. When Fastenal’s machine supplier Apex Supply Chain Technologies developed its own software to use in the machines, VendNovation was cut out, Bauer says. VendNovation partnered with Loy to create SnapVend to “empower” small independent distributors with the same system and quality of technology, Bauer says.
Place in the Market
Brent Scott, technical solutions manager and vending program manager for Martin Industrial Supply in Florence, AL, says a cost analysis is always required when determining where to place machines, no matter the provider. But because the SnapVend solution is less expensive than most, he says, it’s easier to approve placements.
“If you consider that the SnapVend offering is anywhere from a half to a third (the cost) of what we were faced with up until they were introduced, just by the numbers it makes it available to twice as many customers, or more,” Scott says. This has allowed Martin Industrial Supply to become more proactive, he says.
The ease of installation with SnapVend is another important benefit. Bauer says SnapVend machines’ ability to run in the cloud means they can run anywhere with an Internet connection and troubleshooting can be done remotely. The VendNovation control board in SnapVend machines can also be installed right at the factory. “So we’re able to shorten the supply chain quite a bit with the way our technology works,” Loy says.
Eric Dillon, vice president of industrial distributor Dillon Supply Company, Raleigh, NC, says the shorter sales cycle of the SnapVend solution was a major factor in his decision to add it to his offerings. A start-up company Dillon was working with needed a vending solution fast. “When we identified the products they wanted to put in there, SnapVend seemed like the perfect opportunity, but what really sold that point was the timing – they needed a machine in three weeks.”
SnapVend users say although the SnapVend program is new, they expect customers to gain the same general benefits users of other programs enjoy. “Even though it’s a less expensive machine, all of the controls are still there,” Losey says.
Loy, who already has machines in place with Mallory Safety & Supply customers, says several SnapVend customers have already tracked 30 percent or more consumption reduction, among other common benefits like reduced walk time, 24/7 availability and job tracking. “We have found it is hard to get a customer to switch,” he says.
SnapVend also offers the distributors themselves some of the same benefits as those offered by pricier machines.
“You typically pick up additional business when you’ve got a vending system in place,” Losey says. Part of that comes from being in customer facilities more often, and part comes from selling more products to existing customers.
More than once, Scott says Martin Industrial Supply has been able to suggest more items for a new vending machine than what had previously been sold to the customer. “We say, ‘Hey, you’ve got room for 10 more SKUs in the machine.’”
Not wanting to leave the space empty, the customer and rep work together to fill the space. “That’s 10 SKUs that they were obviously getting somewhere else that come into our book of business because we’ve got a store within walking distance,” Scott says.
Higgins says at the end of the day, whoever has a vending solution is going to get a preferred look on spot buys and one-offs where there are higher margins.
Part of a Total Offering
SnapVend is not a standalone vending solution, AD’s Higgins says, which is why the marketing group also supports CribMaster. Losey at Rocket Supply says SnapVend doesn’t threaten his company’s relationship with its other suppliers, AutoCrib and SupplyPro, whose solutions Rocket plans to continue to offer moving forward.
“There are a lot of benefits to having them involved in what we’re doing,” Losey says. “They’ve got a very broad product offering and very extensive reporting capabilities.” The other suppliers also can design complex solutions to meet specific customer needs, he says.
Still, those involved with lower-cost options like SnapVend say it changes competitive dynamics in industrial distribution. “Independent distributors have needed a low-cost solution for a while,” Losey says. “We can now compete on an even playing field with the large nationals, and we weren’t able to before.”