The evolution of vending machines,from simple coin-operated mechanical analog devices to phone-operated, digital payment-enabled smart machines is changing how consumer goods are retailed.
However, as this shift towards unattended digital retail transactions gains momentum, concerns about vending machine data security and privacy have emerged, as well. What data gets stored? How does it get stored? And who has access to it? Read on, as we take a deep dive into understanding the data collected by vending machines: the security challenges and business opportunities in effectively utilising this data for a better customer experience and more efficient inventory management while ensuring customer privacy is maintained. Find out how Vendekin-powered vending machines ensure safe and responsible use of all such data collected.
Table of Contents
What data do smart vending machines collect?
Digital vending machines gather quite a lot of data to improve operations and provide valuable insights. Here is a brief summary of the data a typical smart vending machine collects:
Transaction Data: Every time a user purchases something from a vending machine, every detail of the transaction is recorded. This can include, the date and time of purchase, items purchased, the payment method and of course the vending machine location. This kind of data is usually available to the vending operators via a software such as vNetra, part of the vending machine management software kit provided by Vendekin.
Consumer Behaviour Data: This is where the magic happens! In addition to transaction data, automatic vending machines using cameras and sensors (where available), can provide deeper insights into customer behaviour such as foot traffic patterns, interesting interaction dynamics such as facial expression while making the purchase and much more. Of course, the extent of the data collected depends on the technical expertise of the vending machine hardware & software provider, as well as, privacy and policy constraints.
Vending Machine Operation Data: This data is useful for the constant uptime of a vending machine. Most vending machines collect operation data on power usage, temperature fluctuations, raising a maintenance alert when required. Like any good technology, most vending machine management software will keep an error log, recording any malfunctions, in addition to the above data points.
Inventory Data: One of the best things about smart digital vending machines is the convenience with which operators can monitor stock levels. Smart vending machines track the availability of each item, enabling operators to plan ahead for restocking, reducing the out-of-stock experience for customers.
Location-based Data: An extension of consumer-behaviour data, smart vending machines with location-tracking technology like GPS can also capture valuable location-related data. This can help brands and operators get insights into the usage patterns of products by locations, as well as, get a deeper understanding of the audience demographics at the installation location.
A word of caution: While any and all data can be collected by a smart vending machine in India, it is important to ensure that the collection and utilisation of this data aligns with privacy regulations. It is also important to know that there are multiple parts and parties involved in a digital retail transaction. For example, personal information such as mobile numbers or payment details might not be collected by the vending machine itself, but it will be collected by the payment gateway system integrated into the vending machine. More on nuances like this up ahead in this blog…
How brands can harness vending machine data for growth
Data is king! Smart vending machines are more than just a way to sell more products. The information collected by smart vending machines is now becoming a window for improving business intelligence and connecting with customers. Here are some ways this vending machine data can be used by businesses for improving bottom lines:
Product Optimisation: Product sales and consumer behaviour data from a vending machine can together be used to understand customers' buying patterns and preferences. This data can be extremely useful for brands, during product development — in fine-tuning existing product offerings, as well as, developing new variants.
Location Optimisation: Better decisions around vending machine placements can be made using location-specific vending machine data. It can be used to identify bustling hotspots which can amplify brand exposure and captivate target audience impacting bottom-lines.
Operational Efficiency: Vending machine data can provide brands crucial insights into the machine performance and maintenance at all their installation sights. Using a smart vending machine software like vNetra by Vendekin keeps the brand one step ahead with proactive measures to minimise downtime, and provide a seamless customer experience.
Inventory Management: Optimum replenishment of shelf-space is one of the biggest factors in retail efficiency, including vending. Having real time inventory data means a reduction in out-of-stock times. Using big data, can give insights into a product's overall popularity leading to more efficient inventory management and better future product development.Moreover, such advanced data analysis can uncover hidden patterns in vending machine data to forecast demand and anticipate consumer behaviour.
Marketing and Promotions: Data collected by vending machines over time can provide rich insights on consumer preference and buying patterns across time, product and locations. Once a brand understands its customer demographic and their buying pattern, all marketing can be personalised. This means personalised ad messaging, tailored loyalty programs and promotions can be created. Brands can also curate recommendations based on purchase history, much like popular ecommerce portals, creating a sense of familiarity and eventually loyalty for the customer. Imagine the convenience a customer would experience, if the cashless coffee vending machine they used everyday at their office automatically knew which coffee to brew without even having to go through the options.
One of the best known examples of using big data in vending is Coco-Cola. The beverage giant customises its beverages’ taste in most countries where it is retailed by adding more flavour or sugar etc. The data provided by packaged beverage vending machines is invaluable in understanding customer preferences to make these changes. In fact, Coco-cola came up with a new flavour – Cherry Sprite – after studying data from self-service beverage vending machines which let users come up with new flavours by mixing their own drinks.
Challenges posed in collecting vending machine data
While data opens up a multitude of opportunities, its collection can also open up a Pandora's box of challenges, including vending machine data security. Listed below in detail are some of these challenges:
Data Accessibility, Standardisation & Quality: Because of being far-flung sometimes data retrieval can be a challenge. Similarly, technologies such as GPS can sometimes be inconsistent and unreliable. However, both these challenges can be solved by using a smart vending machine with a reliable thoroughly tested vending software.The issue with data standardisation can also be taken care of by relying on a reliable vending machine management company with hardware and software capabilities.
Technical Limitations: Older analog vending machines have to be upgraded to a smart vending machine through hardware solutions like Retrobox . While this is a quick solution, this does mean additional cost.
Privacy and Security: Vending machines collect quite a lot of data including transaction data and consumer behaviour. Safeguarding customer privacy and ensuring data security are important considerations for any business. This usually means putting in place hardware and software measures to protect data from unauthorised access and hacks. These measures include encrypting all stored data, having stringent access control through role-based access, multi-factor authentication, keeping all the software updated, performing regular audits and training the team that handles data to be proactive in implementing measures such as the above. The data should also be used ethically. Anonymising data to protect identities while still being able to use it for analysis and following local regulations are some ways to deal with this. Deploying vending machines with Vendekin gives you a system that takes care of all the above while having experts consult you for any additional privacy and security related requirements.
Compliance with Regulations: Collecting and managing vending machine data must comply with relevant data protection and privacy regulations. These differ by country. For example, in India vending machine data collection must adhere to Personal Data Protection Bill (PDP), 2019, Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 and RBI Guidelines. Vendekin’s vending machine solutions and data collection are designed to comply with these local laws.
Data Analysis: Collecting data is just the first step. Making sense of the data and extracting useful actionable information requires effective data analysis and interpretation.
Keeping vending machine data secure with Vendekin
Thanks to years of experience in the unattended retail sectors, as well as, a commitment to serve our clients and their customers ethically, Venedekin has the following measures in place to tackle the various challenges in data collection including data security and user privacy:
Legal compliance and secure payment handling: Vendekin adheres to strict legal compliance guidelines, such as the Personal Data Protection (PDP) for India and General Data Protection Regulation (GDPR) for EU countries. In India, trusted banking and payment gateway partners, such as ICICI, PayU and Paytm securely manage user’s payment information with robust security measures.
Multi-layered vending machine security: Vendekin employs a multi-layered approach to vending machine security. Tamper-proof mechanisms, similar to those found in the hardware of the RetroBox system, are implemented. RetroBox keeps existing vending machines offline to prevent surface attacks and automatically logs any attempts to break or open it.
Secure customer data management and audits: Customer information logged in vNetra is kept secure for 30 days and then destroyed. Only upper management can access or modify the data and configuration changes are made if data misuse is suspected. Regular audits are conducted by Vendekin to further enhance data security.
Collaboration and testing for data security: Being a part of the Google Accelerator Program, Vendekin receives guidance from Google. The program allows Vendekin to collaborate with various players in the vending and retail industry, gaining insights into secure data management practices from some of the world’s best. Vendekin's application also undergoes penetration testing every six months to identify and address any potential vulnerabilities.
Data Protection Officer (DPO) and access controls: As part of GDPR compliance, Vendekin has also appointed a Data Protection Officer (DPO). Customers can request the deletion of their data and Vendekin ensures the necessary process is followed. Access controls are implemented to prevent unauthorised access, including limitations on logging in from multiple devices. Vendekin invests in training its employees to handle data sensitively.
In the unfortunate and rare case that a data breach does happen, Vendekin follows a slew of processes for maximum transparency. Some of these measures are listed below:
Data breach and security incident response: In the event of a data breach or security incident, Vendekin takes immediate action. Vendekin utilises tools from Google to promptly identify and address the breach. These tools help in effectively responding to security incidents and minimising potential damages.
In-house mechanisms for enhanced security: Vendekin has developed in-house mechanisms to complement the tools from Google. The specific details of these mechanisms are kept confidential to maintain security. These mechanisms are designed to enhance the overall security posture of Vendekin's systems and data.
Transparent communication with customers: Vendekin values transparency and customer trust as essential pillars of their approach. In the event of a data breach or security incident, Vendekin ensures that customers are promptly informed. Customers are not penalised for any such incidents, as Vendekin prioritises maintaining trust and transparency.
How can vendekin help you?
Vendekin’s unmanned retail ecosystem and vending machine management software help businesses collect, maintain and analyse data over time to make the right decisions regarding their vending business. Itssmart vending solutions such as vNetra allows businesses to remotely track their sales and inventory anytime, anywhere.
Q1. How can smart vending help brands?
Automatic vending machines, such as those equipped with QR codes and interactive touchscreens, can be used by brands to advertise new products, offer discounts on specific products, promote retail convenience as they are touchless, cashless and don’t require human interaction. In the long-term, brands can use data collected by smart vending machines to gain insights into customer behaviour to refine existing products and create new ones based on this. It can also help optimise inventory management and reduce down-time because of vending machine maintenance.
Q2. Can smart vending machines detect a data breach?
Q3. How can customers address security issues with a vending machine?
Q4. What is the price of a smart vending machinein India?