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Linnea Kirgan

Industrial vending machines a growth engine for Fastenal

by Linnea Kirgan | Dun & Bradstreet Editor

January 23, 2012 | 1 Comment »

vendingmachinepicVending machines aren’t just for chocolate bars and Cokes. Industrial distributor Fastenal uses them to dispense duct tape, drill bits, and safety goggles and believes the machines can transform the industrial supply industry.

Since 2009 the Minnesota-based company has offered on-site vending machines filled with all the essentials its manufacturing, construction, and other industrial customers need, such as ear plugs, work gloves, respirators, paints, razors, coveralls, and flashlights.  Larger items such as power tools, hard hats, laptops, and radios can be stored in a larger vending units.

Fastenal has put its vending machine program on the fast track. Since 2009, the number of customer-placed vending machines has grown more than 1,200 percent and vending machine contracts increased 500 percent. As a result of the program’s expansion, sales to customers with vending machines, as a percent of net sales, has grown from 2.2 percent in 2009 to 15.7 percent in 2011.

Industry analyst Ryan Merkel told Dow Jones that industrial vending machines may be “the biggest land-grab opportunity” in the industry in 20 years and supports Fastenal’s fast-paced vending strategy.

Competitors in the $50 billion US industrial supply industry have also been building their vending businesses. W.W. Grainger and MSC Industrial Direct, for example, offers vending machines through their KeepStock Secure and MSC Vending lines, respectively.

Benefits for customers include setting usage parameters, such as designated equipment check in and check out periods and volume limits on specified items. Customers can track usage and spending of individual employees and better control inventory. Most machines offer automated ordering, which eliminates stockouts.

A customer case study on Fastenal’s website cites one company’s out-of-control work glove consumption, costing up to $15,000 a month. After the industrial vending machine stocked with gloves was installed and employees had to use their ID badge to check out gloves, the company saw glove consumption drop from $13,000 to $9,200 in the first month of use.

Has the market on vending machine really worked, in other words, where do we stand on 2012 with this business model.
Is Fastenal still the largest, how about LATAM for such market.

Great Article.

Best Regards.
Eduardo Cantu

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