Fastenal (FAST, Financial) is emerging to be one of the most promising companies involved in the vending machine industry. While it sees itself as an industrial supplies company, Fastenal has over the last eight years encroached in the technology sector with a key focus on vending machine technologies.
Founded in 1967 and incorporated a year later, Fastenal begun by selling mostly fasteners such as screws, threaded rods and nuts, which are used in construction and manufacturing.
The company has since expanded its portfolio of products, bringing its total product offering to more than 690,000 alongside a variety of services, including inventory management, SKUs, vending and machining.
Fastenal does not develop its own products, but rather it sells products manufactured by other companies. It acts as a facilitator in the distribution chain by helping customers to find specific products for specified needs.
After diversifying its offerings, it has managed to redesign its growth model, which now seeks to capitalize on evolving technologies in the consumer market.
The company has seen a significant growth in revenues and net income over the last seven years, with the top line growing from $2 billion to nearly $4 billion without breaks. On the other hand, the bottom line managed to increase from about $184 million to more than $510 million in the same time, again illustrating the milestones gained since the company launched its first vending machine in 2008.
Vending machines industry outlook
Right now, companies are trying to develop innovative ways of dispensing products in small units in a bid to initiating valuable customer engagements with their products. While Coca-Cola (KO, Financial) has for many years been one of the leading companies in the dispensing technology market, more players have joined the lot and now, even the likes Apple (AAPL, Financial) have begun to see the sense in vending technologies.
Coca-Cola allows people to purchase a variety of its drinks from vending machines located across the world in retail malls, restaurants and cafes rather than buying the already packaged products. With such access, customers can mix hundreds of flavors to their desired quantities to come up with unique cocktails.
Apple, on the other hand, has placed its vending machines at strategic locations such as airports and high-end hotels. These are places that could give consumers ample time to take a closer look at the products.
Vending machines are common in food products, cosmetics, snacks and pharmaceuticals, but based on recent developments, tech devices, tools and fasteners also appear to be taking their place in the cue. The industry is attracting players from all over the world as it continues to gain traction across several markets.
One of the latest vending machine innovations comes from Chile, a nation that is firmly on its way up towards reaching developed country status. Entrepreneurship is driving growth in the private sector as investors continue to find ways of alleviating some of the common hygiene issues in urban centers. Algramo is a Santiago, Chile-based company founded by Jose Manuel Moller and Salvador Achondo. The company is trying to cut the costs of various products by taking the packaging out of the equation.
Instead, it uses small re-usable containers which consumers can fill with various products from their vending machines that are installed across major cities in the country. Consumers can buy various cereals including lentils, chickpeas and rice, as well as common cleaning detergents from the vending machines.
How is Fastenal positioning in the market?
These developments indicate that the future of vending technologies remains bright and companies that have invested heavily in the industry could reap the benefits within the next few years. As discussed at the beginning, Fastenal is one of the main players, and as per recent reports, the company has already launched more than 60,000 vending machines in North America.
Fastenal is fine-tuning its strategy for vending machines by incorporating internet sales such that whenever one of its vending machines is running out of supplies, restocking can be ordered instantly. This helps in maintaining optimum levels for each product in the machine. The company can also engage with its customers to know which products are in high demand for a given vending machine at a certain location, thereby enabling it to manage the inventory respectively.
Conclusion
Fastenal may not be involved directly with other players in the vending machine business like Apple, Coca-Cola and Algramo. However, the fact that more companies are joining the industry means that it’s gaining popularity.
This will trigger a knock-on effect on companies that could be interested in Fastenal’s vending machines. If most people are using vending machine technologies, then it would become a norm amongst businesses eventually.
Disclosure: I have no position in any stock mentioned in this article.
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