Why Coca-Cola using artificial intelligence to build vending machines?

Around 10,000 bottles of Coca-Cola drink are consumed every second in more than 200 countries worldwide, generating close to $2 billion in sales.

Coca-Cola has such a huge business and data volume, you can certainly guess that it will use artificial intelligence technology to enhance its business. But you might not expect it to apply artificial intelligence technology to vending machines.

More and more vending machines are now equipped with touch displays, wireless connections and computing capabilities. Is such a vending machine gimmicky? Does it have its reasonable business logic behind it?

“Coca-Cola & Artificial intelligence”

Why does Coca-Cola need artificial intelligence?

The Coca-Cola Company produces 3% of beverages worldwide, and its unique red and white logo is recognized by more than 90% of people worldwide. But maintaining this leading position is not an easy task, which requires huge investment in marketing. In fact, as early as a few years ago, the Coca-Cola Company has invested more in advertising than Apple and Microsoft combined.

It relies on a lot of data to analyze why users buy its products? What caused their purchases to increase? And why did they later switch to other home products? Today, Coca-Cola has a very complex product line. The problem it faces is not just that: “Let users give up Pepsi and choose Coca-Cola.”

There are many similarities between beverages and other highly branded products, such as sneakers and luxury fashion. The functions of different brands of products are only slightly different, but the sales are very different, which mainly depends on the attitude of consumers to the brand.

Attaching importance to research and development is the key to Coca-Cola’s success. It is not just product research and development, but also in-depth research on customer and brand influence. The relationship between the latter two and the purchase model is very complicated and involves a very large amount of data. This is one of the important reasons why Coca-Cola uses artificial intelligence technology.

“Artificial intelligence is the foundation of everything we do,” Greg Chambers, the Coca-Cola global digital innovation director, once said publicly.

There are many links in the Coca-Cola company’s value chain that can use artificial intelligence technologies, such as distribution, logistics, and manufacturing. But what it did first was to use artificial intelligence to improve the customer and brand experience, and all related businesses became the biggest beneficiaries of artificial intelligence.

What is the value of smart vending machines?

Coca-Cola’s application of artificial intelligence technology in vending machines can be divided into three levels, and this also corresponds to the triple value of vending machines:

1. Laying physical sales outlets in places with high demand;

2. As an important point of contact for loyal customers;

3. As a showcase for brands and products;

There are many indicators to measure the success of the above three aspects. It is not easy to improve and enhance them through data analysis. For example, how to determine the best location for a vending machine, whether it should be replaced, how to persuade customers to buy more beverages and give them corresponding rewards, and which products should be replenished.

In many ways, running a vending machine is similar to running a Starbucks store. The difference is that there are no staff near the vending machines.

Therefore, you should build the vending machine in the direction of your desired store, but it is only automated. When you disassemble this goal into the data needed to achieve it, artificial intelligence begins to generate value.

Determine the best location

Data modelling can calculate the best location for vending machines, but this requires a lot of location data, such as passenger traffic, data from competitors, and data from a large number of other vending machines.

After the machine is installed, collecting and understanding sales data is one of its important tasks. Enterprises need to use this to assess the differences between channel sales capabilities and estimates and make adjustments in a timely manner… Therefore, it is not enough to just know the sales data for a specific time period. This data must be real-time and can be directly passed to the company.

However, Starbucks and other companies’ gains in evaluating store performance go far beyond that. One of their big gains is that they have more personalized insights into transactions. Among them, customer loyalty programs and mobile apps have played a key role.

This is the second place where the value of smart vending machines can be used, but it just offers possibilities. Because it is only a small part of the Internet of Things.

Attract loyal customers

Smart vending machines should be combined with the company’s customer loyalty program. If customers can use points to buy goods, vending machines will become more interesting.

In Japan, users can get points when they use the mobile app “Coke On” to buy goods on vending machines. Coca-Cola’s user loyalty program benefits greatly from it, as it can obtain consumer buying preferences and historical purchase data. In return, customers can earn points and cash rewards to drive them to buy again.

In markets such as Australia, Coca-Cola tried another interesting vending machine. Customers can order drinks on their mobile phones and pick them up at vending machines. Similarly, customers who do so can be recorded and earn points.

The innovation of the intelligent vending machine is not only reflected in its use of mobile phones and mobile Internet but also the installation of digital displays. With the two elements of connection and display, artificial intelligence has more room to play. This time, Coca-Cola used artificial intelligence to turn the vending machine into a fully functional “smart” device.

Show brands and products

Vending machines have always been an important means for brands to showcase their products and brand image. In the past, brands could post posters on vending machines, but with the advancement of technology, the methods have become more flexible and diverse. Digital display technology makes it possible to display different high-definition images and videos.

Based on artificial intelligence technology, Coca-Cola’s vending machines go further. Coca-Cola’s exploration of vending machines dates back as far as ten years. At that time, its first-generation automatic coffee machine could provide customers with 200 different flavours by mixing different proportions of ingredients.

The new generation of vending machines has a large touch screen-larger than most home computer screens-and a mobile application. It also has a lot of sleep functions that need to be activated, such as audio functions and optical sensors.

With these elements, perhaps the only thing that limits Coca-Cola’s use of artificial intelligence technology in vending machines is your imagination.

All in all, the humble auto-trader in the past has become a smart device, capable of rivalling any smart device in your home. In serving its customers, it provided Coca-Cola with a wealth of data sources.

More than just data

In addition to selling beverages and collecting complex data, artificial intelligence brings another value-personalized shopping experiences.

When developing the vending machine, Coca-Cola partnered with a company focused on chatbots.

Interacting with a chatbot has many similarities to buying drinks on a regular vending machine. But people tend to underestimate the value of personalized experiences.

The best chatbots can show a temperament that fits the brand. Coca-Cola has now replicated this model in all of its smart vending machines. At the same time, it adds a function to these intelligent vending machines, allowing the vending machine to show different personalities according to its location and environment. For example, vending opportunities on college campuses are more interesting, while the same machines in hospitals appear cooler.

In other words, Coca-Cola has injected more emotional shopping experience into vending machines through artificial intelligence technology.

Wrapping up:

At first glance, a vending machine with artificial intelligence looks like a gimmick. It may remind you of the robotic image in Lost Space, and keeps persuading Will Robinson to drink more cola.

But when you start to analyze the function of vending machines from a commercial perspective, the situation is different. This is just a small step for Coca-Cola to use artificial intelligence to improve and enhance its business.

By integrating artificial intelligence in vending machines, Coca-Cola has improved its business in many ways, such as using location data to plan locations and provide customers with a personalized and innovative experience.