Automatic Merchandising - Meaning & Definition

Published in Marketing and Strategy Terms by MBA Skool Team

What is Automatic Merchandising?

It is a way of selling merchandise through using vending machines. This is also referred to as automatic selling. Vending machine is useful in dispensing items like snacks, consumer products, beverages etc after a currency is inserted by the customer or is credited into the machine. It saves the company from incurring cost of labour, involving a third party directly and a few other hassles.

They are also serving the motive of advertisement, building brand equity among customers and fighting against piracy and counterfeit goods. The distribution can be maintained with ease as the tracking of entire inventory is done by company directly. It is also helpful in analysing the demand of your product in different markets. By installing the vending machine and dispensing of products in small quantity, the company encourages trials as the cost is less because of a small quantity per unit. Vending machines are not very popular in India and are observed only in metropolitan cities or on a few national highways.

The pioneer for introducing vending machines to India is Seaga India, a wholly owned subsidiary of the Seaga Group USA. Seaga India's vending machines are deployed by the IT parks, Delhi Metro, BPO, the state government, factories etc. The most common form of vending machine which was used by Indians was the coin-operated telephones. Since the mobile and cellular revolution they have lost their place in the market. A number of reasons are held responsible for the lack of success of vending machines in India. One of the major reasons is the availability of cheap labour which takes away the cost benefit from vending machines because operating stores or kiosks are pretty economical.

Another major reason is the customers’ lack of technical knowledge due to illiteracy and language barriers which makes it uncomfortable for them to use vending machines. The need of the hour is to have a machine that accept a wider variety of payment methods like credit cards, debit cards and not just coins or notes. The vandalism followed by anti-social elements especially during demonstrations, protests etc. are a big deterrent to the security of vending machines and India hosts a large number of such violent events throughout the year even at the most posh areas. The rough use and poor maintenance of the machines is also one of the concerns for the vending machines. Although, vending machines are relatively new in India and there are a lot of rough edges that need to be smoothened out, it is believed that the usage will rise with the development of the nation.

Hence, this concludes the definition of Automatic Merchandising along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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