While technology exists that would allow him to do many of these things in vending, he hasn’t wanted to spend the money on these back-end systems. Instead, he wants to invest his money where it will impact users most.
Olson uses the 365 Retail Markets kiosk for his markets. He likes that he can use his own brand on the machines, unlike some of the other market retailers, and it offers biometric payment options.
Another great advantage to markets is the high dollar margin on products, although the percentage margin is higher in vending. Olson breaks it down, explaining that he sells chips in a vending machine for $.95, with a cost of $.38, leaving him with a $.57 profit, 60 percent. In the markets, he sells a grab bag sized chip for $3.69 with a cost of $2 and profit of $1.69, 45 percent. In the market, sales tax is added to the customer’s final purchase amount, similar to a retail transaction. Olson sees this as a benefit because he doesn’t have to build the tax into the price, as he does with vending products.
Most astounding, however, is the increase in sales volume from the markets. He replaced a vending bank averaging $400 per week with a market that offers coffee, frozen food and deli food in a cooler. The sales are now $900 to $1,000 per week. Plus, the upfront equipment costs are lower, and maintenance can be done over the phone. Just recently, Olson had an audio malfunction on a kiosk. He called the service line and they fixed it remotely, charging him nothing.
Initially, Olson had vending route drivers stock the markets, but this did not work well. He finds vending drivers don’t make good marketers. “Vending guys are not c-store guys,” he said. Most drivers lack an understanding of the importance of facing products or of maintaining that “strike zone” of high margin products presented at eye level. Therefore, he recently hired a tenacious individual to focus on merchandising, inventory and customer service exclusively at the markets.
Branded hot beverage machines
While CNC Vending does offer OCS to customers who request it, Olson never wanted to enter that side of the business. However, he has found success offering branded hot beverage machines. He had a generic machine at a local community college, but swapped it out for a Seattle’s Best Coffee machine and saw growth.
“That (old) machine was selling maybe $50 a week,” said Olson. “Now it (the Seattle’s Best Coffee machine) sells $50 in a day.” He’s convinced it’s the branding that makes a difference. In his micro markets, he’s planning to place a branded Starbucks coffee machine.
Healthy products really work
Health and wellness items are a draw in the markets. “We’re becoming more than a vending company,” said Olson. “We’re becoming a health and wellness break room expert.” He uses health and wellness as a selling tool, offering to assist companies in achieving wellness initiatives while servicing their employee’s needs. Olson has co-branded the CNC Company Markets with expertise in health and wellness. “We create excitement around our new market openings complete with education, screenings and the like,” Olson beamed. “At one market opening, we had a technician measure how many daily calories an individual burns daily by screening their breathing patterns.”
The concept is fairly new. Previously, Olson believed the common thought that customers want healthy products in the break room, but won’t actually buy them. But, he proved himself wrong this year.
CNC Vending was approached by a large location that needed to offer a 1:1 ratio of healthy items to unhealthy items. Olson agreed, deciding the variety required a market. He balanced traditional candy bars with granola-type bars made by Kind. Because the account was mostly blue collar, and the healthier bars were priced significantly higher than other candy bars, Olson didn’t expect them to do well. He was wrong.
He sold almost as many Kind bars as candy bars. This inspired Olson to add nutritional bars to all accounts, and even baked chips or similar healthier alternatives.
“And sales didn’t go down,” said Olson, although he admits they didn’t increase either. “But now we know we’re meeting a need.”