I received an article for consideration the other day, I would like to share with the industry, at least in part. The headline read: Why A Vending Machine Could Be Your Next Big Business Idea. Obviously, my attention was caught. This is what I write about everyday, afterall.
The article began, “For many entrepreneurs, finding their next business opportunity is crucial to continued success...While owning a vending machine may not seem like the most glamorous entrepreneurial pursuit, many have found that it can certainly be a lucrative one.” Ok. I am not in love with the idea of our industry not being considered glamorous, but I suppose I know what the author meant. It is a down-to-earth business with vending machines on loading docks, hidden in alcoves and sitting as tall black boxes in break rooms. As to her second point, I agree that the industry can also be quite lucrative, if done the right way. I routinely interview operators for success stories who find it so. I continued to read and felt the author’s spin on many of the topics looked more like she was selling the idea of vending as a get rich quick solution, instead of an actual business. What caught my attention, I share below.
Vending is low maintenance
“Unlike many other types of products or businesses, operating vending machines requires relatively little owner intervention,” the author said under the heading “Low Maintenance.” She then went on to disagree somewhat with her own statement, indicating that, “They should be stocked regularly with new foods, beverages, or sundries (depending on what you choose to sell) and loose change, but most do not require full-time attendants like a retail store would.”
The term loose change actually made me laugh. It implies that you can stick a few quarters in there and the changer will be all set. From what I’ve been told, that number is closer to $100 dollars in a multiple tube coin changer that holds dollar coins, quarters, nickels and dimes. Bill validators also have optical sensors that can get dirty and rubber parts that wear out, especially in high use accounts, which would be preferable as they offer the vending operator more money. Stocking products also takes time. A good account that is bringing an operator a nice return on investment could require restocking several times a week.
The article goes on to mention market saturation, as though it were a good thing. The author suggests looking at the new offices popping up or investing in a nontraditional vending machine, “such as a fresh food, makeup, branded candy (as in, all the candy made by M&Ms, for example), or even a bicycle vending machine (yes, they exist!).”
Fresh food is one of the most difficult things to sell from a vending machine in the U.S. Most consumers don’t believe it is fresh, and therefore won’t buy it. The spoilage is high, meaning profits are low. Candy is a great option, but most existing operators say having a variety of options in a machine produces more profits. Customers like having choices. And finally, the bicycle vending machines..., well, I admit that I have not had much experience with these machines, but my understanding is that usually it is a bike store owner that buys and services them, as the bike store would have all the parts and equipment to sell inside the machine. This is an extension of a storefront, not a traditional vending business model.
Cash-only as a good thing
There is one more topic I would like to share from the article and that is her take on cash-based transactions. “While many newer vending machines accept credit cards as payment, if you invest in some older, refurbished vending machines, your business will all be conducted in cash, which is helpful for avoiding credit card transaction fees. The vending machine industry started out on this basic, cash-only system and some patrons may even be expecting to use cash rather than a debit or credit card.”
This argument for cash actually hurt. With all the case studies, operation profiles and sessions I’ve written about dedicated to revealing the increase in sales when a vending machine accepts debit and credit cards, I just couldn’t believe anyone would think only accepting cash would be a good business model. Yes. Cash-only means no credit card transaction fees, but it also means no business from anyone who doesn’t carry cash. Every vending operator I have interviewed who has added cashless readers to machines saw an increase in sales. Even the parking meter industry, which was also one of the last coin/cash only hold outs, has joined the electronic payment game with mobile pay units.
We don‘t talk much about companies that sell vending as a "set it and forget it" business that will deliver hundreds of thousands of dollars worth of profit. Once you get in the vending business, the focus is on making the business better, so we cover best practices, tips, business basics and new products. This is the first time I was actually sent an article with claims that are, in my opinion, a bit more optimistic than true.