The Most Important Questions About Starting A Vending Business Answered

With the introduction of smartphones and digital payments, consumer behaviour has changed 360 degrees. Balancing a busy lifestyle, consumers are constantly on the lookout for more efficient and faster ways to accomplish their tasks. Due to this mindset, the concept of unmanned retail in on the rise. Right from Amazon Go’s ‘Just Walk Out’ initiative to Bodega’s ‘Stockwell’, all big names in the industry are trying their hands at this form of retail.

An important aspect of unmanned retail is the vending channel. The most known, trusted and simplest ways for unmanned retail, smart vending machines are booming with an approximate of 17 million vending machines worldwide reported in 2016. Many aspiring entrepreneurs and dynamic new brands are looking for ways to enter the vending business. Supporting this argument is market research conducted by Frost & Sullivan, which shows that global shipments of smart vending machines are forecasted to reach around 3.6 million units by 2020 with a penetration rate of 20.3%.

The growth of the vending industry can be attested to the promise of bringing in $100+ per hour making rounds in the vending machine business world. While achieving this benchmark is completely possible, there are certain key aspects you need to consider.

At Vendekin, we have created a list of frequently asked questions regarding starting a vending business. Based on our research we have given answers that can help individuals to take the next step to start and run a successful vending business.

Question 1: What Kind of Business Margin To Expect From My Vending Machine?

The profit margins you can expect from your vending machines, like any other business, depends on:

  1. High  sales
  2. Low operational costs

 

When it comes to sales, the vending machine needs to be located at a spot which experiences heavy footfall and provides products that the audience at the location would like to purchase. On average, depending on the location, a vending machine can earn as little as $5 or up to $100 on a weekly basis based on the amount of traffic that crosses the machine. Additionally, drink machines in high-traffic areas can bring in a gross figure of about $250 in a single day, and snack machines in high-traffic areas can earn up to $500 in one day.

While the operating margins in this industry are about 10-15%, they can get even better with our vending solutions. Based on our research, we have found that vending machines that have been upgraded with Vendekin’s solutions see:

  • Increase of 10% month on month sales
  • Decrease of 30% in machine Capex
  • Average of 8% increase in margins
  • About 20-30% decrease in Opex

Add to these numbers, our vending solutions also help decrease the cost required for vending operations. With Vendekin, businesses can keep track of real-time sales, be privy to inventory alerts and manage the operations of their field staff accordingly. Vendekin provides data-backed decision making for its customers thus enabling them to focus on the most urgent matters to improve sales.

By upgrading to our vending solutions, you get an overview of which vending machine requires which product well in advance, thereby ensuring faster pre-kitting. With the help of the guided operator app, operators can refill machines faster and better.

 

With Vendekin, the vending business owner has greater control of their staff and can make sure that the manpower is used effectively. This means that the work 1 operator was doing for 10 machines, can now be divided between 20 machines.

 

Question 2: What Should I Stock In My Vending Machine?

 

Selling the right product to your customers is one of the most important aspects of running a profitable vending machine. You can get everything right, but if you aren’t selling what the customer is looking for, there will be no sales. Here are some of the most commonly stocked products that you should consider stocking in your vending machine:

 

Top Three Favourites

 

Be it in the subway station, or in a college canteen, who doesn’t stop at vending machines to grab a quick bite or a drink? Chips, candy and beverages are definitely the top three favourites, that any vending machines should store. After all, 56% of vending machines sales are for cold drinks, including soft drinks, juices, etc. Additionally, candy saw an increase in revenue, with chocolate, gum and mint offerings gaining the most traction. Cookies and crackers too saw a huge increase in sales in 2016 and continue to grow.

 

 

Healthier Options

 

With the importance of fitness and health increasing, the demand for healthier options in vending machines is increasing too. Between 2011 and 2015, the market for healthier snacks grew by 4.7% and is expected to continue growing through 2020. Hence, save some storage space on the racks of your vending machines for healthy snacks!

 

Be Unique

 

While a plethora of vending machines selling food products, you could consider storing other products. Here are a few products sold in vending machines that have adopted the ‘unique’ strategy and are trending all over the world:

 

  • Gold
  • Live crabs
  • Raw milk
  • Champagne
  • Pharmacy medication

 

You too could store unique products. However, ensure there is an actual demand for the products and that you are following the law of your location.

Question 3: Should I Buy A New Or Pre-owned Vending Machine?

Buying your first vending machine is the first step you take towards launching your vending machine business. However, this decision is crucial as it has a direct impact on the cash flow of your business, especially in the earlier stages. The idea of buying a new vending machine is sure to seem enticing. However, the capital expenditure in a new machine is high, which means that you might have to cut your budget from other costs like marketing or efficient procurement & supply chain management, which will hurt your business in the long run.

 

On the other hand, by investing in a pre-owned vending machine, you can own the machine at a low cost. Based on the research of top brands that manufacture vending machines like PirhanaVending, The Motley Fool and Kiosk, the average lifespan of a vending machine is between 10-20 years, depending on the brand. Hence, even a machine that has been used for 5 years will still have a long run left to help kickstart your vending business at minimal costs. However, a pre-owned vending machine should not get in the way of providing the best service to your consumer. Pre-owned vending machines can come with problems like motor jam, products getting stuck, or issues in the money accepting slot. That’s why it is always recommended to invest in a well-maintained pre-owned vending machine.

 

To make sure the pre-owned and used vending machine drives sales, simply integrate it with Vendekin’s vending solutions. Not only do we provide an upgrade to your machine, but also provide health information about your vending machine so that you can get the necessary repairs done before the issue escalates. This will ensure you have a ‘SMART’ vending machine at a low cost!

 

Question 4: How Do I Make My Vending Machine ‘Smart’?

Here’s a question for which Vendekin is the ideal answer. A smart vending machine is basically a technological upgrade to your traditional machine. By using our vending solutions, your existing vending machine will be able to:

 

  1. Allow cashless and internationally accepted forms of payment from consumers
  2. Provide you end-to-end management of assigned route of your goods with maps
  3. Provide you with the health of your vending machine, so you can ensure your machine is operating optimally for your consumers
  4. Provide you with alerts whenever the machine runs out of any product
  5. Provide you with effective inventory and warehouse management

 

Vendekin software not only provides a better user experience for your consumers but also assists you in multiple ways, thereby ensuring your vending business is a roaring success!

 

In conclusion, it is extremely important for you to be completely prepared before you launch your vending business. Make sure to look into the local competition, as well as national and regional laws, like whether you need a special license for operating a vending machine, etc. It’s also important to remember that every business is different, and you need to conduct trial and errors to find the perfect process that helps you build a successful business. And, with a little help from vending solutions, like Vendekin, you can get high sales and greater margins.

 

Read some more important tips and information about starting your own business in our blog!

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