So you are ready to become a part of India’s thriving unattended retail industry by entering the vending machine business? But hey, you have a bunch of questions too, right? Here’s a comprehensive step-by-step guide to start your vending machine business in India. Let’s jump right in.
Table of contents
Like any other business, it all starts with researching the market to understand the target audience: where they are most likely to be, their expectations and the product mix to fulfil these desires. Ask yourself questions: Who is my ideal customer likely to be? Do they work or study or are retired? What is their level of education? What is one problem they have that vending machines can solve? Where can this problem be solved? Is this problem already being solved by others? If yes, who and how well do they do this? This is your competition, which is also great research as you enter the vending business. If the problem is not being solved currently, then ask why again. The answers will help you understand if there is a gap in the market that you can fill, or if the defined problem does not exist.
For example, if there is a new medical college on the outskirts of your city, with no food-delivery options or eateries around. The problem you can solve for the medical students, who are 18 to 24 years old, is offering affordable ready-to-eat food through multiple automatic vending machines on campus.
Choosing the Right Vending Machine
Once you have decided on the target audience, you need to select the right vending machine. While deciding, consider factors such as size, price and features available in the vending machine. For example, a smart vending machine will provide a superior user interface for the end-user with multiple digital payment options, and a scannable interface for product selection and payment. A smart vending machine will usually also have a backend vending management system that can automate some of your inventory and maintenance tasks, while providing rich data insights through a dashboard.
And of course the right vending machine also depends on the product-mix required by the end-user. For our medical college example, if the students are looking for a greater variety of food options, this can be done through a snack vending machine, a hot food vending machine that can serve hot meals like poha, upma and idli. In case students are looking for healthier options, you can even opt for a custom vending machine that can stock salads, full meals and so on.
Find the Right Location
Perhaps the most important vending machine business tip is regarding location. Where you place your vending machine is the single most important defining factor in the business’ ROI. When selecting a location make sure to look for areas with high foot traffic like airports, office buildings, schools and even colleges, like the medical college in our example above. Please read our earlier blog for examples of great vending machine locations.
Apart from high-traffic, you also want to make sure the location is safe, accessible, visible and does not have too much competition from other vending machines or other retailers selling the same items.
Get the Necessary Licences for Vending
Starting any business involves following the rules and regulations set up for that industry to avoid violating the law, which can result in penalties and bad publicity. Having the necessary licences ensures this doesn’t happen. When starting a vending machine business, you will need several licences to operate legally. For this you must submit the required documents depending on the service/product and the jurisdiction where you plan to operate your vending machine.
Some of the common licences or certificates required are: GST certificate (you can apply for a GST number on the official GST portal), trade licence, FSSAI licence (for food vending machines), fire safety certificate and so on. Here’s an even more in-depth look at vending machine laws in India and which all might apply to you.
Working with a Vending Machine Consulting Company
A lot can go into starting a vending machine or unattended retail business in India. Right from identifying the audience, studying the business opportunities and the competition, finding the right location, finalising the right product mix, obtaining adequate licences and certificates to run the vending machine business and finally, actually getting the vending machine installed. Sometimes, it can feel like too much, especially when trying to start a new business. In which case, it helps to work with a vending machine company that can consult you on all the above and provide the vending hardware and software required to run the business effectively. Not to brag, but we at Vendekin are one such company. We love helping entrepreneurs and brands in their unattended retail journey with vending machines, hardware, software, consulting and ongoing business support all in one place. Want to start a conversation? Drop us an email at email@example.com.
Vending Machine Business ROI
And finally to the most important question. How much do you stand to earn from starting a vending machine business? And how soon do returns on the original investment start coming in. The business’ ROI depends on a multitude of factors, from the location to margins to the operational efficiency to even the number of vending machines you have installed.
So let’s talk numbers. Vending machine prices usually start from Rs. 1 lakh and go up depending on the customisation, size etc. An average vending machine should have a target of about Rs. 40,000 in sales per month. If you are targeting fewer sales, select products with higher margin. For a product with about 15-20% margin, vending machines businesses can recover their initial investment in 1 to 2 years.
Once the initial investment is covered the remaining years can go into earning profits. Since a vending machine usually has a life of 10 or more years, the next 8 years or more are spent earning profits on the initial investment and covering minor operational costs. This makes vending machines a low-risk source of passive income. It is a 24x7 business, where the operator is not required to be physically present all the time for the business to operate. This makes the vending machine business a great second business. For brands, vending machines are a great way to market their product or get feedback on a new product, while also generating sales.
Vending Machine Operations and Tips
Once your vending business is up and running, follow the tips below to keep business operating smoothly:
Keep your vending machine fully stocked
Keep a regular check on the vending management systems and its notification. It will help you know when your vending machine is low on stock, allowing you to refill it promptly and avoid the chances of an empty vending machine, thus retaining customers.
Maintain the vending machine
Cleaning the vending machine and its upkeep becomes important especially when you are selling perishable items in the vending machine. Regularly check products to ensure they are not expired. Clean the interior and exterior of the vending machines regularly to maintain hygiene.
Providegreat customer support
Take into account complaints or feedback you receive from customers and make sure to resolve them promptly. In case of any issues, provide refunds if necessary, demonstrating your commitment to customer satisfaction.
By now you might agree that the vending machine business is a lucrative opportunity to earn passive income. It doesn’t require a lot of investment or time or a specialised skill set. What it does require is a well-thought out initial strategy regarding the points mentioned above. If you are interested in starting your own vending machine business and need help, drop us an email at firstname.lastname@example.org for step-by-step assistance from selecting a vending machine, location, product to vending machine installation and maintenance.
Frequently Asked Questions
Why is vending becoming popular in India?
The primary factors behind this growing popularity are the growing population, increased digitisation, the popularity of mobile-based cashless payment solutions and increasing buying power.
What is the most profitable vending business?
Bulk machines are one of the most cost-effective vending machine models with the highest profit margin. Bulk machines are those low-tech gumballs, candy and toy vending machines that are commonly seen in parks and playgrounds.
What is the scope of vending machine business in India?
Vending machines can sell a variety of products and offer interactive and engaging experiences for customers using AI and IoT. The vending machine business in India offers a variety of opportunities for innovation and customisation. Because of this, the Indian vending machine market is anticipated to increase at a CAGR of 8.7%. between 2020 and 2026.
What type of vending machine options are available?
There are various types of vending machines available in India, depending on factors such as the mode of dispensing items, the temperature in the machine and the mode of payment. Some of the common types of vending machines are:
Snack vending machines
Hot beverage vending machines
Frozen food vending machine
Combo food vending machines
Cooked food vending machines
Customised vending machines
What is the typical ROI for a vending machine business?
The business’ ROI depends on a multitude of factors, from the location to margins to the operational efficiency to even the number of vending machines you have installed. For a product with about 15-20% margin, vending machines businesses can recover their initial investment in 1 to 2 years. The next years of a vending machine’s life are then for earning profits.