Vending machine business: What you need to know

Wireless vending machine was originally posted by Per-Olof Forsberg on Flickr and is reused here under the terms and conditions of the Attribution 2.0 Generic (CC BY 2.0) Creative Commons license

You may have come across an ad that promotes a great money-making vending machine business opportunity.

According to claims by those who advertise this type of franchise vending machine business, the capital required for such an investment is usually small compared to other types of more “traditional” business ventures.

This is due to the fact there is no need to own or rent large commercial premises to run a vending machine business.

The requirements for staff are also minimal, since a vending business is usually operated by the owner himself/herself.

Of course, once the number of the sites where the vending machines are located has increased, the need might arise to hire an employee on a part-time basis, or even full-time if it’s necessary.

How to find the right product for a vending machine business

The type of the vending machine you are going to buy depends on the product that you intend to sell. There are machines aimed at selling everyday consumer products. For example, there are snack vending machines, water and soft drinks vending machines, cigarette vending machines, stamp vending machines; whatever you can think of really. Fishermen can even have access to live bait vending machines locally!

And the list does not end here; if you live in Japan or travel there frequently, you should know that there are endless opportunities to sell virtually any type of product or service through a vending machine. You can get plenty of ideas for your vending business from the high-tech crazed Japanese, with the lobster vending machine being one of the most popular.

Starting a vending machine business involves buying the vending machines

There is a wide range of options to buy from various vending machine suppliers, in case you can afford such a purchase.

One of the most popular alternative choices to vending machine purchase is to rent the equipment. However, many vending machine operators prefer to sign a full service vending machine operating agreement with franchisers. Under this agreement, the franchisee will be provided with any equipment, products to sell, and support, at no cost to him/her.

What will a franchiser earn from that?

They will earn ongoing royalties on any sales made at that specific location by the leased vending machine.

It sounds mutually beneficial for both sides and can be a great money-making opportunity, especially for those wishing to become self-employed but lack the necessary capital.

Location of vending equipment for high sales volume

Like in any other business, the significance of “Location, location, location!” cannot be overemphasized, since it is considered to be the strongest foundation for marketing success.

The ability to reach customers is essential for a company’s selling strategy to be successful, and this is particularly true for a vending machine operation, where the volume of passing trade is directly related to the volume of products sold.

Shopping malls, nightclubs (at least, those left!), universities, and factories are only a few examples of highly recommended locations to set up your vending machine(s).

How long will the vending machine madness last?

Good things do not last forever and prudent entrepreneurs are aware of business cycles that inevitably happen, as well as the fact that consumer tastes can change unexpectedly. The vending machines consumer market has reached maturity in many countries, while in others the image of a vending machine may be perceived as a product of science fiction.

It is wise to conduct market research and analyze the market in which you intend to start your operation, in order to evaluate whether there is a specific market niche or segment, the needs of which you are going to satisfy profitably.

Vending machines have been around since ancient times, and Hero of Alexandria is believed to be their original inventor. However, they were not commercially exploited until the Industrial Age, when they started to emerge as a successful business concept. Therefore, it is strongly recommended to always keep an open eye for innovations in the field of vending machine operations, in the form of new equipment, franchise methods, etc.

Another important thing you should decide is whether you wish to expand and grow your vending business nationally or even internationally.

You should bear in mind, however, that a growing business operation is more demanding and needs more dedication and effort from you, in terms of time, money and organization.

You should ask yourself if you are really prepared to go in that direction; if you feel confident, and believe that you have the necessary skills, as well as meet all other requirements, then you should not hesitate and go ahead to exploit any vending machine opportunity that seems to be promising and profitable. Otherwise, you will regret it for the rest of your life!

Beware of vending machine scams

Over-enthusiasm is rarely a wise counselor and there are always animals of prey ready to tear apart other gullible animals attempting to step out of their refuge.

Vending machine scams are just another way that fraudsters have found to make people part with their money. It is highly advisable to get official information and advice on vending scams prior to handing your cash to buy any vending equipment or sign a binding contract.

Your primary source of information on any issues that refer to running a vending machine business should be the various national vending machines associations operating in many countries across the globe.

For example, a first point of contact for those wishing to enter the United States vending machines market should be the National Automatic Merchandising Association (NAMA), where prospective vending machine entrepreneurs can get valuable assistance and information on matters such as health and safety, legal and technical issues, as well as access to any industry news.

There are similar associations in the European Union (European Vending & Coffee Service Association), the UK (Automatic Vending Association), Australia (National Vending Association), South Africa (Vending Association of South Africa) and last but not least, Japan (Japanese Vending Association).

Other issues: Theft, coin fraud, and legal issues

There have been a growing number of businesses suffering from theft and fraud problems in recent years, and the vending machines business could not be an exception.

There is always the risk of vending machines getting literally stolen, when they are located in areas with poor security surveillance.

In such an event, a full year’s profit can be lost, and you will have to start from scratch, with a brand new machine, and preferably, at a different location.

Coin fraud has evolved into a high art, and there are a lot of highly trained and skillful people who have the necessary knowhow, and who are always willing and greedy to apply their technical expertise on the targets that they choose.

Before buying a vending machine, always check whether its technical specifications include the option to recognize and reject fake coins, or not.

Another important aspect to be considered when starting a vending machine business is compliance with laws related to selling tobacco, alcohol, and adult movies to minors. There are strict laws to which you should abide; otherwise you will end up having legal troubles.

Conclusion

From a purely economic point of view, in an ailing economy, where everyone finds it hard to make ends meet, and businesses try to reduce their operating costs, embarking on a new vending business venture could result in meeting successfully the needs of a number of market niches and segments, and generate, in this way, a very healthy cash flow.

In other words, running a vending machine operation is a great way to provide 24/7 retailing, with minimum staffing requirements and a high ratio of turnover/profits over expenses/costs.

However, there are a number of important aspects to pay attention to, such as theft, coin fraud, and special legal issues, if an aspiring vending machines entrepreneur wants to save himself/herself from any unpleasant surprises, and turn a small business venture into a steady source of income.

Further reading and sources:

Vending machine

National Automatic Merchandising Association (NAMA)

European Vending & Coffee Service Association

Automatic Vending Association (AVA)

Australian Vending Association

Vending Association of South Africa

The economics of vending machines

Drink vending machines market expected to witness the highest growth

How To Start A Vending Machine Business: Everything You Need To Know

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