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The economics of vending machines

251 points by Anon84 6y ago

vlan0 6y ago
Vending machines are still all over college campuses in the US. But I suspect the small outfits cannot compete with the big players in this scene. Seems like it's all just coke or pepsi.
- bluGill 6y ago
  coke and pepsi own their own machines (not entirely, but many of them). However there are a lot of other things sold in vending machines that coke/pepsi don't control.
vmurthy 6y ago
Somewhat related : Warren Buffett seemed to have an interest in such "low-cost" hustles[0] nearly 75 years ago and seemed to have done well with it:) [0]https://www.cnbc.com/2018/06/19/warren-buffett-bought-a-25-pinball-machine-in-1946-and-made-money.html https://www.cnbc.com/2018/06/19/warren-buffett-bought-a-25-p...
- Cthulhu_ 6y ago
  I have trouble believing this would still work; why should a barber shop get only a fraction of what people put into the machine? They see that thing all day and will know how much money goes through it, what's stopping them from kicking Buffet out and buying their own? I think the modern equivalent around here is the odd slot machines and cigarette vending machines at pubs; I'm fairly sure they aren't owned by the pub itself, because of regulations and stuff.
  - bluGill 6y ago
    Because the barber wants to go home after a long day of cutting hair not go restock the machine. Better to get a small profit on an unused corner than deal with inventory management.
    - ed25519FUUU 6y ago
      Except someone else sees the machine taking in cash, and says to the the barber “I’ll give you a 20% cut to swap out to my machine”. When the economics wake up, it’s a race to zero.
      - bluGill 6y ago
        Races to zero never reach zero. Eventually someone says it isn't worth it.
      - vmurthy 6y ago
        Given that the barber has limited resources and time, perhaps he might think twice about constantly changing his partners for a couple of hundred dollars more per change,no? Remember, there are switching costs for these sort of things. Personally ,I tend to weigh the (hard) benefits of cash and the (soft) costs of switching things before making a decision.
kilroy123 6y ago
This is a topic I know a fair amount about. For a brief while, I worked at a startup that made software to manage vending machines and handle digital payments, from the device stuck on the front, to accept credit cards. Basically, the name of the game is location location location. It's very tough to find a good lucrative location to put your machine at. Why? Because there's likely already a machine in such location. Also, it's a numbers game as many locations don't make that much profit per month. Therefore you have to have many machines, and getting 50-100 machines in great locations is no easy task.
- skelseys 6y ago
  This article seems to suggest that there's lots of small players competing over marginally profitable locations. There's also a negative externality which can lead to these people destroying their whole business: as people compete over machines that don't make much, they cut costs by not refilling as often and not maintaining the machines. This means that the general level of trust in these machines goes down. After you lose your dollar a couple of times you stop using them. Aside from trusting official Coke or Pepsi machines, there's no brand loyalty (to the operator - a random name on a small sticker on the machine). So if your machines are well-stocked and in good working order, you won't do any better than anyone else. And after a while there are broken vending machines everywhere, which everyone ignores.
  - kzrdude 6y ago
    This suggests that the machines should use clearer branding, but it needs to be a brand that combines maker + operator.
    - antasvara 6y ago
      The issue there is the same issue that plagues sellers on Amazon or Ebay- brand loyalty is difficult to maintain when one operator often doesn't have the snack you want, or you can't find the operator in your area. Branding could help, but it's unlikely that most consumers will remember what operator their vending machine snack came from, just like I will never remember what 3rd party seller my Amazon product came from.
ZephyrBlu 6y ago
The juice doesn't seem worth the squeeze. 40% margin, maybe less and you need a shit ton of machines to make decent money. You also have to restock all the machines, so it seems like a difficult business to scale that actually gets harder the larger scale you are. 250 machines with 500k in revenue for 2 people doesn't seem like that much. With 40% margins, that's 200k and assumes you have no employees which seems unlikely given the number of machines. Perhaps I'm way off though, since my perception is probably skewed by tech companies.
- imtringued 6y ago
  You also need to find a place to put the machine. The article mentions paying up to a 25% comission to the owner of the place. Even if you somehow get amazing margins on the machine itself like 70% (assuming you refill the machine for free) it will turn into 45% margin after actually putting the machine down. >We surveyed 23 vending machine owners with various-sized operations and found that the average operator in our sample owned 13 machines that gross $309 per machine per month. Warning: napkin math. $309 x 13 x 45% = $4017 x 45% = $1807.65 profit (excluding cost of machine) It's just a side hustle. Even with higher margins you can never go above $4017 so it's never going to turn into a scalable business. Once you consider the cost of the machines of around $2k each (very low estimate) your first 14 months will net you nothing.
  - sokoloff 6y ago
    "Average" (of 23 survey respondents) might not be a particularly great measure. I can imagine many operators would have 1-3 machines on the premises of the business they are actually focused on (a pizza shop or an office cafeteria with a drink and a snacks vending machine), while others might have 75 or more. (How much does the average mobile app make? Does that low 4-figure amount (edit-to-add: per year) mean that app development is a dead end?)
    - martin_a 6y ago
      Do you need to put aside money for insurance, ongoing repairs/maintenance, restocking physical goods, vandalism/loss of the machine for apps? I think vending machines are not really a realiable income when looking at the costs that might occur. So, I'd take any 4-figure app over any amount of vending machines.
miohtama 6y ago
I would be also interested of costs. The article seems to have gross figures only.
- prophet_ 6y ago
  > All costs considered, an operator who makes $5k per month in revenue might take home something like $2k in profit. I was looking for the same, the above helped me to get an idea about the net income.
  - crispyporkbites 6y ago
    This line doesn’t line up with the data also in the article. The gross margin on each product is about 40%, you then lose 15-25% on stocking the machines, plus have to pay for gas, a car, insurance, repairs, initial outlay of machines etc. You’re getting maybe 5% net margin.
    - callamdelaney 6y ago
      > you then lose 15-25% on stocking the machines What? How've you come to that conclusion?
      - crispyporkbites 6y ago
        Sorry I meant on paying the owner of the place you’re putting the machine
    - asdff 6y ago
      Why do you have to be running around town stocking these machines yourself? Surely there are service companies who do this for you, just like US vending machines.
      - crispyporkbites 6y ago
        Right and there goes your margin
amelius 6y ago
And let's not forget that an iPhone is basically a vending machine in your pocket ...
- self_awareness 6y ago
  I have no idea why you're getting downvoted, what you wrote is true.
  - Finnucane 6y ago
    I've never gotten a bag of M&Ms out of my iPhone.
crispyporkbites 6y ago
Here’s the real lede: > Ibanez’s YouTube channel, which chronicles his life as a vendor, boasts 362k subscribers and now earns more than his machines. The margins on vending machines are tiny and the net revenue is not enough to sustain much beyond minimum revenue. If you had a few hundred or thousand machines this would be a great business, but it’s a long way up from 1-2 machines. Many of the people in this feature are boasting about only having to do 2-3 days of work every 2 weeks, they won’t get the scale they need.
- Cthulhu_ 6y ago
  lmao, that's a good one. It's like those reality soaps on Discovery (e.g. the gold miners), always complaining that they didn't find nearly enough to make ends meet, but surprise surprise, next season they buy tons of new equipment. They're not in the gold mining industry, they're in the acting industry. The motorcycle / car customizers aren't as much into that business as they are in the acting & marketing one. Worked great for OCC, the show turned them into an internationally recognized brand. Wouldn't be surprised if they earn more off of merchandise than motorcycles.
howlgarnish 6y ago
Surprised to see no mention of Japan in the comments. As any visitor can attest, the country has way more vending machines than anywhere else I know of, and in way more categories. Soft drinks, tea (hot and cold), coffee, beer, hard liquor, tobacco, snacks, ice cream, rice, toiletries, even the semi-apocryphal used panties. The article below outlines some reasons why, but it seems to boil down to high cost of labor & real estate, high population density and heavy public transport usage. In suburban shopping arcades (shotengai), which by and large are dying a slow death, it's not uncommon to see closed stores that have literally been replaced by a vending machine or two (often owned by the store owner) retailing the same products, particularly for liquor and tobacco. https://www.businessinsider.com/why-so-many-vending-machines-in-japan-2017-1 https://www.businessinsider.com/why-so-many-vending-machines... Not that Japan has the monopoly on weird vending machines: https://www.norwegiansalmon.com.sg/ https://www.norwegiansalmon.com.sg/
- mc32 6y ago
  It also helps that it’s a high trust society and you don’t get a lot of delinquent kids breaking in to get cigs or beer. Obviously cameras help with that.
  - codeulike 6y ago
    Yes I thought that when I visited. A vending machine on the streets of a UK city full of beer and cigs wouldn't last 3 minutes.
    - pjc50 6y ago
      Railway stations in the UK used to have cigarette vending machines, back before smoking ban.
      - mc32 6y ago
        Not sure about the UK but in the US when there used to be cig vending machines it would be under the supervision of staff, so like in a bar. In Japan they are out in the open in non descript corners and alleyways, although there is usually a streetlight.
ryanmarsh 6y ago
Also, ATM machines. When my daughter was sick with cancer ten years ago I was a contractor. I couldn’t put in enough hours because I was always at the hospital with her. The handful of ATM’s I owned at the time allowed us to keep paying our bills. Cash isn’t as common now (pre-COVID), and even less so post, but my guess is there’s still money to be made in some parts of the world. ATM machines are cheap, about $1,500. If you put them in places where people REALLY need cash (strip clubs, festivals, etc...) you can make a fine living. I eventually sold mine to a friend because my consulting required me to travel and you lose all your profits if you have to pay a company to manage (refilling) the money for you. I have some funny stories like the time I was sitting behind a strip club in a bad part of town at night with $30k in cash waiting on a tech because the magazine jammed. I once had to withdraw 60k in $20’s for my friend and business partner at the time. He was out of the country and is 18 year old cousin was refilling the ATM’s. His ATM’s were two hours from me. We sat in the back of a large Wells Fargo branch with money counters and VERY SERIOUS (read: terrified) EMPLOYEES as I handed the $60k they just counted to a kid and sent him on his way. LOL In the ATM biz everyone knows each other and lending money is common and done on a handshake. The reason is, if you can’t be trusted with cash you don’t last long. So if you’ve been around nobody had a problem letting you borrow $100k in duffle bags in the parking lot of a Home Depot at 6am. Everything is tracked because the ATM’s all go through a data provider that handles the bank interchange. You should see the volumes of money that pass through them. Even the small ones back then would process hundreds of millions in $USD a year. When you lend someone money you call Chris at the data company up and say “I’m borrowing $50k from Tom so send the next few wires to him”. M-F you get an ACH from the previous days withdrawals plus whatever fee you charged. Monday’s includes Fri-Sun. It’s an interesting business and it’s fun. I never got robbed but I’m ex military and stayed strapped and aware of my surroundings.
- jbverschoor 6y ago
  Not in the Netherlands anymore, as they'll simply bomb your house for the ATM
- dylan604 6y ago
  I would have assumed that strip clubs owned/operated the ATMs inside their clubs. Why not make that much more money from their customers? When recreational marijuana became legal in CO, the ATMs close to the shops were always out of cash because they only dispensed $20 bills when everyone was trying to pull out $300-$400 at a time. The smart ATM owners started dispensing larger denominations to avoid the Out of Cash problem
pierreogi 6y ago
Seems like it would be a pretty interesting business to get into, my dad is thinking about it, since he works as an operator right now. Seems like water has best margin :D
fortran77 6y ago
In NY you’d have to deal with the mob to break into the business at all.
AQXt 6y ago
It might not be a good investment, according to the article: - Many of the best locations — places with heavy foot traffic, or large worker populations — are already saturated with machines. - Some owners have to make 100+ calls before landing a decent location. In the end, they often end up paying the owner a commission of 10%-25% of gross sales to drive home the deal. - And these figures are pre-expenses. The business comes with its share of overhead costs. For starters, ~50% of revenue goes toward the cost of items that go in the machines. - Most vendors have seen a 10-50% dip in revenue this year due to the stressors of the pandemic.
- MivLives 6y ago
  Also not really addressed, what's the life span of a vending machine? I know I've seen some ancient ones out there, but most seem pretty new. It says new ones are 3k, if it lasts five year that's sixty dollars a month.
  - Cthulhu_ 6y ago
    Vending machines last way longer than 5 years; 25 years at least, the only thing is they require maintenance and repairs every once in a while, and the payment system may need to be swapped out depending on developments (e.g. accepting cards, contactless, phones, google/apple wallet, alipay, bitcoin, etc).
- drpgq 6y ago
  Yeah it seems like being a Lyft or Uber driver where your hourly pay ends up getting driven towards the minimum wage.
- asdff 6y ago
  That might not matter if these are passive investments. If you have a company servicing your machine, so what if your profit is low? Save your money and buy a second machine, then another one, then enjoy your exponential growth on your vending empire. If things are making money you aren't doing poorly, especially when you might not ever have to visit one of your machines and can work another job or pursue your interests.
jpomykala 6y ago
I work at telemetry system called VendingMetrics. We initially created this with my dad who got over 20 years experience in vending. I must to say, it’s much harder business than everyone thinks. Different machines, different settings, firmware, motherboards, external devices. Many things can go wrong but yeah if you are lucky and like old-tech it could be work for you. :)
opportune 6y ago
I find it interesting that the operators are buying from Sam’s club rather than a legit wholesaler. $0.50/unit for soda is ridiculous I looked into this a few years ago because someone on reddit wrote a long post about I couldn’t find. The ROI looks amazing until (as the article alludes) you look into how much labor is required to keep the operation going. It kind of works if you have capital and your time has low opportunity cost. I think the smart way to do it would be to start a franchise that provides machines with financing, acts as a wholesaler, etc so you can take a cut of the operation with less capital investment and less driving around to actual machines. But then that starts looking like an MLM...
- chillwaves 6y ago
  Knew a guy who had vending machines at my office. He was a UPS driver and many of the vending machines were on his typical route. Seemed like a good side gig.
- from 6y ago
  I found this odd too. Most of the largest wholesalers have microscopically thin margins (i.e., they're not making much from you), whereas grocery stores tend to be a lot higher. I'm not an expert in the food distribution business but it seems most wholesalers (McLane, for instance, https://www.mclaneco.com/content/mclaneco/en/customer.html https://www.mclaneco.com/content/mclaneco/en/customer.html) are happy to take new customers. Maybe Sam's club is offering a better deal than wholesalers on specific items because of coupons/sales and whatnot?
jamesskarzynski 6y ago
I tried this a few years ago and I can really attest to just how awful an idea buying a used machine is. I found a decent condition one on craigslist for $100. I bought it, and it's been stuck in my garage for 2 years now. I must have gone through $200 of parts just trying to get the bill collector to work, and it still doesn't. It would be at least a few hundred more to bring it to a place that can fix it. If you're thinking about doing this, you need to make sure that every part of the machine works, because if you're just starting out I can guarantee that you won't be able to do the maintenance yourself.
- slingnow 6y ago
  I think the awful idea is paying $100 for something that costs well over 20-30x that cost new, according to the article, and expecting it to work without investing a significant amount of time and money.
pnathan 6y ago
One big takeaway here from this is that you can compete on inventory. Keep the high-volume items that are popular, but also sell, e.g., masks, sanitizer, other knickknacks that are relatively disposable and are good impulse buys.
biztos 6y ago
I was pleased to find dairy vending machines in Greece, for when you can't wait for that yoghurt: https://popupcity.net/observations/cooperative-milk-vending-machines-pop-up-in-greece/ https://popupcity.net/observations/cooperative-milk-vending-... Apparently they are farm-to-machine, which is also nice. Seemed to get plenty of use at least where I was in Thessaloniki.
stephen_cagle 6y ago
I think of Amazon Go stores as giant vending machines that you can walk into.
halfnormalform 6y ago
If you find this topic interesting, there’s a book by Kerry Segrave called ‘Vending Machines: An American Social History’ that’s surprisingly readable for a book about the history of vending machines.
ed25519FUUU 6y ago
I'm surprised that no is mentioning the cost to power a soda machine (refrigeration). Do places just eat the bill for your giant refrigerator?
DoreenMichele 6y ago
The article doesn't cover a scenario I am familiar with: If you own your own small business doing something else and also have one or more vending machines to help make that work. Growing up, I knew a guy named Clark. He ran a barber shop and he drove a school bus and he did leather work in the back room of his barber shop during slow times and he had a soda machine in his barber shop. Restocking was a matter of getting bottles of soda out of stacks of supplies in the back room where his leather working stuff was. I know because my parents had a store next door for a while and I sometimes restocked his machine when he was too busy to get to it just to have something to do while bored out of my mind hanging at my parent's store. I wrote about that once, probably badly: https://noonegoesthereanymore.blogspot.com/2020/06/clarks-barbershop.html https://noonegoesthereanymore.blogspot.com/2020/06/clarks-ba...
commonturtle 6y ago
Really interesting article. Still two questions about the economics that I don't understand: 1/ Why no economies of scale? Why aren't there companies that own 100k machines throughout the country? 2/ Why don't the venues run their own vending machines?

251 points by Anon84 6y ago

Vending machines are still all over college campuses in the US. But I suspect the small outfits cannot compete with the big players in this scene. Seems like it's all just coke or pepsi.

bluGill 6y ago
coke and pepsi own their own machines (not entirely, but many of them). However there are a lot of other things sold in vending machines that coke/pepsi don't control.

vmurthy 6y ago

Somewhat related : Warren Buffett seemed to have an interest in such "low-cost" hustles[0] nearly 75 years ago and seemed to have done well with it:) [0]https://www.cnbc.com/2018/06/19/warren-buffett-bought-a-25-pinball-machine-in-1946-and-made-money.html https://www.cnbc.com/2018/06/19/warren-buffett-bought-a-25-p...

Cthulhu_ 6y ago
I have trouble believing this would still work; why should a barber shop get only a fraction of what people put into the machine? They see that thing all day and will know how much money goes through it, what's stopping them from kicking Buffet out and buying their own? I think the modern equivalent around here is the odd slot machines and cigarette vending machines at pubs; I'm fairly sure they aren't owned by the pub itself, because of regulations and stuff.
- bluGill 6y ago
  Because the barber wants to go home after a long day of cutting hair not go restock the machine. Better to get a small profit on an unused corner than deal with inventory management.
  - ed25519FUUU 6y ago
    Except someone else sees the machine taking in cash, and says to the the barber “I’ll give you a 20% cut to swap out to my machine”. When the economics wake up, it’s a race to zero.
    - bluGill 6y ago
      Races to zero never reach zero. Eventually someone says it isn't worth it.
    - vmurthy 6y ago
      Given that the barber has limited resources and time, perhaps he might think twice about constantly changing his partners for a couple of hundred dollars more per change,no? Remember, there are switching costs for these sort of things. Personally ,I tend to weigh the (hard) benefits of cash and the (soft) costs of switching things before making a decision.

kilroy123 6y ago

This is a topic I know a fair amount about. For a brief while, I worked at a startup that made software to manage vending machines and handle digital payments, from the device stuck on the front, to accept credit cards. Basically, the name of the game is location location location. It's very tough to find a good lucrative location to put your machine at. Why? Because there's likely already a machine in such location. Also, it's a numbers game as many locations don't make that much profit per month. Therefore you have to have many machines, and getting 50-100 machines in great locations is no easy task.

skelseys 6y ago
This article seems to suggest that there's lots of small players competing over marginally profitable locations. There's also a negative externality which can lead to these people destroying their whole business: as people compete over machines that don't make much, they cut costs by not refilling as often and not maintaining the machines. This means that the general level of trust in these machines goes down. After you lose your dollar a couple of times you stop using them. Aside from trusting official Coke or Pepsi machines, there's no brand loyalty (to the operator - a random name on a small sticker on the machine). So if your machines are well-stocked and in good working order, you won't do any better than anyone else. And after a while there are broken vending machines everywhere, which everyone ignores.
- kzrdude 6y ago
  This suggests that the machines should use clearer branding, but it needs to be a brand that combines maker + operator.
  - antasvara 6y ago
    The issue there is the same issue that plagues sellers on Amazon or Ebay- brand loyalty is difficult to maintain when one operator often doesn't have the snack you want, or you can't find the operator in your area. Branding could help, but it's unlikely that most consumers will remember what operator their vending machine snack came from, just like I will never remember what 3rd party seller my Amazon product came from.

ZephyrBlu 6y ago

The juice doesn't seem worth the squeeze. 40% margin, maybe less and you need a shit ton of machines to make decent money. You also have to restock all the machines, so it seems like a difficult business to scale that actually gets harder the larger scale you are. 250 machines with 500k in revenue for 2 people doesn't seem like that much. With 40% margins, that's 200k and assumes you have no employees which seems unlikely given the number of machines. Perhaps I'm way off though, since my perception is probably skewed by tech companies.

imtringued 6y ago
You also need to find a place to put the machine. The article mentions paying up to a 25% comission to the owner of the place. Even if you somehow get amazing margins on the machine itself like 70% (assuming you refill the machine for free) it will turn into 45% margin after actually putting the machine down. >We surveyed 23 vending machine owners with various-sized operations and found that the average operator in our sample owned 13 machines that gross $309 per machine per month. Warning: napkin math. $309 x 13 x 45% = $4017 x 45% = $1807.65 profit (excluding cost of machine) It's just a side hustle. Even with higher margins you can never go above $4017 so it's never going to turn into a scalable business. Once you consider the cost of the machines of around $2k each (very low estimate) your first 14 months will net you nothing.
- sokoloff 6y ago
  "Average" (of 23 survey respondents) might not be a particularly great measure. I can imagine many operators would have 1-3 machines on the premises of the business they are actually focused on (a pizza shop or an office cafeteria with a drink and a snacks vending machine), while others might have 75 or more. (How much does the average mobile app make? Does that low 4-figure amount (edit-to-add: per year) mean that app development is a dead end?)
  - martin_a 6y ago
    Do you need to put aside money for insurance, ongoing repairs/maintenance, restocking physical goods, vandalism/loss of the machine for apps? I think vending machines are not really a realiable income when looking at the costs that might occur. So, I'd take any 4-figure app over any amount of vending machines.

miohtama 6y ago

I would be also interested of costs. The article seems to have gross figures only.

prophet_ 6y ago
> All costs considered, an operator who makes $5k per month in revenue might take home something like $2k in profit. I was looking for the same, the above helped me to get an idea about the net income.
- crispyporkbites 6y ago
  This line doesn’t line up with the data also in the article. The gross margin on each product is about 40%, you then lose 15-25% on stocking the machines, plus have to pay for gas, a car, insurance, repairs, initial outlay of machines etc. You’re getting maybe 5% net margin.
  - callamdelaney 6y ago
    > you then lose 15-25% on stocking the machines What? How've you come to that conclusion?
    - crispyporkbites 6y ago
      Sorry I meant on paying the owner of the place you’re putting the machine
  - asdff 6y ago
    Why do you have to be running around town stocking these machines yourself? Surely there are service companies who do this for you, just like US vending machines.
    - crispyporkbites 6y ago
      Right and there goes your margin

amelius 6y ago

And let's not forget that an iPhone is basically a vending machine in your pocket ...

self_awareness 6y ago
I have no idea why you're getting downvoted, what you wrote is true.
- Finnucane 6y ago
  I've never gotten a bag of M&Ms out of my iPhone.

crispyporkbites 6y ago

Here’s the real lede: > Ibanez’s YouTube channel, which chronicles his life as a vendor, boasts 362k subscribers and now earns more than his machines. The margins on vending machines are tiny and the net revenue is not enough to sustain much beyond minimum revenue. If you had a few hundred or thousand machines this would be a great business, but it’s a long way up from 1-2 machines. Many of the people in this feature are boasting about only having to do 2-3 days of work every 2 weeks, they won’t get the scale they need.

Cthulhu_ 6y ago
lmao, that's a good one. It's like those reality soaps on Discovery (e.g. the gold miners), always complaining that they didn't find nearly enough to make ends meet, but surprise surprise, next season they buy tons of new equipment. They're not in the gold mining industry, they're in the acting industry. The motorcycle / car customizers aren't as much into that business as they are in the acting & marketing one. Worked great for OCC, the show turned them into an internationally recognized brand. Wouldn't be surprised if they earn more off of merchandise than motorcycles.

howlgarnish 6y ago

Surprised to see no mention of Japan in the comments. As any visitor can attest, the country has way more vending machines than anywhere else I know of, and in way more categories. Soft drinks, tea (hot and cold), coffee, beer, hard liquor, tobacco, snacks, ice cream, rice, toiletries, even the semi-apocryphal used panties. The article below outlines some reasons why, but it seems to boil down to high cost of labor & real estate, high population density and heavy public transport usage. In suburban shopping arcades (shotengai), which by and large are dying a slow death, it's not uncommon to see closed stores that have literally been replaced by a vending machine or two (often owned by the store owner) retailing the same products, particularly for liquor and tobacco. https://www.businessinsider.com/why-so-many-vending-machines-in-japan-2017-1 https://www.businessinsider.com/why-so-many-vending-machines... Not that Japan has the monopoly on weird vending machines: https://www.norwegiansalmon.com.sg/ https://www.norwegiansalmon.com.sg/

mc32 6y ago
It also helps that it’s a high trust society and you don’t get a lot of delinquent kids breaking in to get cigs or beer. Obviously cameras help with that.
- codeulike 6y ago
  Yes I thought that when I visited. A vending machine on the streets of a UK city full of beer and cigs wouldn't last 3 minutes.
  - pjc50 6y ago
    Railway stations in the UK used to have cigarette vending machines, back before smoking ban.
    - mc32 6y ago
      Not sure about the UK but in the US when there used to be cig vending machines it would be under the supervision of staff, so like in a bar. In Japan they are out in the open in non descript corners and alleyways, although there is usually a streetlight.

ryanmarsh 6y ago

Also, ATM machines. When my daughter was sick with cancer ten years ago I was a contractor. I couldn’t put in enough hours because I was always at the hospital with her. The handful of ATM’s I owned at the time allowed us to keep paying our bills. Cash isn’t as common now (pre-COVID), and even less so post, but my guess is there’s still money to be made in some parts of the world. ATM machines are cheap, about $1,500. If you put them in places where people REALLY need cash (strip clubs, festivals, etc...) you can make a fine living. I eventually sold mine to a friend because my consulting required me to travel and you lose all your profits if you have to pay a company to manage (refilling) the money for you. I have some funny stories like the time I was sitting behind a strip club in a bad part of town at night with $30k in cash waiting on a tech because the magazine jammed. I once had to withdraw 60k in $20’s for my friend and business partner at the time. He was out of the country and is 18 year old cousin was refilling the ATM’s. His ATM’s were two hours from me. We sat in the back of a large Wells Fargo branch with money counters and VERY SERIOUS (read: terrified) EMPLOYEES as I handed the $60k they just counted to a kid and sent him on his way. LOL In the ATM biz everyone knows each other and lending money is common and done on a handshake. The reason is, if you can’t be trusted with cash you don’t last long. So if you’ve been around nobody had a problem letting you borrow $100k in duffle bags in the parking lot of a Home Depot at 6am. Everything is tracked because the ATM’s all go through a data provider that handles the bank interchange. You should see the volumes of money that pass through them. Even the small ones back then would process hundreds of millions in $USD a year. When you lend someone money you call Chris at the data company up and say “I’m borrowing $50k from Tom so send the next few wires to him”. M-F you get an ACH from the previous days withdrawals plus whatever fee you charged. Monday’s includes Fri-Sun. It’s an interesting business and it’s fun. I never got robbed but I’m ex military and stayed strapped and aware of my surroundings.

jbverschoor 6y ago
Not in the Netherlands anymore, as they'll simply bomb your house for the ATM
dylan604 6y ago
I would have assumed that strip clubs owned/operated the ATMs inside their clubs. Why not make that much more money from their customers? When recreational marijuana became legal in CO, the ATMs close to the shops were always out of cash because they only dispensed $20 bills when everyone was trying to pull out $300-$400 at a time. The smart ATM owners started dispensing larger denominations to avoid the Out of Cash problem

pierreogi 6y ago

Seems like it would be a pretty interesting business to get into, my dad is thinking about it, since he works as an operator right now. Seems like water has best margin :D

fortran77 6y ago

In NY you’d have to deal with the mob to break into the business at all.

AQXt 6y ago

It might not be a good investment, according to the article: - Many of the best locations — places with heavy foot traffic, or large worker populations — are already saturated with machines. - Some owners have to make 100+ calls before landing a decent location. In the end, they often end up paying the owner a commission of 10%-25% of gross sales to drive home the deal. - And these figures are pre-expenses. The business comes with its share of overhead costs. For starters, ~50% of revenue goes toward the cost of items that go in the machines. - Most vendors have seen a 10-50% dip in revenue this year due to the stressors of the pandemic.

MivLives 6y ago
Also not really addressed, what's the life span of a vending machine? I know I've seen some ancient ones out there, but most seem pretty new. It says new ones are 3k, if it lasts five year that's sixty dollars a month.
- Cthulhu_ 6y ago
  Vending machines last way longer than 5 years; 25 years at least, the only thing is they require maintenance and repairs every once in a while, and the payment system may need to be swapped out depending on developments (e.g. accepting cards, contactless, phones, google/apple wallet, alipay, bitcoin, etc).
drpgq 6y ago
Yeah it seems like being a Lyft or Uber driver where your hourly pay ends up getting driven towards the minimum wage.
asdff 6y ago
That might not matter if these are passive investments. If you have a company servicing your machine, so what if your profit is low? Save your money and buy a second machine, then another one, then enjoy your exponential growth on your vending empire. If things are making money you aren't doing poorly, especially when you might not ever have to visit one of your machines and can work another job or pursue your interests.

jpomykala 6y ago

I work at telemetry system called VendingMetrics. We initially created this with my dad who got over 20 years experience in vending. I must to say, it’s much harder business than everyone thinks. Different machines, different settings, firmware, motherboards, external devices. Many things can go wrong but yeah if you are lucky and like old-tech it could be work for you. :)

opportune 6y ago

I find it interesting that the operators are buying from Sam’s club rather than a legit wholesaler. $0.50/unit for soda is ridiculous I looked into this a few years ago because someone on reddit wrote a long post about I couldn’t find. The ROI looks amazing until (as the article alludes) you look into how much labor is required to keep the operation going. It kind of works if you have capital and your time has low opportunity cost. I think the smart way to do it would be to start a franchise that provides machines with financing, acts as a wholesaler, etc so you can take a cut of the operation with less capital investment and less driving around to actual machines. But then that starts looking like an MLM...

chillwaves 6y ago
Knew a guy who had vending machines at my office. He was a UPS driver and many of the vending machines were on his typical route. Seemed like a good side gig.
from 6y ago
I found this odd too. Most of the largest wholesalers have microscopically thin margins (i.e., they're not making much from you), whereas grocery stores tend to be a lot higher. I'm not an expert in the food distribution business but it seems most wholesalers (McLane, for instance, https://www.mclaneco.com/content/mclaneco/en/customer.html https://www.mclaneco.com/content/mclaneco/en/customer.html) are happy to take new customers. Maybe Sam's club is offering a better deal than wholesalers on specific items because of coupons/sales and whatnot?

jamesskarzynski 6y ago

I tried this a few years ago and I can really attest to just how awful an idea buying a used machine is. I found a decent condition one on craigslist for $100. I bought it, and it's been stuck in my garage for 2 years now. I must have gone through $200 of parts just trying to get the bill collector to work, and it still doesn't. It would be at least a few hundred more to bring it to a place that can fix it. If you're thinking about doing this, you need to make sure that every part of the machine works, because if you're just starting out I can guarantee that you won't be able to do the maintenance yourself.

slingnow 6y ago
I think the awful idea is paying $100 for something that costs well over 20-30x that cost new, according to the article, and expecting it to work without investing a significant amount of time and money.

pnathan 6y ago

One big takeaway here from this is that you can compete on inventory. Keep the high-volume items that are popular, but also sell, e.g., masks, sanitizer, other knickknacks that are relatively disposable and are good impulse buys.

biztos 6y ago

I was pleased to find dairy vending machines in Greece, for when you can't wait for that yoghurt: https://popupcity.net/observations/cooperative-milk-vending-machines-pop-up-in-greece/ https://popupcity.net/observations/cooperative-milk-vending-... Apparently they are farm-to-machine, which is also nice. Seemed to get plenty of use at least where I was in Thessaloniki.

stephen_cagle 6y ago

I think of Amazon Go stores as giant vending machines that you can walk into.

halfnormalform 6y ago

If you find this topic interesting, there’s a book by Kerry Segrave called ‘Vending Machines: An American Social History’ that’s surprisingly readable for a book about the history of vending machines.

ed25519FUUU 6y ago

I'm surprised that no is mentioning the cost to power a soda machine (refrigeration). Do places just eat the bill for your giant refrigerator?

DoreenMichele 6y ago

The article doesn't cover a scenario I am familiar with: If you own your own small business doing something else and also have one or more vending machines to help make that work. Growing up, I knew a guy named Clark. He ran a barber shop and he drove a school bus and he did leather work in the back room of his barber shop during slow times and he had a soda machine in his barber shop. Restocking was a matter of getting bottles of soda out of stacks of supplies in the back room where his leather working stuff was. I know because my parents had a store next door for a while and I sometimes restocked his machine when he was too busy to get to it just to have something to do while bored out of my mind hanging at my parent's store. I wrote about that once, probably badly: https://noonegoesthereanymore.blogspot.com/2020/06/clarks-barbershop.html https://noonegoesthereanymore.blogspot.com/2020/06/clarks-ba...

commonturtle 6y ago

Really interesting article. Still two questions about the economics that I don't understand: 1/ Why no economies of scale? Why aren't there companies that own 100k machines throughout the country? 2/ Why don't the venues run their own vending machines?