At the cost of sounding cliche, the top three of the five most important factors for success in the vending business are location, location, and location. It won’t be surprising if the other two are location too. Winning the right site for the vending machine is the first step towards monetizing the capital investment made on the machine. It influences critical business metrics like sales, profits, and average revenue per user. Choosing a poor location for a fancy piece of vending equipment is like keeping your gold in the bank and paying rent for safe keep. It is not only a poor use of your asset, but it also burns more cash for the upkeep. Incidentally, you could check out Vending.com’s profit calculator to simulate your earnings.
Need for a new location
Vending businesses are always looking for new machines and locations to place them in. The location is where their business starts generating returns or cash. Each vending business owner has their own drive to expand or enter a new location.
Starting a new vending business
Vending is a lucrative business with low barriers to entry. Vending machines are easy to use, not too expensive, and quick to generate returns. First-time investors of the vending industry who are looking to save for a rainy day are hungry for new locations. Location owners prefer working with them as long as they are in for the long haul. Vending.com has a specialized focus on helping entrepreneurs becoming successful.
Expanding to a new location
Vending machine owners who are already in business are also looking for opportunities to expand. They often start close to their base of operation and slowly expand to adjacent locations.
Choosing the right location for maximizing growth
Businessmen who are trained hands at the vending business always seek to maximize growth. If they identify an open opportunity in a high-growth locality that can benefit from the convenience of a vending machine, they pursue it. This adds to the race for space. Our earlier blogpost covers this area.
Diversification of risk
Veterans in the business are not only hungry for growth but are also keen to reduce risk. Betting on one or a few locations is like putting all the eggs in one basket. So, they often try to find new localities to place their equipment with diverse demographics and preferences. This helps them tide over challenges due to lagging demand in the areas they already operate in.
Selecting the right location
Newbies and veterans alike are hunting for that attractive bit of real estate where their vending machines can serve more and more customers. But not all places have the same level of earning potential. Successful vending entrepreneurs carefully select the ideal spot for their machines and then go all-out to win the location. While there is no clear definition for the right site, common sense and meticulous consideration of certain influencing factors can help get the best location deal. Some of them are discussed below.
All said and done, like all other retail businesses, vending is a numbers game. The more the number of transactions, the faster is the recovery of capital employed. The machine should be placed in spaces where there is a good level of foot traffic. Public spaces, offices, schools, and other public places are good examples of a good volume of user traffic. These locations often generate the most per-machine revenues.
While the volume of transactions driven by high foot traffic is essential, the kind of traffic also plays an important role. The vending machines in the lobby of the office of an investment bank will have users with high disposable income. The average price per transaction will be higher than a school where children deal in “small change.” This also allows adjusting margins depending on where the machine is located. A good example would be when the same water bottle costs more in the office than at the school.
Competition in the vending business is a necessary evil. When the location you are pursuing has been hosting a competitor for a long time, the competitor continues to enjoy good sales. But it also means you will have to fight harder. Fight harder with the location owner for placing the machine and then fight harder for the wallet-share of the consumer who visits the place.
There are also advantages to placing the machine where there is competition. It is relatively easier to price suitably for the location without experimentation. A common trick is to price the competitors’ product brands at lower levels in your machine and price your unique ones at higher margins. Eventually, in a location with fair competition, the prices of all vendors settle down to similar levels. Then the differentiator is through the quality of products, availability, and the quality of the machines used. This is also an opportunity to showcase and grow your brand’s identity and recall value, and Vending.com’s marketing has the precise support that helps with this.
The merchandize that is sold in the machine also varies as per the location. Protein shakes sell almost exclusively at the gym. There is very little chance that an office employee will shell out change for a protein shake at the cafeteria. Potato chips at the gym might only the serve the purpose of testing the resolve of the patrons. They may fly off the racks at a school or a park though.
Type of Vending Equipment
It might come as a surprise, but what machine you choose will also depend on your location to place it. The table below shows how certain types of machines will suit almost all the locations, while others fit only a few.
|Location||Combo Vending Machines||Drink Vending Machines||Snack Vending Machines||Frozen Food Machines||Coffee Vending Machines|
|Schools and Universities||✔||✔||✔|
|Hospitals & Care Centers||✔||✔||✔||✔|
|Transport Service Centers||✔||✔||✔||✔||✔|
Vending business owners can consider work half done when they have scored the best locations for their machines. From there, it is just making them rain.
Experts at Vending.com can guide you to get your new vending business off to a flying start or race ahead of the competition. To know how to pick the best vending machines for your location or suitable locations for the equipment you have in mind, talk to us at 1-855-929-1042.