Vending.com - Blog

Finding the best location for your vending machine

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 best location 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 vending machines and the best 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.

  • Traffic volume

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.

  • Traffic quality

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

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.

  • Merchandize

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.

LocationCombo Vending MachinesDrink Vending MachinesSnack Vending MachinesFrozen Food MachinesCoffee Vending Machines
Schools and Universities
Offices
Hotels
Shopping Centers
Hospitals & Care Centers
Government Offices
Transport Service Centers
Gyms
Manufacturing Facilities

Conclusion

Vending business owners can consider work half done when they have scored the best locations for their vending 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.

V.COM-March Blog

Snacks, Drinks, Frozen Foods, or Combo – What Would Give You More Vend Sales?

The product decides the machine.

A vending business is a reliable source of revenue, if you do it right. Even if you are not a mainstay vending business owner, an additional revenue stream from a vending machine gives you the liberty to pursue your passion. It helps you save money for a rainy day. The first step towards getting a steady flow of revenue is by choosing the right product to sell and the machine that vends it, in that order. It is important to remember that while people interact with the machine, it is the product that they consume.

First-time buyers often tend to focus more on the machine than the best products for their vending machines. The product is a bigger capital investment than stocking the machine. They tend to pay less attention to the fact that revenue and profits come from the product you stock and sell. So, choosing what you want to sell takes precedence over the machine you use to sell it. Let us discuss how to select the right product that will give you the best results.

Factors to consider

The most obvious factor influencing your decision on the best products for your vending machines should be user experience. Your consumers should get the best satisfaction by buying from your machine. The best experience comes from the product they want to buy and the machine they interact with. So, the product you sell and the machine you use should be of the best quality and at the right price point. These two factors are applicable to what product you choose to sell. Other factors are influencing the selection of the product you choose to sell, however, like the ones below.

  • Volume: Some products sell in higher volumes than others. The higher the number of transactions, the better the returns on investing in a vending machine. Water bottles and beverages constitute more than 56% of the sales through vending machines[1]. They are universally sought staples and can also generate a decent margin[2]. Moreover, vending machine products are generally impulse buys. This means while users start transacting to buy a water bottle, they can get interested in a bag of chips or an energy bar. So, high-volume products increase the chances of up-selling and generating more revenue per user.
  • Profitability: Certain products can fetch a higher margin than others in your vending machine. While the same product may not have the best profitability everywhere, there are certainly some sweet spots. There is statistical evidence from a survey showing that the humble water bottle scores high on the profitability scale. Fruit snacks are a close second[2], but again, these are statistical averages. While your water bottle might get you good profits at a gym, sugary drinks and candies might earn big bucks at an amusement park. That takes us to the next factor you need to consider while selecting the right product to sell, the location.
  • Location: The location of your vending machine can significantly influence what sells and what does not. The volume of traffic, the spending power of the traffic, and the need for convenient access to supplies are all dependent on the location. Outdoor vending machines with cold beverages at a summer fair can be a bigger attraction than the rides. Cold sandwiches might fly off the machines at the factory cafeteria. Protein shakes are more likely to be bought at a gym than most other places. Location not only defines what sells but also how much of it. Some vending enthusiasts place so much significance on the location that they are happy to select their machine or product based only on this factor.
  • Demographics: This is a slight evaluation of the location. This defines who is likely to use the machine. The demographics you are likely to cover at a school are children between 8 and 18 with access to disposable income in the form of pocket money. An office is more likely to have an older age group of people but with a bigger purse at their disposal. This kind of classification of who is likely to use your machine will help you identify the products they will likely need. It also indicates how you can price the products that have a compelling demand against others that don’t.

The right machine for the right product

Choosing the best product for vending machines impacts you’re the experiences of your customers, who do business with your machines. Getting the product mix right has a great influence on the revenue and profitability of your vending business, but the product by itself does not complete the experience of your customer. They conduct these transactions through your machines. Hence, the right machines combined with the best products deliver delight to your customers and success to you. Striking a balance between performance, features, cost of purchase, cost of ownership and maintenance could be tricky even for experienced vending machine owners.

This is where businesses like Vending.com can help. With over 90 years of experience in the vending industry and a sophisticated ecosystem of distributors and partners, Vending.com can provide the right vending solutions tailored to your needs. Reach out to us at www.vending.com or call us at 1-855-929-1042 to know more.

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