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The economics of vending machines

thehustle.co

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Re: The economics of vending machines

#11

Post by zxcmx »

lordnacho wrote: post #10
zxcmx wrote: post #9

Earlier quoted context omitted.

It's good money for something accessible to almost anyone. It doesn't require much capital, doesn't seem very regulated and needs no deeply specialised skills to get started. No franchise. No middleman or supplier lock-in. No fixed rental payments. Easy to pull in friends & family labour if you need to scale, and if you miss restocking it's no biggie. Nobody yelling at you. Flexible hours. Rarely have to talk to peop…

If anything you should be surprised such a thing is profitable, it's a textbook case of "the free market should have squeezed profits to zero".

Agree.

Also surprised it hasn't been feudalised somehow. Some company owning all the machines and then uber-ing out the hard work of siting them and restocking them. Gamifying the process of monitoring, "your fleet", the "ching" on your phone when someone buys a bottle of water or candy bar. Special deals for site owners. Branded supplies. An app for customers to talk to the vending machine. Loyalty points. A snack radar. Etc.

I think it's great the market is mostly independent operators.

Re: The economics of vending machines

#12

Post by skelseys »

lordnacho wrote: post #10
zxcmx wrote: post #9

Earlier quoted context omitted.

It's good money for something accessible to almost anyone. It doesn't require much capital, doesn't seem very regulated and needs no deeply specialised skills to get started. No franchise. No middleman or supplier lock-in. No fixed rental payments. Easy to pull in friends & family labour if you need to scale, and if you miss restocking it's no biggie. Nobody yelling at you. Flexible hours. Rarely have to talk to peop…

If anything you should be surprised such a thing is profitable, it's a textbook case of "the free market should have squeezed profits to zero".

Everything seems to suggest that this has already happened. The reason this works as a 'side hustle' is because it's only lucrative if you ascribe a very low value to your time (and your car mileage, and the stress of doing admin for your 'business').

The fact the big players don't bother, the number of 'entrepreneurs' doing this in their spare time, the fact that they repair, move and restock the machines themselves, the calculations which ignore the presumably high risk of vandalism or theft, the presence of a landlord who can charge you as much as they like. And finally, the existence of 'mentors' who will charge you to be taught how to replicate their business.

Re: The economics of vending machines

#14

Post by crispyporkbites »

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.

Re: The economics of vending machines

#15

Post by crispyporkbites »

prophet_ wrote: post #7
miohtama wrote: post #5

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

> 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.

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.

Re: The economics of vending machines

#16

Post by ghaff »

skelseys wrote: post #12
lordnacho wrote: post #10

Earlier quoted context omitted.

If anything you should be surprised such a thing is profitable, it's a textbook case of "the free market should have squeezed profits to zero".

Everything seems to suggest that this has already happened. The reason this works as a 'side hustle' is because it's only lucrative if you ascribe a very low value to your time (and your car mileage, and the stress of doing admin for your 'business'). The fact the big players don't bother, the number of 'entrepreneurs' doing this in their spare time, the fact that they repair, move and restock the machines themselves…

I'd add that what people here are calling a "side hustle" is something that quite a few people without a lot of marketable skills would call a job/income stream. And, yes, there are a lot of jobs/income streams that work for individuals who lack a lot of alternatives that don't work for companies that have offices, accountants, etc.

Re: The economics of vending machines

#17

Post by howlgarnish »

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...

Not that Japan has the monopoly on weird vending machines:

https://www.norwegiansalmon.com.sg/

Re: The economics of vending machines

#18

Post by mytailorisrich »

ZephyrBlu wrote: post #4

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 unl…

From the article:

> All costs considered, an operator who makes $5k per month in revenue might take home something like $2k in profit.

That's actually not bad at all.

The issue, as you mention, is that it may be difficult to implement economies of scale. But even 200k for 2 people is something the majority of people would be quite happy with out of a full time job, and considering that this does not require any special degree or training this is very good.

Re: The economics of vending machines

#19

Post by em500 »

howlgarnish wrote: post #17

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 &…

There are lots of weird and wonderful vending machines around the world: https://www.straitstimes.com/singapore/live-crabs-and-lego-s...

Re: The economics of vending machines

#20

Post by Tor3 »

howlgarnish wrote: post #17

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 &…

I counted 16 vending machines side-by-side outside a random shop I visited in "my" town (the town where I stay when I'm in Japan).

And yes they're everywhere. I appreciated them particularly the first couple of years I visited, as at that time shops insisted on you paying as accurately as possible, they tended to refuse accepting banknotes if that implied returning a lot of coins. Strange thing, and that has since changed (i.e. that's not a problem anymore), but, back then the easiest way out was to simply buy a 100yen coffee from a vending machine, paying with a note, and keep the change to use in shops.

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