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The economics of vending machines

thehustle.co

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Re: The economics of vending machines

#41

Post by MivLives »

AQXt wrote: post #32

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 busin…

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.

Re: The economics of vending machines

#42

Post by powvans »

skelseys wrote: post #31
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 this business is so lucrative, why isn't organized crime involved? It seems like a field where they have a number of comparative advantages: 1. Good at negotiating with local businesses. 2. Good at motivating low-paid employees to handle large cash sums without pilfering. 3. They love cash businesses. 4. More tax efficient than people doing 'side hustles'. 5. Good at managing kick-backs to eg. motel staff. My gues…

This comment sounds like the inspiration for an Anchorman style comedic exploration of the dark underbelly of the vending machine world.

Re: The economics of vending machines

#43

Post by Cthulhu_ »

MivLives wrote: post #41
AQXt wrote: post #32

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 busin…

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.

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).

Re: The economics of vending machines

#44

Post by bluGill »

zxcmx wrote: post #11
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".

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 r…

The parts that can be feudalised already are. The big companies make the machines and sell them. Big companies make the software. What is left is the physical efforts of finding a location, putting the machine in place, and then tending it regularly. There isn't much to be gained by adding a layer of management over the top of that, so big players can't really skim off the top by good management making things better.

Also big companies have too much to lose to fraud. The route operators are alone with big piles of cash. It is very easy for someone who knows what they are doing to "discover" a broken a machine (read they break it) and it was dispensing the J row without payment, then take the extra cash.

All in all it is best to leave route operations to little players.

Re: The economics of vending machines

#45

Post by Cthulhu_ »

zxcmx wrote: post #11
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".

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 r…

I dunno, I'm fairly sure Coke machines are all owned / franchised by Coca Cola; after all, you can't just use their brand on the outside of your machine. I think.

Re: The economics of vending machines

#46

Post by Cthulhu_ »

powvans wrote: post #42
skelseys wrote: post #31

Earlier quoted context omitted.

If this business is so lucrative, why isn't organized crime involved? It seems like a field where they have a number of comparative advantages: 1. Good at negotiating with local businesses. 2. Good at motivating low-paid employees to handle large cash sums without pilfering. 3. They love cash businesses. 4. More tax efficient than people doing 'side hustles'. 5. Good at managing kick-backs to eg. motel staff. My gues…

This comment sounds like the inspiration for an Anchorman style comedic exploration of the dark underbelly of the vending machine world.

I did hear one of those factoids saying more people are killed by vending machines than sharks...

https://freakonomics.com/2011/09/08/how-are-sharks-less-dang...

Re: The economics of vending machines

#47

Post by Cthulhu_ »

vmurthy wrote: post #2

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-p...

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.

Re: The economics of vending machines

#48

Post by raxxorrax »

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 &…

So now they have salmon in vending machines... Tried to buy some fish once and the cashier just laughed at me and wanted to sell me fishing equipment.

Re: The economics of vending machines

#49

Post by bluGill »

skelseys wrote: post #27
ghaff wrote: post #16

Earlier quoted context omitted.

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.

There are a lot of opportunities like this. However, when you look at many of them in detail, they pay very very poorly.

As a sole operator though the pay is better because you don't have overhead. If you pay a helper, some of the net income goes to you as the manager, and some to them (you can split that up however you choose). In some businesses management is hard and so the manager can skim off the top of their employees and yet their great management skills can pay the employees more than they would get along. This isn't one of those business where skilled management is required though, so a manager is just skimming off the top and a good employee will soon figure out they can start their own business and make more money without the manager.

Re: The economics of vending machines

#50

Post by Cthulhu_ »

crispyporkbites wrote: post #14

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…

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.

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