The economics of vending machines • Hacker News Board

Re: The economics of vending machines

#51

Post by bluGill » Mon, Oct 05, 2020, 1:58 PM UTC

Cthulhu_ wrote: post #47

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 p…

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.

Re: The economics of vending machines

#52

Post by TwelveNights » Mon, Oct 05, 2020, 1:58 PM UTC

altacc wrote: post #36

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…

> Perhaps I'm way off though, since my perception is probably skewed by tech companies. Where you're standing makes a massive difference to your perception. Using your back of the envelope calculations, 200k or even quite a bit less is a lot of money to many, if not most, people. The median USA income is apparently 50k, so they'd be earning more than most other people. Compared to a hard working minimum wage job, whi…

The only thing missing in OP's calculation is the cost of employees. Maintaining a fleet of 250 vending machines alone doesn't seem very possible.

Re: The economics of vending machines

#53

Post by bluGill » Mon, Oct 05, 2020, 1:59 PM UTC

vlan0 wrote: post #25

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.

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.

Re: The economics of vending machines

#54

Post by antasvara » Mon, Oct 05, 2020, 2:14 PM UTC

kzrdude wrote: post #39

skelseys wrote: post #34

Earlier quoted context omitted.

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…

This suggests that the machines should use clearer branding, but it needs to be a brand that combines maker + operator.

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.

Re: The economics of vending machines

#55

Post by pjc50 » Mon, Oct 05, 2020, 2:17 PM UTC

codeulike wrote: post #30

mc32 wrote: post #26

Earlier quoted context omitted.

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.

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.

Railway stations in the UK used to have cigarette vending machines, back before smoking ban.

Re: The economics of vending machines

#56

Post by jbverschoor » Mon, Oct 05, 2020, 2:18 PM UTC

ryanmarsh wrote: post #21

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…

Not in the Netherlands anymore, as they'll simply bomb your house for the ATM

Re: The economics of vending machines

#57

Post by xyzzy_plugh » Mon, Oct 05, 2020, 2:18 PM UTC

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 &…

If North America was speckled with machines vending hot canned coffee, I would use them far more often than e.g. Starbucks. I drank so many Boss coffees last I was in Japan, they're so convenient -- no line, not too-hot-to-drink, open 24/7, such as in the early dawn. Just a wonderful thing.

Re: The economics of vending machines

#58

Post by deadmetheny » Mon, Oct 05, 2020, 2:19 PM UTC

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…

This is a bit myopic - $200k for two people for what's basically a no-skill gig is a pretty decent income in most of the country. At that scale it's not a side gig anymore, it's your primary income, and I can imagine the hours are probably comparable to a normal job. And really, I can think of way less appealing jobs that pay worse with less flexibility.

Re: The economics of vending machines

#59

Post by antasvara » Mon, Oct 05, 2020, 2:22 PM UTC

TwelveNights wrote: post #52

altacc wrote: post #36

Earlier quoted context omitted.

> Perhaps I'm way off though, since my perception is probably skewed by tech companies. Where you're standing makes a massive difference to your perception. Using your back of the envelope calculations, 200k or even quite a bit less is a lot of money to many, if not most, people. The median USA income is apparently 50k, so they'd be earning more than most other people. Compared to a hard working minimum wage job, whi…

The only thing missing in OP's calculation is the cost of employees. Maintaining a fleet of 250 vending machines alone doesn't seem very possible.

If we assume that the restock is 3 times a month (close to the once every 2 weeks that was mentioned in passing), that leaves around 25 visits per day. If they're in close geographic proximity, that seems like it might be doable.

Re: The economics of vending machines

#60

Post by greggman3 » Mon, Oct 05, 2020, 2:27 PM UTC

Tor3 wrote: post #20

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 ch…

Been here since 98, never ran into the issue of not being able to pay with banknotes because of returning lots of coins. In fact quite the opposite. Go into a convenience store, buy a pack of mints for $1.04 (104 yen) hand them an $100 bill (10000yen) no one blinks an eye.

Most convenience stores in the USA won't accept $100 bills AFAIK.

I can see if it was some tiny store and they couldn't make exact change then yes, they'd have an issue.

Also, liquor (and maybe beer) I think may have changed. I haven't seen a beer/liquor machine since 2016 but the one I saw then required an id card to prove you were old enough to buy. Tobacco too apparently (I don't pay attention to cigarette machines)

https://ja.wikipedia.org/wiki/Taspo