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The economics of vending machines

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Re: The economics of vending machines

#111

Post by asdff »

crispyporkbites wrote: post #15
prophet_ wrote: post #7

Earlier quoted context omitted.

> 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.

Why do you have to be running around town stocking these machines yourself? Surely there are service companies who do this for you, just like US vending machines.

Re: The economics of vending machines

#112

Post by vkou »

NikolaeVarius wrote: post #88
de_Selby wrote: post #63

Earlier quoted context omitted.

Climbing Mt Fuji in Japan is a reasonably serious climb (for ordinary people). At 3600m you need to think about altitude acclimitisation and it's best to sleep overnight on the way up. The achievement is only undermined by the fact that there is a literal queue of people in front of you for the entire ascent, and by the fact that after completing the climb you are greeted with a vending machine at the summit!

Thats about 12,000 feet. You dont need altitude acclimatization for that, it'll just suck a decent bit more than normal. I just went backpacking at 13k+ feet without any prep, it was fine outside of needing to take more breaks.

I live at sea level, and I've been up to 10,000 feet five times. I've felt fine for four of them, but the fifth time, some light physical activity (~60 minutes of walking) put me flat on my ass, made my feet feel like lead, and made me want to do nothing other than to lie down and sleep.

Different people react to altitude differently.

Re: The economics of vending machines

#113

Post by bluGill »

ed25519FUUU wrote: post #73
bluGill wrote: post #51

Earlier quoted context omitted.

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.

Except someone else sees the machine taking in cash, and says to the the barber “I’ll give you a 20% cut to swap out to my machine”. When the economics wake up, it’s a race to zero.

Races to zero never reach zero. Eventually someone says it isn't worth it.

Re: The economics of vending machines

#114

Post by spike021 »

greggman3 wrote: post #60
Tor3 wrote: post #20

Earlier quoted context omitted.

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…

Similarly, I've been on two long trips to Japan recently and had no issues either.

Though I suspect that there's less of an issue when the conbini you're in has a change machine at the teller. So they just put the bank note in and it dispenses whatever the change amount is, even if many coins also come out.

Re: The economics of vending machines

#115

Post by from »

opportune wrote: post #82

I find it interesting that the operators are buying from Sam’s club rather than a legit wholesaler. $0.50/unit for soda is ridiculous I looked into this a few years ago because someone on reddit wrote a long post about I couldn’t find. The ROI looks amazing until (as the article alludes) you look into how much labor is required to keep the operation going. It kind of works if you have capital and your time has low op…

I found this odd too. Most of the largest wholesalers have microscopically thin margins (i.e., they're not making much from you), whereas grocery stores tend to be a lot higher. I'm not an expert in the food distribution business but it seems most wholesalers (McLane, for instance, https://www.mclaneco.com/content/mclaneco/en/customer.html) are happy to take new customers. Maybe Sam's club is offering a better deal than wholesalers on specific items because of coupons/sales and whatnot?

Re: The economics of vending machines

#117

Post by smogcutter »

asdff wrote: post #107
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…

That might not matter if these are passive investments. If you have a company servicing your machine, so what if your profit is low? Save your money and buy a second machine, then another one, then enjoy your exponential growth on your vending empire. If things are making money you aren't doing poorly, especially when you might not ever have to visit one of your machines and can work another job or pursue your intere…

The problem is that dividing owning the capital (of the machines) and performing the service doesn’t really make sense in this circumstance. This isn’t a situation where you’re creating efficiency by specializing. What does the servicing company need you for? If all you do is own the machines, they can do that themselves without complicating their business at all.

Re: The economics of vending machines

#118

Post by Animats »

kilroy123 wrote: post #3

This is a topic I know a fair amount about. For a brief while, I worked at a startup that made software to manage vending machines and handle digital payments, from the device stuck on the front, to accept credit cards. Basically, the name of the game is location location location. It's very tough to find a good lucrative location to put your machine at. Why? Because there's likely already a machine in such location.…

You need the locations near each other, or time is wasted driving around. There's economy of scale here. The soft-drink people are already there. That doesn't leave much room for the rest of the market.

Re: The economics of vending machines

#119

Post by ctack »

smogcutter wrote: post #117
asdff wrote: post #107

Earlier quoted context omitted.

That might not matter if these are passive investments. If you have a company servicing your machine, so what if your profit is low? Save your money and buy a second machine, then another one, then enjoy your exponential growth on your vending empire. If things are making money you aren't doing poorly, especially when you might not ever have to visit one of your machines and can work another job or pursue your intere…

The problem is that dividing owning the capital (of the machines) and performing the service doesn’t really make sense in this circumstance. This isn’t a situation where you’re creating efficiency by specializing. What does the servicing company need you for? If all you do is own the machines, they can do that themselves without complicating their business at all.

You’re sourcing the location.

Re: The economics of vending machines

#120

Post by duderific »

Cthulhu_ wrote: post #46
powvans wrote: post #42

Earlier quoted context omitted.

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...

Sure, but how many people are killed by mafia thugs when trying to muscle in on their vending machine territory
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