 |
 |
 |
 |
 |
 |
 |
 |
 |
|
|
Vending Machines Provide Entry To Business Ownership for Many There is not much that can't be sold through vending machines these days, and advances in technology are constantly expanding both the range of products and services that can be offered in this manner and the options available to consumers to pay for them. As a result, the vending industry is one of the most popular choices for entrepreneurs on the prowl for exciting new business opportunities. The vending industry has been around for a very long time. As early as 215 B.C., the ancient Egyptians were using a vending device to dispense holy water in their temples, according to the mathematician Hero, who lived in Alexandria. The Chinese people developed and deployed a coin-operated vending machine almost 1,000 years ago, but what might be considered the "modern age" of vending arrived with the use of coin-operated tobacco boxes in English taverns beginning in the 1700s. By the late 19th century, a number of patents for coin-operated dispensers had been granted by the U.S. Patent Office, and Thomas Adams Co. began installing Tutti-Frutti gum machines on the platforms of New York City's elevated train lines in 1888.
Cigarette vending machines-a segment that is now declining-hit the market during the Roaring '20s. Ice-cooled bottled soft drink machines-a segment that continues to grow-appeared on the scene about a decade later. The 1930s also saw the formation of the National Automatic Merchandising Association (NAMA), which remains the industry's preeminent trade group. The first coffee vending machines debuted in 1946, a development that would dramatically change the nature of coffee breaks in the future. Companies began installing vending machines in employee break rooms, making it possible to offer workers a greatly increased variety of snack foods and beverages at reasonable prices. Technology was the driver behind most of the important changes in the vending industry in the second half of the 20th century. Important developments included the introduction of refrigerated food vending machines and dollar bill changers. Electronic components made vending machines more versatile, efficient and user-friendly starting around 1980, and credit/debit card readers began popping up on machines in the middle of that decade. The first wireless transmission of data from vending machines to warehouses occurred in 1993, signaling a coming period of dramatic improvements in supply chain management.
MORE CHANGE COMING The vending industry can look forward to more technology-driven change in the years to come. Already, consumers in a number of foreign countries and a handful of U.S. markets have gained access to a new generation of machines that let customers pay for their purchases using their cellular phones. Customers dial in a code, and the appropriate amount is added to their next cell phone bill or debited from their bank account.
The scope of merchandise being sold through vending machines today is enough to boggle the mind: DVDs, CDs, made-to-order pizza, piping hot French fries, cameras, live bait, underwear, prescription medicines, jewelry and even art prints and sculptures. To be sure, such products account for a very small percentage of the vending industry's $65 billion in annual sales ($40 billion of which comes from "conventional" vending machines), but it gives you an idea of just how versatile these machines can be. As the chart on this page illustrates, the overall vending industry includes several different segments, all of which fit into one of three larger categories: vending operators, coffee service operators and music and games operators. Some companies are active in more than one type of operation. According to NAMA, the industry currently consists of about 11,000 companies in the vending category, 6,000 in music and games and 3,800 in coffee service. However, some companies are counted more than once in that tabulation because they are active in multiple categories.
TYPES OF VENDORS While emphasizing that the lines between different categories and segments of the vending industry have sometimes blurred and that definitions tend to evolve over time, NAMA offers the following descriptions, which might be helpful to those interested in buying a buisness opportunity in this industry.Full-Line Vendors. A full-line vending operation provides complete refreshment services through vending machines. A full-line operator may offer refrigerated food machines as well as multi-product candy-and-snack equipment and hot and cold beverage machines. The term "full-line" originally applied to non-specialist operators selling beverages, candy and cigarettes,and that usage remains common. "Four-C" Vendors. Candy, coffee, cold drinks and cigarettes were the original "four Cs," and they constituted a full line of vendible products. The term if often used today to describe operators who do not offer food vending equipment but do provide cold and (usually) hot beverage machines, candy-and-snack machines and other equipment for products that do not require refrigerated transport. Specialized Vendors. Included in this varied group are bottling companies that place their own canned cold-drink machines, dairies that supply milk and ice cream machines, concession operators who place vending equipment in the locations they serve (such as theaters and convention centers) and vending companies that concentrate on a limited range of products. Music and Game Operators. The video games, pinball machines, pool tables, jukeboxes and "cranes" found in many train and bus stations, hotels, taverns and similar locations are put there by music and game operators. Some also run equipment on their own premises ("arcades" or "family fun centers"). Coffee Service Operators. Serving primarily smaller work-places, these vending operators started out by installing coffee brewers and delivering kits of coffee packets and filters to customers. Most now offer a much broader array of products, including other hot beverages, snacks, candy, soft drinks and juices. As is the case with any business venture, it is very important that prospective owners considering the purchase of a vending business conduct a thorough due diligence process. The Better Business Bureau (BBB) notes that many people have achieved financial success by owning vending machines. The industry consists mainly of small, independent local firms where initiative and hard work can yield both a comfortable income and the pride of accomplishment. However, succeeding in any business requires hard work and determination, and vending is no exception. You have to go into this venture with both eyes open and the understanding that the most important factor in your business' future success is your own drive and determination. Choosing the right business opportunity can also be a critical factor in achieving success as a vending operator. While you need to assess each offering on its merits, the BBB has identified a number of tactics that can be red flags. If you spot any of them you should-at the very least-conduct further investigation before moving forward.
WARNING SIGNS Inflated profit projections. You may be shown elaborate charts illustrating the profit possible with a certain number of sales per day. Do not accept such projections at face value without doing additional research on your own.
If the company you are dealing with promises to provide assistance in finding prime locations for your vending machines, investigate those claims thoroughly. Who is responsible for finding those locations? How much experience does that person have? How familiar is he or she with the market where you will be doing business? These are important questions. Training programs. Find out what kind of training your business opportunity supplier provides. Knowledge of how to operate and service the machines is critical, of course, but it is not enough. Industry veterans say that sales work-soliciting accounts-is a very important part of most successful vending businesses. If you are not comfortable with that or lack the necessary skills, make sure your supplier can fill those gaps with the right kind of training. "Good deals" on machines. Another axiom of business is if something sounds too good to be true, it usually is. Don't accept a salesperson's work that you are being offered a "good deal" on the price of a vending machine without doing some checking first. Find out what others are paying for the same or similar machines. An important part of your due diligence process also involves making sure that you get what you think yo are paying for. If a machine is presented as being backed by a specific manufacturer or supplier, follow up to confirm that is the case. Otherwise, you could be left in the lurch should you need support of repair parts for your machines in the future. The items listed above are just a sampling of the things you need to look at in the due diligence process before you purchase a business opportunity in the vending industry. Some other issues that the BBB says warrant close scrutiny are "discounts" promised on merchandise, repurchase plans, restricted territories, leaseback arrangements, guarantees, packaging limitations and promises of success. Unless you have extensive previous experience in the vending industry (and even then), it is a good idea to tap outside resources for professional advice before starting you business. Some good sources for that advise include:
|
