As an investment preparation consultancy in Switzerland, we receive this question a lot. Yes, starting a Vending Machine Business could be still profitable. But it depends on a variety of elements which we’re going to mention in this article.
Location Is The Critical Factor
Number one, according to our testing, the correlation between a Vending Machine Business’s success and its success is mostly related to location. There aren’t that many location-based businesses out there.
This industry or this market of starting a vending machine is entirely focused on the location of where you’re going to put that machine. Now at the end of the day there are cost variables in consideration, product choices that make or break in this industry, but when it comes to location we have seen this is really what makes or breaks it.
Understanding Consumer Behavior Towards Vending Machines
Your consumers are usually on the move and they’re looking for something that you can provide. FMCGs (Fast-moving Consumer Goods companies) know that better than anyone. They know what a shelf share could mean, how important it is to put product placement or to place your product on a specific shelf at a specific time so that when you’re walking around there you would see that product.
Now there is a science behind it, but this is what your business is really all about. People who are sitting waiting for the train or for the bus and see your vending machine with a product that they didn’t know that they need right now and just immediately go for it.
The keywords in these sentences are: you might think that they are the products, but initially they are the train station or the bus station. Placing a Vending Machine Business in the right location is crucial.
Avoid Common Business Mistakes
Most vending machines in our experience fail due to the fact that the location does not really require a vending machine.
We’ve seen Vending Machine Business plans of being placed in close proximity to a grocery shop chain for example, and this is catastrophically wrong. Don’t bet on your users being lazy. On the contrary, bet on them seeing you as the only option because that’s the only profit margin you have at the end of the day.
They could simply go to a restaurant, sorry to a grocery store that is close by and pay a cheaper amount for the product that you’re selling in your vending machine. So location is key.
The Importance of Market Research For A Vending Machine Placement
For that, we highly advise you to create an extensive market research to truly show where the perfect locations that could work for you as a Vending Machine Business owner.
We always require market research in practically every work we do, but when it comes to this business in particular, market research is not kind of a luxurious add-on or something optional.
It is what will determine in an unbiased way, whether your product is worthy of being in the market or whether this is not the perfect location to have your vending machine.
Vending machines as a concept are flawless. Yes, people would want to buy products that are immediately in front of them, but will the equation make sense? That’s what you should keep in consideration.