Vending machines as a business – reviews from aspiring entrepreneurs

Advantages of a vending business

1. There is no need to maintain a large staff. You will only need a person servicing the machines (also an engineer), a driver delivering consignments, and an accountant. Although this recruitment of employees is not mandatory. If desired and possible, you yourself can perform one or more of these duties. This way you can save on wages and your business will not depend on the human factor.
2. The risk of incompetent customer service is eliminated. There are no sellers in this business, because the machine itself is a seller. In the trading business, businessmen often struggle with theft of sellers, their unprofessional treatment of clients, impoliteness and unfriendliness. And for successful trading this is all very important. In addition, the seller may get sick, want to take a vacation, or quit without warning. An automatic machine will never give you such problems.
3. Small shopping area. To install one machine, you will need a retail space with an average size of 1-1.5 square meters. There are also non-standard vending machines that take a little more, however, they are less common, and you are unlikely to encounter them at first. Accordingly, the cost of renting such a small area will be low.
4. The machine operates around the clock, on weekends and holidays. Of course, now many stores also work around the clock and on any day, however, sellers charge additional payment for this. Also, the machine will never make a mistake with change, and will not accept counterfeit or torn bills. But you cannot be 100% sure that a live seller will not do this. Here again the human factor begins to intervene - the seller may be tired or inattentive, and simply not notice the “set-up”.
5. There is no need to organize warehouse and production facilities. You can simply store all business consumables at home or in any free space in drawers or boxes.
6. No need to spend money on an advertising campaign. You can allocate a minimum amount to advertise your business, however, most often vending machines do not need advertising. They advertise themselves. You just install them in the right places and they start working.
7. There is no need to purchase and register cash registers . The machine keeps financial records using the payment system installed in it.
8. The relative novelty of vending in the CIS countries. In America, Europe, and Asian countries, vending machines are much more common than here. Asians actually see them at almost every step, and for them such machines are quite commonplace. In our country, this business has not yet achieved such development. For many people, vending machines are still some kind of interesting curiosity, especially if they do not sell coffee or chewing gum, but something more original. Children are also interested in buying something from the machine, inserting a coin on their own and picking up a candy or toy in a special compartment. Even if 5 meters away there is a kiosk with exactly the same product, the child will ask the parent to buy it from the machine, because the process itself is interesting.
9. Short payback periods and low start-up capital. As practice shows, the average payback period for a vending business is 5-10 months, depending on the type of product/service and the number of outlets. Compared to many other types of business, these are very good indicators. The start-up costs of starting a business are also encouraging - if you start with a small number of machines, you can easily get by with no more than four to five thousand dollars, which is significantly lower than in many other types of business.

“In the wholesale direction, our goal is to become a leader in Russia”

— You supply machines to the store for free. Are there other forms of work?

- Yes. It happens that the owner of the machine rents space in the store.

— What percentage does the store get from using the machine?

— If we work on the terms of delivery of fillers, the store makes a markup of 25 to 30 percent on our products. This is a standard store markup for other goods. Under rental conditions, stores receive income from monthly rent. And everyone’s appetites are different. It happens that in a store with minimal traffic they ask for an inflated fee, for example, 3-4 thousand rubles. Therefore, we give recommendations to our partners on how to optimize work, increase profits and minimize costs.

— Where is it more efficient to place machines - in a large shopping center or a small store?

— A small store can be effective. If the machines are on delivery terms, the store itself is interested in sales. In a medium-sized supermarket, turnover may be higher, but there you have to pay an arena. And in a large shopping center, 16 machines are installed at once, each of which brings in revenue of 2-3 thousand rubles per month. We work in both small shops and large shopping centers.

— Are you the market leader in Tatarstan?

— In the wholesale direction, our goal is to become a leader in Russia. Now our share is 20-25 percent.

The wholesale business brings in more revenue, and we have a good margin component from retail. We are a large wholesale supplier

— What is the average annual turnover of the company?

— Every year we grow approximately twice.

— What is the share of revenue from the wholesale business in the total volume?

— The wholesale direction brings in more revenue, and we have a good margin component from retail. We are a large wholesale supplier. In Russia there are only four companies conducting such business. Three of them are located in Moscow, one is in Krasnodar. We maintain good relations with all these companies, and sometimes we supply them with goods. The main thing is that we always find a client who will order only from us.

Disadvantages of the vending business

1. Possibility of breakdown of the vending machine. Like any equipment, vending machines can break. In this case, you lose in several ways: 1) you lose part of the profit that you could have received during the repair period; 2) spend money on updating broken machine parts. And if the machine is unlucky enough to break down beyond repair, then there is nothing left to do but buy a new one - and this also entails additional costs.
2. Vandalism. Especially if your device is located just on the street. Passers-by will come across different things, and someone will probably want to break something off the machine gun or paint it with paints. Alas, no one is immune from this. To somehow protect yourself from vandals, place your machines indoors - shopping centers, educational institutions, etc. This way the likelihood of damage to the machine will be much lower.
3. Problems with water supply and electricity. All machines require connection to a source of electricity, and some to a water supply. For example, coffee and tea machines. Accordingly, if there are interruptions in the supply of electricity or water beyond your control, the operation of the machine will freeze for a while, and you will lose part of the profit.
4. Frequent checks from government services. However, this disadvantage applies not only to the vending business, but also to many others. But we cannot fail to mention it here, since most vending business owners consider this a significant drawback. The machines themselves, as well as the goods they sell, will be carefully and quite often checked by the sanitary-epidemiological service, consumer supervision and other inspection organizations.
5. Highly dependent on location. Unfortunately, many businessmen in this business face this problem. Choosing a good location is very important for the further success of the business. The machine must be placed where there is a large crowd of people. However, it is better to stop your choice in those places where people are more static than dynamic. That is, educational institutions, shopping and entertainment complexes, hypermarkets, gas stations are perfect. But metro stations are not the best choice. Although there are a lot of people there, most of them are in a hurry somewhere and have no time for shopping. The only exceptions are mobile account replenishment machines. In general, you are unlikely to be able to predict 100% whether a machine will be in demand in a particular location, so be prepared for the fact that the equipment will have to be moved to a more promising location.
6. The machine requires some care . You or your employee should visit all vending machines from time to time and clean them. It will be unpleasant to approach a dirty and sloppy machine, let alone touch it. All procedures for cleaning the machine and maintaining it in proper condition require time and money.

“If people ate all the most beautiful things, then we would eat flowers”

— Why will the client order only from you?

—

Because we are focused on selling businesses, not just machines or fillers. We offer clients ready-made business solutions that will provide them with a stable income. We teach them how to sell products correctly. We think through the sales strategy and product concept down to the smallest detail so that the buyer makes purchases from our machines again and again.

We are revolutionizing the vending industry. We don’t just sell goods, we find a retail outlet, negotiate a lease, find a tenant and sell him a ready-made business.

At the end of September —

At the beginning of October, we are planning to hold a training seminar in Kazan, which will be attended by entrepreneurs from all over Russia and the CIS countries. This is the most correct form of presenting material.

— How much does your ready-made business cost?

- Let's do the math using our new development as an example. This is a “Locomotive” display case, which can accommodate 16 machines. You could say we invented the steam locomotive. With light illumination, machines and fillers, this kit costs approximately 270 thousand rubles.

Having once bought chewing gum that tastes bitter, or an uninteresting toy, the child will not come to this machine again. Children are
small, but not stupid. This is important to remember

— What mistakes do people most often make when starting this business?

— The business is easily accessible, and anyone can start it. Therefore, there are many amateurs present. The main mistake that 70 percent of beginners make —

sale of cheap fillers at high prices.
Chinese chewing gum, for example, costs 20 percent less than ours. But, having tried it once, you won’t want to buy it a second time. Chinese products are bright. But it is a misconception to think that children only love everything bright. I have a saying that I came up with myself -
“If people ate the most beautiful things, then we would eat flowers.” Many buyers associate chewing gum or candies that are too bright with chemicals.

It happens that a person installs machines, fills them with goods, and in the first month his sales go through the roof, so he can set a markup of 500 percent. People saw a new product and decided to try it. The entrepreneur begins to imagine himself as Bill Gates and thinks that everyone is doing the wrong thing, but he has found a “gold mine”. And, having paid for three machines in the first month, he buys another five machines. And fills them with cheap consumer goods. But after 2-3 months he sees that there are no sales. Having once bought chewing gum that tastes bitter, or an uninteresting toy, the child will not come to this machine again. Children —

small, but not stupid. This is important to remember.

— What is the difference between expensive and cheap fillers?

- Very small. Expensive “chewing gum” costs 2.2 rubles, and is sold for 10 rubles (the profit from the sale of one “chewing gum” is 7.8 rubles). The cheap one costs 1.34 rubles and is also sold for 10 rubles, that is, the margin is 8.66 rubles. But expensive “chewing gum” sells much better because it tastes better and children like it. Therefore, the difference in margin is more than covered. So don't go after cheap prices. It is better to earn 200 rubles than not to earn 300 rubles.

Coffee machine business: reviews

Having finished listing the nuances of making money, I would like to supplement them with several interesting reviews (both positive and negative) from entrepreneurs who were engaged in this type of business:

“I’ve been working with coffee machines for quite a long time and have come to the appropriate conclusion - a large crowd of people does not always guarantee profit (for example, a supermarket or market does not always generate income). You need to look at how advisable it is to install the machine in a particular place. According to my observations, it is easy to make money by placing devices in offices where people are not averse to smoking a cigarette and drinking a cup of coffee, and they do this quite often, or in places where taxi drivers gather - they, in general, are regular customers due to the specifics your profession."

“From my own experience. The game will only be worth the candle if you have enough resources to install a sufficient number of machines. Income from 2-3 pieces can be considered a good increase in salary rather than profit from the business. It’s like you’re running around with these cars, filling them up, but you only have enough money for good beer.”

“About five years ago I tried to install a coffee machine. I found a good passage place in a pavilion at the market. So, the payment for renting a place for this very machine took away almost all the money earned. There were attempts to move the device to a more profitable location, but this turned out to be not such an easy task for a simple private owner - everything was filled with large vending companies. In general, I got tired of working for practically nothing and had to sell the equipment.”

“Business on coffee machines is an excellent start for aspiring entrepreneurs who do not have a large budget. Compared to other types of vending machines, you don’t need to pay as much attention to them. The same milk vending machines require almost daily supplies of refills, so they are profitable only if there is a network of five or more units. And you can put one “coffee pot” - it will bring in, albeit small, income.”

“For business security, it was necessary to be “friends” with someone

— What do you buy abroad besides machine guns?

—

Bouncing balls. We wanted to launch the production of bouncy balls in Russia. But we had to postpone this project until better times. Participated twice in the republican program “Leasing Grant”. We received great verbal support from everyone. But according to the results of the competition, we did not have enough points to use the program. Therefore, we decided to postpone the project until the time when we can build the plant at our own expense.

— Are you currently developing only with your own funds or do you take out loans?

— We use loans. Until 2012, no loans were taken out. It was difficult to get loans back then. Now, it seems to me, it has become easier to do business. In 2001, after the “wild 90s”, there was not even a thought of taking out a loan for business. Usually they borrowed money, mortgaging everything they had. For business security, it was necessary to be “friends” with someone. Now you can start any business, and there are loans for this. They didn’t give you a loan, you can go to the bank and get a credit card with a grace period.

— How many people are currently working in your company?

— Now it’s 19. A year ago it was eight. Before this, my wife and I sat opposite each other at home and took orders without raising our heads from the computer. And two people worked in the warehouse and two more “in the fields”, driving around to “points”. And eight years ago, I myself concluded contracts and delivered goods to stores.

- Why did you name yours?

“Only a rhinoceros always goes to the goal, overcoming any obstacles, no matter how difficult the road is.”

Evgenia Gazizova, photo by Maxim Platonov

Reference

The group
was created in 2001 by Ruslan Ayupov. The company sells vending equipment and fillers for it. It has its own network of 1.5 thousand mechanical vending machines in Tatarstan, Bashkortostan and Udmurtia.

Ruslan Ayupov

born in Kazan in 1980.
In 2001 he graduated from the Institute of Economics, Management and Law with a degree in law, specialization in civil law. In 2001 he created a vending company, and since 2013 he has been
the CEO of the group.
BusinessRetail

Where to install

Example of a coffee machine

Review No. 2. It is imperative to ensure that no one damages the machine and, most importantly, that the coffee and water in it do not run out as such “jokes” can end badly for you

The most popular places for installation will be various kinds of shopping centers with a large flow of people; also try to install coffee machines in educational institutions and at bus stops. Regarding rent, it is worth mentioning that at first the profit will not be very large, therefore, try to include such an expense item in your business plan. Do not forget also about installation in hospitals and car dealerships. Try to choose the installation location based on your life experience, for example, if in an educational institution there are short breaks between classes, then it is unlikely that anyone will have time to drink coffee. At the same time, you can try to additionally install a snack machine, this will only work to your advantage. If you have to transport the machine to the installation site, you can contact https://rins.com.ua/ this company will deliver you to the required location quite quickly and efficiently. Also, you will need supplies

Vending - what is it?

At its core, vending is a sale that involves a street method of distributing goods.

Vending today is carried out using special devices (automated systems) that can work around the clock. Such mobile points are becoming increasingly widespread in Russia also due to the fact that the range of goods offered is constantly increasing.

You may be interested in: MLM business - what is it and what are its advantages.

Sales of goods using vending machines

1.1. Advantages of vending

This method of trading has a number of undeniable advantages:

1. Service time. It is spent sparingly, since the buyer knows in advance what he wants to buy.
2. Ease of maintenance. The entire procedure developed by the creator is standard and ensures ease of purchase.
3. Stability of quality. By regularly paying for a product, the buyer gains confidence in its quality and basic properties. At the same time, service always remains at the same level to which the habit has been developed.
4. Staff. The operation of such equipment requires only one master, who will supplement it with the necessary products and collect money. There is no particular need for other labor force.
5. Renting a place. Due to its dimensions, such a retail outlet can easily be located on an area of ​​1-2 square meter(s) .
6. Additional income. Due to its widespread general appearance, the device allows you to place advertising attributes on its area.
7. Work without interruption. According to the inventors, the operation of the mechanism does not require interruptions or downtime. It is ready to work 24 hours a day .

1.2. Organization of vending business

The organization of such a business is considered profitable if it is gradually possible to establish a network of retail outlets. Working in this direction, compared to conventional sales of goods, allows you to avoid a lot of costs and start your own business with minimal investment.

Beginners who want to try their hand must first assess the real prospects. To do this, it is important to understand how relevant such a mobile point will be in the exact place that you determine:

1. evaluate the very demand for the product and whether there is a demand for it;
2. study the trading infrastructure;
3. determine the presence of competitors;
4. analyze the level of development of related businesses;
5. Find out information about the operation of similar points in your area, the profitability of projects and the amount of possible costs.

1.3. Key points when starting a vending business

When starting your own business and deciding to start a vending business, you need to take into account that there are certain nuances that are important to pay attention to:

1. First, determine the type of products you want to work with, and, after analyzing possible locations for sales markets, conclude whether such trade will be relevant, taking into account customer demand.

2. Next, you need to develop a detailed business plan with calculations that will take into account all the necessary costs, preliminary purchases and a certain amount for the “financial cushion” that may be required in case of unforeseen circumstances.

In the first stages of work, you should rely only on your own strength and deal directly with all the functionality.

3. Only at the moment when the system is adjusted and all the missing elements are adjusted can you hire a person who will become your performer.

Profit breakdown from vending machines

Let's consider the most popular machine - the coffee machine. The number of coffee servings per day can range from 40 to 130. In the minimum plan, monthly revenue will be 12,000.00 rubles. (at a price of 10.00 rubles – 1 serving). Considering the cost of coffee, you will need to pay 3,600.00 rubles per month. to buy coffee. We add overhead costs to this figure and get 6,100.00 rubles. As a result, according to these data, the net profit is 5,900.00 rubles. These calculations are superficial, but show an approximate financial breakdown. According to statistics, a vending machine generates a profit of 3,000.00 rubles per day.

The average cost of a vending machine in Russia is 200,000-250,000 rubles. The payback period for the equipment should be within 1-2 years. If during this period the revenue was significantly more than the cost of the machine, you can continue to develop your vending machine business. There are often offers to purchase a vending machine at a price of up to 100,000.00 rubles. You should not trust this, since the production of a high-quality machine requires a lot of money and expensive technical equipment. To develop your business, you should not skimp on equipment reliability.

Let's sum it up

Although the coffee machine business cannot become a source of super-profits, an average income of 25% of revenue is a good indicator. A new machine pays for itself in about a year, and a used one in 6 months. Equipment maintenance does not require special knowledge, large financial costs and a lot of free time. If we talk about competition, it is not yet so strong: in the same European countries there is one vending machine per 100 people, but in our country almost two thousand are served by one machine. Therefore, there is still room for improvement.

On the other hand, you must always control the quality of your products, monitor your employees and be prepared for numerous inspections by certain government agencies (there is, in principle, nothing to worry about - these problems are typical for any food-related business). Sometimes all this is compounded by the inability to reach a mutually beneficial agreement with landlords, who often equate coffee machines with gaming machines in terms of profitability and charge too high prices for placing the machines.

That's all for me. If you have experience making money from coffee machines, tell us about it in the comments. Any criticism and additions to the article are also welcome.

Valuation of this type of business

Success in vending business depends on various factors, that is, on how correctly decisions are made on a number of important issues.

Among them, the most significant are:

• choice of service or product provided;
• choosing the location where the devices will be located;
• number of devices;
• quality of devices;
• quality of services or products provided;
• price factor of the goods and products offered;