There is no doubt that Coca Cola Amatil with it’s strength in the relatively small and uncompetitive Australian market, determines pricing of soft drinks and all the other suppliers follow their lead. Most operators in the Vending Industry know how Coca Cola controls the distribution and pricing of their products and the difficulty in obtaining good pricing.

This is not surprising as it is the way things are around the world. The strongest dominate the market and determine pricing. Consider companies like Microsoft, Woolworths, Coles, Harvey Norman, the Fuel companies, and how they determine pricing in the Aussie market. What about the high prices Aussie consumers pay for CD’s and DVD’s?

However, the issue with parallel imports (same product imported from another country) is that the products are not the same as those manufactured in Australia. Take Coca Cola for example. I have tasted some of the imported Coca Cola from Asia and found that it does not taste the same as the Aussie product. There is no way I could sell them in our vending machines due to the negative feedback we will receive even if the pricing was lower. I have yet to taste the USA version which I’m sure will taste better.

Such is life.

The machine looks great and is suitable for Corporate and most workplace environments. The Stainless Steel plate is very clean and appealing.

They are robust machines which should give many years of reliable service. They have a very simple programming menu which make them easy to operate and service, reducing re-stocking times.

We have been running these machines for over a while and find them very reliable. The slider coin feeding system works well at reducing jams and faulty coins been inserted into the machine.

They come in 3 sizes ( VM3, VM4 and VM5) which makes choosing the right size to match customer needs, very easy.

They have the electronics to enable Note acceptors to be installed which makes it very convenient for customers who may not have any coins with them.

View the brochure for full details and specifications.

The question is, what kind of customers do you have? Many large corporations routinely look at their businesses, teams and customers, and put processes in place to get rid of the low performers. Should your Vending business deserve less? I would say that it does not.

Invest the time to list your customers and identify those A grade as well as those “D” grade customers? It will not only give you great insight into your business but will also help you tailor your marketing efforts.

Different Vending businesses will have different criteria to grade their customer base. Let me suggest a few to help you get started:
• Average Weekly Sales
• Customers you and your team enjoy working with
• Customers that are a good source of referrals
• Customers that understand that once in a while, something may not go right. When that happens, and you own up to it, the customer does not go on a rampage
• If you could start your business over again, you would want them to be a part of it.

Chances are, there are other things that you will add to the list. The trick is to get started on assigning grades to your customers.

Once you have identified your “A” and “B” customers, that is where you should spend your time. Give them great service and try to find out as much as possible so that you can get more of them.

Let your “C” and “D” clients work with someone else. That will free up your time for more “A’s” and “B’s” as well as help you sleep better at night (an added bonus).

2. Does your vending company have workers compensation? If not you could be held liable for any injuries that might occur to their staff while they are on your premises.

3. Do you know how long your provider has been in the industry. If only for a short period, then should your machine malfunction they may not have the expertise to get it running again quickly.

If the answer is no to the above questions you could have future problems. Ask these questions today.

4. What is the condition of the vending equipment coming into your company? Is it new, refurbished or old?

5. Are the vending machines equipped with the new “Sure Vend Delivery System” that guarantees delivery of your product or your money back? There is less likelyhood of people losing their money in machines that have this new technology

6. Are your prices guaranteed? If yes, do you know for how long? If not, then you could be getting teaser rates for them just to get in the door.

7. Does your contract have an out clause for bad service? Make sure they explain this to you or you could be stuck with bad service for a long period of time.

8. Does your contract have automatic renewal? If so be careful or you will find you are locked into a contract for another 1-3 years.

9. Can you choose what products you want in the vending machines? If your vending company has a plan-a-gram that they have to follow then they are not flexible enough to put in what you want.

10. Can your vending company deliver after hours or on weekends if need be?

Running a Vending business in Sydney is expensive. For a vending company to offer cheap prices they might have to cut corners like not paying liability insurance or placing old equipment just to break even. Cutting corners can lead to frustrating problems for you down the road.

Make sure you do your homework before choosing a vending company. Just because you negotiate low prices doesn’t mean you have a great deal.

If you have limited capital but you want to start a business, you can purchase a used vending machine. When you are going to purchase a used vending machine consider the following:

Drink only machines are easier to start with and have the following benefits.

A. The machines are relatively easy to operate. They come in different sizes and you can choose one that suits your needs.
B. Refilling the machine is simple and quick.
C. The products have a long shelf life, some over 12 months. This saves on spoilage as you have enough time to sell the items before they expire.

You can find used vending machines in classified ads, the Trading Post, Ebay etc but, be careful. There are many individuals and companies selling their old vending machines. You do not want to end up with someone else’s problem machine, especially if you are starting out new.

Your customers will not be happy if you install a machine that is constantly breaking down. You may even lose the site if the machine does not perform to their expectations and, in vending everything depends on the LOCATION. If you have a good location you should do what it takes to keep it.

You should look for machines that are in reasonable condition and function well. Look for companies that provide a warranty on their second hand units and buy from those that have a good reputation.

The reputable companies will also provide you phone support when starting out, and this can save you a lot of money and down time.

You should also consider how you will maintain the used vending machine you purchase and the availability of spare parts. You do not want to buy a machine which seems cheap and then find out later that parts are not available. This can result in the machine being worthless.

When first starting out, it is best to use the local vending machine distributor for repairs. If you wish to save money on repairs down the track, be present when the technician is repairing the machine and observe what he does. Should you have the same problem again you should be able to fix it and save on a service call.

Find out what sort of products you want in the machine. All drink machines can vend 375ml cans but these days people are also after products like Energy V, Bottled water, Juice etc. This is great, as the profit margin on these items are much higher than normal 375ml cans. Not all drink machines can vend these types of products reliably.

The machines that can vend different sized products might cost a few hundred dollars extra, but you will quickly recoup this amount with the sale of the premium products. These machines will also be multi priced which means that premium items can be set at different prices.

When starting out be very careful about buying machines already located. A lot of sellers will exaggerate sales being achieved and you will probably end up paying more than you should. After you have run your own machines for a while you will know what is realistic at a given site. This is when you should consider buying other peoples runs.

Snack and Combination machines. A lot of people now want combination machines as it saves on space and energy and they can sell drinks, Chocolates and Chips etc. If you want the business you will have no option but to provide what the customer wants. As well, sales from a combo machine is usually higher than from a drink only machine. It is the way of the future. This makes them more attractive to buy and run.

Be aware of some of these issues when first starting out.

A. Chips and some Snacks have a shorter shelf life than Chocolates and Soft drinks. Some only have a shelf life of 4-6 weeks. You will need to manage your stock carefully if you want to minimise spoilage from products expiring. Buy small quantities initially.

B. Snack and Combo machines are a bit more involved when it comes to re-stocking. Firstly it will take a little longer to fill than a drink only machine as you will need to check expiry dates. As well, snacks come in different sizes and will need to be stacked in the machine properly if you want them to vend reliably.

C. They are a compromise solution best suited to small to medium locations. What normally happens is that a few popular items (like drinks) will sell out first while the slower moving items will hardly be touched. This means that you will have to visit the site to fill the faster moving items. This may not be important when you are first starting out but, as you get more and more machines time will become more valuable to you.

You can double up on the quicker moving items so as to balance out sales which will result in more money in the box per visit. This might involve buying parts to make the change.

If you have a large location then individual Drink and Snack machines are the way to go. You can choose the size of the machines based on sales, so that you are achieving the best return on your investment.

Keeping the above points in mind should help you not make any fundamental mistakes.

The easiest way to getting into the vending business is to buy machines already sited. Many people have built vending businesses and because of illness, lack of time, the amount of work involved or other unforeseen setbacks have caused them to sell. The main advantage of buying an existing vending run is that the machines are already sited and making money.

The Firstthing to consider when buying an existing business is the equipment.

Consider the age of the vending machines and if it will be functional in another five years. Do the machines have coin mechanisms and give change? If they do not, stay away as your sales will be reduced and it can be costly to change the product prices on the machines. Note Readers are today’s industry standard and will increase your sales so if the machines have them, all the better. You need to make sure the equipment is up to standard. At the very least it should have a change giving mechanism. To update an entire route with change giving coin mechanisms and note acceptors will cost a fortune.

Make sure the equipment has been adequately maintained and that each location is pleased with the current equipment provided. Also, verify if there are any existing agreements made to any of the locations by the seller that would need to be honoured. These are additional expenses that you will need to anticipate once you gain ownership yourself.

Determine if parts are readily available and who will do the servicing when something malfunctions. There a few machines on the market for which parts are very hard to obtain. You do not want to have to wait weeks for parts to come from overseas. Your client will not wait this long. You will probably lose your client if a replacement machine cannot be obtained quickly.

The Second and possibly the most important thing to consider is where the machines are located. Location is what will make you money or send you out of business. You need to research the sales and expense history of the machines. This information will be provided by the seller. We advise you be very careful with the figures given. They will most likely be inflated. This is even more so if you are only buying one or a few machines. You will only really find out the sales when you start running the machines yourself. The assistance of your accountant will be valuable here. Verify each location’s sales, calculate the depreciation value of the equipment and suggest a fair purchasing offer.

I suggest you ask the seller to provide you training on a contingency basis for a period of 2-3 weeks, during which you can learn all aspects of the business and be introduced to your clients at each location. This will also give you the opportunity to confirm sales from the machines. It is important that you have the seller sign a non-competition agreement to protect the security of your locations. You do not want them to have your machines subsequently removed from the sites and they then put other machines in its place.

You can expect to pay a premium for the convenience of buying existing business. Depending on the machines involved, a large amount of capital up-front might be required. It could easily exceed $100,000 and more than a Million in some cases. Make sure you have a lawyer look everything over before closing the deal.

If you lack the large capital investment or are hesitant to commit yourself to the responsibilities buy fewer machines to start off with. You can always buy more later, once you know what you are doing. You can also independently find your own locations one at a time. There are some skills required here and is the subject of another topic I will cover later. You need to learn how to become confident in your ability to sell your services to a location on your own. It is the cheapest way to go and once you can do this by yourself, the sky is the limit (at least until your funds run out

The above advice will assist you not getting burnt when first getting into the vending industry. Vending can be very profitable but like most businesses it takes diligence and effort to be successful. Be wary when people say that all you have to do is drive to your machines and collect the money. There is much more to vending than that.

Good luck.

Any business may consider using a vending machine to dispense their product. For example, a 24 Hour Automatic Car Wash business will find that placing their car cleaning products in a vending machine will significantly increase sales. Clients will even have access to products when the facility is unattended.
A Tourist Park can have Soft Drinks, Snacks, Ready to eat meals, Toiletry items etc made available in a Vending Machine on their premises. The machine will generate revenue for the owners even when they are not present.

Vending machines require little maintenance. If a business purchases a new machine it will typically come with a warranty. If a used machine is bought they can be reassured that spare parts are easily available and that it will be fixed promptly should the need arise.

Vending machines require minimal management so the business will not incur additional staffing expenses in order to keep the machine restocked.
Vending machines are convenient in that payment is made before a product is dispensed. This does away with creditors and the problems that go with them. As well, Vending machines generate money as soon as they are installed.

A business should consider how the installation of vending machine will enhance their Sales. For example, a Nursing Home that has a high volume of staff, residents and visitors may spend long hours in the facility. While there, they will appreciate having a soft drink, coffee or snack available should they require one.

After concluding their analysis a business owner can safely select the appropriate vending machine and be on their way to improving the overall profitability of their business.