Vending leisure products, from collectible toys to iPods, provides a new revenue stream at minimal cost. But what do you sell, and how do you start?
Jon Bruford investigates
Machines that vend leisure products can be a useful source of income, with financial risks for the site operator that can be kept very slight. For example, if a gym owner wanted to vend iPods to members they could look forward to a high potential return, with no danger of pilferage thanks to excellent machine security, and a product that’s on sale round the clock with no staffing requirement.
Retail and leisure outlets “are very hard pushed to part the customer from his pound,” says Jonathan Hilder, CEO of trade body the Automatic Vending Association. “If you have the customer on your premises, you have ‘passed Go’ – what you then want to do is part him from his money. The more opportunities you have within your location to do that, the better.”
But that is only one part of the challenge – of equal importance is finding the right products to vend in the first place. Hilder continues: “If you find the demographics of your bowling club or leisure centre has some kind of aspiration and you can put that into your vending, you have a greater share of their pound, which is the most important thing to venue owners at the moment. It’s about providing people with more options to spend their money, it’s picking the products that work for you.”
The delivery mechanism is also important, along with positioning. Christian del Malvo, of All Things Nice Vending, told Euroslot that his company’s aim is simple: “Find toys that, for a pound, give us 15 minutes of tranquillity.”
Aiming the right product at the right person at the right time is the key to successful vending, as del Malvo explains: “The major takers in a bowling alley are sweet machines, on the end of a bowling lane, where 20p gets you a handful of Minstrels. Toy machines are not very strong in a bowling alley, but sweet machines and arcade machines are.”
By contrast, “in a family pub environment, where you have adults and children, and adults want children to be entertained, your strongest product is a toy capsule machine or an interactive pinball machine [a small mechanical device, where the customer has to actually ‘play’ for the prize] where you win a ball. That’s what will make more money in a family pub than a sweet machine.”
Who does what?
The business models available to venues vary. When businesses first start vending, they generally outsource it: a supplier comes in, installs and stocks a machine, and the take is split. If the machine contains products – say, for example, the iPod – then it is only profit that is split. Approximately 40 percent of the machine’s take will be for the cost of goods, with the remaining 60 percent divided between supplier and venue.
But as del Malvo observes, these figures are not set in stone: “Some operators give less, some more, it depends how much money each one needs to make – and it is also tied to the quality of the machine. A brand-new, high-quality machine will mean the vending company can’t give you 40 percent. So the location operator has to think, if I try to squeeze the vendor in terms of profit percentage, will they supply me with higher- or lower-quality machines, or low-quality products to produce higher margins to pay for that increased percentage? It’s a very fine balancing act.”
As the business matures, management may consider buying in their own machines, but there are still other options to be explored. Says del Malvo: “As the business settles and they start making money, they buy their own machines. Generally, the next phase is they buy the cheaper machines and leave the more expensive machines outsourced. We’ve had sites lately looking to buy machines but not kiddie rides or crane grabs – they want the capsule machines. We’ve said to some customers they can have the machines for free, as long as they buy stock from us, and as long as we can operate the bigger machines on their site.”
So now you have a shiny new vending machine. What do you sell? Plush toys remain a strong seller across leisure vending, and collectible capsules are growing in popularity in the UK. But opt for more expensive items, and you might be headed for disaster if the footfall is not there, or if you’ve slightly misjudged your customers, explains the Automatic Vending Association’s Hilder: “With an average vending machine you might have £400-500 worth of stock, but if you fill it with iPods you’ll go into thousands of pounds. You have to be pretty sure that something will sell well, and you need a good footfall – and of course, you need the right kind of footfall.
“If you’re in a swimming pool, and you want to do hats, armbands and so on, there are suppliers who can do that for you and it makes sense to use them. If you decide to sell iPods and they then don’t move, you have a lot of items tied up in stock – you absolutely have to have the right items for your venue. Your business model is, what is it that my public want to buy?”
The rule of thumb, says Hilder, is simply to look at what sells on the high street. “If you imagine what sells well in high-street retail, that is what sells well in vending. You just have to keep an eye on what is selling at the moment. Fill a machine with Pokemon and it probably won’t move; fill it with today’s hot product and you will do very well. Use supermarkets as a barometer to see what’s selling, it’s market research on everyone’s doorstep.”
A big no-no
An often-overlooked hurdle to successful vending is: can a particular product actually be sold from a machine? Is it too bulky? Is the packaging a problem?
Jonathan Hilder, CEO of the Automatic Vending Association, told Euroslot of his experiences with Lego after a successful trial with the family favourite in vending machines in the UK.
“Lego did a fantastic job in a three-machine trial that did very well. When the next year’s range came out, however, the packaging was too big and we had to stop it. They hadn’t thought about the vending side, which was a small trial but could have been a new outlet. It simply wasn’t usable, though it still sold well at retail. You have to look at how things are packaged to see whether or not they can be vended.”
New ways to vend
Vending has moved far beyond the insert-coin-and-press-button-for-goods model. All Things Nice Vending, for example, has the Go-Goal interactive kinetic machine. Simply put, it vends a bouncy ball, but in reality it does a lot more – because to get the ball, customers have to interact with the vending machine by playing a game of football.
As a 50p coin is inserted into the machine, a 32mm bouncy ball is dispensed into the game table and the player has to try and score a goal using the two pinball buttons at each side of the machine. Once the player scores a goal the machine releases the ball. The game has no time limit, and the machine is purely mechanical with no electricity needed – an attraction to many site owners.
In similar vein, Luca – distributed in the UK by ATN Vending – combines pinball and vending in its Magic Circus machine, with six different game modes allowing it to comply with varying redemption regulations in multiple territories and also letting operators adjust the game on offer for adult or child customer demographics.
Branding is another way to differentiate vending machines. Tomy Gacha International (TGI), for example, is anticipating the summer season with vendable merchandise tying into the biggest movie blockbusters, such as Transformers 3. It will also introduce its first collection to support the most highly-anticipated CGI movie of the year, Cars 2, while girls are targeted with a new Disney Princess collection and Hello Kitty Erasers.
Technology can also help a vending unit stand out from the crowd. All Things Nice’s Wonder capsule station, meanwhile, is its best-selling machine, providing customers with capsule collectible toys. It uses a patented method to automatically self-adjust the vend size from 45mm to 70mm diameter, allowing it to supply mixed products of different dimensions.
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