What are Vending Machines?
Vending Machines are unmanned machines that sell goods such as food and beverages. Vending Machines provide convenience to many people living in urban areas, who might not have the time or energy to visit a nearby store for basic necessities.
Vending machines are functional and secure. It keeps all products fresh and ensures that each item picked by customers is of quality and safety standards. Maintenance costs for products are minimised, while shelf lives are maximised.
How do they work?
Typically, vending machines are filled with various products. These are sorted into product groups to allow users to have a general idea of what they want before purchasing the product. A small amount of money is inserted into the vending machine , which can be anything from 5cents to $5. The user then selects their desired product by pressing the needed buttons. Once the transaction is complete, the user receives their product.
In this arising new era of technology, consoles are equipped with different payment systems, which allows us to use different methods to pay, such as credit card or mobile payment readers. It offers a convenient and time-efficient solution for the customers when they are in a rush.
The Vending Machine Business
The industry continues to grow as it becomes an increasingly popular choice for most businesses. With the convenience it brings, consumers love vending machines because they provide products at an accessible price point. Vendors benefit as well, since this type of business requires little manpower.
Sales generated by the vending machine industry are expected to exceed $66 billion in 2020, up from $48 billion in 2015 (Statista). This increase is due to the growing demand for convenience and the increased global population. As more people migrate to cities, vending machine services become crucial as they provide a quick and reliable source of food and drink.
Vending machine business requires a low initial capital. In comparison to a retail store, vending machine business does not require much space and labor costs are minimal. Many companies are turning to this unmanned retail solution as they no more need to care about expensive space rental fees for the usual brick and mortar shop.
The global vending machine market has been growing at a CAGR of 4% from 2012 to 2017
And it is forecast to grow at a CAGR of 4.6% from 2017 to 2023. The growth in the global vending machine market is primarily due to an increase in consumer spending, rising demand for convenience, growing use of vending machines at workplaces, and increasing focus on cost-efficiency.
Asia-Pacific has the highest CAGR during the forecast period (2017 to 2023) in terms of value, mainly due to an increase in consumer spending, growing use of vending machines at workplaces, and increasing focus on cost-efficiency.
Vending Machines in Singapore - Industry Overview
The vending machine industry was valued at SGD 690 million in 2015, according to a report by Euromonitor International. Compound annual growth rate of 10% is expected over the next 5 years. Initially, this industry was dominated by snack and beverage vending machines; however, technology has evolved at a rapid pace. Currently, the majority of revenue is contributed by IT and Office Supplies Vending Machines (25%) and Snack and Beverages (23%), with the remainder shared between General Merchandise (21%) and Perishables (21%).
Organic growth in Singapore's vending machine industry is expected to come from the proliferation of technology for office products and IT hardware. Additionally, healthy vending machines are in high demand; this trend will present new market opportunities for many health-conscious consumers.
Vending machine penetration in Singapore is low. However, vending machines are being used increasingly by urbanites as a source of convenience. Vending machine companies are eager to tap into this market and offer services that allow consumers to purchase their favourite snacks on the go, whether it's coffee or chips.
Industry experts believe that vending machines play a crucial role in Singapore's retail landscape. Vendors are also exploring the option of unmanned stores, where customers can pick up their orders without any assistance from staff.
For example, Redmart has recently launched an unmanned store at NUS , where students can collect groceries ordered online using vending machine. Customers are allowed to purchase items over the phone, via their website or through an app.
Singapore As The Third Largest Global Vending Machine Market
Developed countries such as the USA, Japan and Singapore lead the way in terms of vending machine market size.
Singapore is the third largest global vending machine market , accounting for 5% of total revenues generated worldwide (Technavio). This is an impressive feat for a relatively young nation that only became independent in 1965 . The popularity of vending machines in Singapore has grown exponentially, reaching a number of over 15,000 vending machines nationwide.
The vending machine market in Singapore is dominated by two local companies: SRJ and G4S. They hold 87% of sales in terms of revenue, followed by Royal Vending and VendCafe (Officeworks). These figures are expected to grow as established vendors continue to expand their operations in the country.
Why is the market for vending machine so big in Singapore?
The vending machine market in Singapore is growing at a rapid pace because of several reasons . First, there is a high demand for convenience in the country. More and more citizens have been working long hours, but they don't want to wait until they get home before having a meal or snack. Having to stop by a nearby grocery store every time they want their favourite snacks is time-consuming and less than efficient. Vending machines allow people to quickly purchase the food they like with ease.
Secondly, vending machines offer a wider range of products as compared to brick and mortar stores. Consumers can shop for fit items if they so desire instead of sticking to conventional choices such as beverages or chips .
Thirdly, vending machines are an affordable way to introduce new products into the market. Since they receive limited footfall (they are situated in key areas), vendors can promote their latest offerings without investing too much on marketing . This is especially helpful for small and medium-sized enterprises that want to gain brand recognition among the public.
Additionally, vending machines have been installed at the workplace so that employees can have snacks and coffee on demand. While it is no secret that vending machine companies have been trying to expand their presence in Singapore , this increase in sales also reflects a changing mindset of local consumers who want convenience and efficiency when it comes to food purchases.
Vending machines can be found everywhere, from schools, to offices, to hospitals
Due to the convenience it offers, companies are banking on this business model to improve their overall bottom line. In Singapore, vending machine services range from snack vending machines to pastry dispensers. Vending machines for coffee and tea are also a common sight in shopping malls and other retail areas where people can get a quick caffeine boost while they shop. In schools, vending machines are a great way to increase revenue as students can easily purchase items during break times.
The increasing popularity of vending machines has seen it become a common feature in the landscape of convenience stores. Vending machines are not only found inside shops but also outside near busy areas including MRT stations, bus stops and parks. These spaces are prime locations for pedestrians looking to grab a quick drink or snack on the go.
Benefits of vending machine for vendors and retailers
Understanding the needs and wants of customers has become a key focus for vendors who are transforming their business models to remain relevant in this digital age. For example, VendCafe has introduced a Coffee-on-Call service that allows people to have fresh coffee delivered to them by a server at a café via an app. This app-based service also allows customers to save their favourite orders so that they only need to click a button when they are in desperate need of caffeine.
Vending machine retailing is an innovative system that helps vendors take advantage of lucrative opportunities even if their store is small or located in inconvenient locations. With vending machines, retailers can reach more people as it is more accessible and convenient. Vendors can also keep their kiosk fully stocked at all times, resulting in a loyal customer base since people no longer have to place an order, wait for the product to be delivered, and pay before they can enjoy a cup of coffee or oatmeal.
Vending machine services have proven to be a reliable source of income and a thriving business for many retailers. As it continues to grow, vendors are looking into ways they can improve their business operations so as not to miss out on the opportunities emerging from this market. With one machine, even small vendors can enjoy high market demand while not giving a care about rental costs; whether it be for office rental or startup cost, just simply put the machine in public or commercial spaces.
Despite the growth in revenue generated by vending machines, retailers should not forget that it is still an emerging industry compared to other conventional brick-and-mortar retail outlets. This is why it is important for vending machine retailers to have a clear understanding of the needs and wants of their customers, as well as what kind of products they are looking to purchase.
Benefits of vending machines for customers
On the other hand, vending machine retailing helps customers save time since they do not have to leave their homes to grab a quick snack. This also cuts down on additional costs if people are making unnecessary trips just to buy something small like a bottle of water, for example.
Apart from that, vending machines offer customers a wide range of products to choose from, giving them the convenience of picking up something different without having to go out of their way.
For most stores that sell beverages, they only accept cash so this means you wouldn't be able to buy cold drinks if you forgot your wallet at home. Vending machines, on the other hand, do not have this restriction. All you need to do is put in your money (coins or notes) and press a button. It could not get any simpler than that!
There are 2,000+ types of vending machines in Singapore
Typically, vending machines are of two types: hot and cold beverage vending machines. According to statistics, the retail sale for each of these types accounts for 50% of total sales . The remaining 50% is shared between food and other unique vending machines types such as cigarette vending machines, pizza vending machine, fruit juice drinks machines, or even mask vending machines.
Coffee and tea continue to be the top selling items, accounting for 25% of total sales (Statista). This is followed by bottled water and carbonated drinks such as soft drink and soda. Other common items found in vending machines include:
- Ready to eat meals such as instant noodles
- Canned products
- Instant breakfast products
- Confectioneries such as candy and snacks
- Tobacco products like cigarettes and chewing gum
Unique types of Vending Machines Nowadays
With the technological advancement of vending machine industry, unique vending machines have been introduced. In Singapore, the sophisticated vending machines can provide TV viewing for kids, hot food dishes, hot coffee, ice cream, masks, as well as make-up products. Currently, they are only available in certain areas but they will soon be more accessible once they become popular.
Technology is also being used to make vending machine services more accessible. In the near future, vending machines will have features such as product recognition and barcodes scanners so that customers who have special dietary requirements can easily purchase a specific product. As convenient as it is now, customers only have to choose their preferred drink or food item with a push of a button and not bother with cash at all!
Other uses of vending machine
With the help of technology nowadays, companies have been very creative in finding new innovations for the vending business. For instance, a Singapore startup known as Infinium Robotics is using the technology to provide automated security surveillance services . The company's CEO claims that its product can deter crimes and vandalism in public places where CCTV cameras might not be able to reach.
In addition, a University of Cambridge study has found that vending machines can be used to buy and sell Bitcoins . The new technology enables users to transact instantly without the need for an account or registration of any kind. Because of this, it is becoming popular with people looking to trade in cryptocurrencies.
Other than that, there are lots of smart vending machines nowadays that are used for commercial spaces considering the fact that they are often put in commercial or public areas. Needless to say, the uses for vending machines are endless.
What are some common misconceptions about the vending machine industry?
One of the common misconceptions about vending machines is that it is not a "real" or established business. However, in reality, this industry has been around for many years and continues to grow with the surge in demand for convenience. In fact, according to Statista , it is estimated that there will be an annual sale increase of 2% in the vending machine industry so it is definitely a business worth taking into consideration.
Additionally, some people believe that this industry is only suitable for big companies but in fact anyone can set up their own operation no matter how small or large! It is also easy to get started since there are many components of the vending machine that you do not have to worry about buying – the only thing you need to provide is your product.
Furthermore, some people might think that vending machines are not suitable for certain types of businesses but this is absolutely untrue! As mentioned before, since most vending machines can hold a lot of products with different categories such as food and drinks, it makes it very convenient for most business owners when it comes to product display.
Lastly, people believe that the vending machine business is too expensive but in reality you can set up your own vending machine for as low as SGD 300, which is even cheaper than some of the cheapest car rental services in Singapore ! Moreover, this fee excludes the cost of products so you will not have to worry about paying for them.
Why should you invest in a company that manufactures or produces vending machine products
According to experts, the future of vending machines is bright with an anticipated annual growth rate of 4% over the next five years (Statista). This is expected to continue as more people look for quick and convenient sources of food and drink. It is possible that vending machines will be the only source of getting a coffee or cold drinks in some locations, such as on sidewalks, train stations and bus stops.
Vending machines play a major role in the provision of goods and services to urban residents. As demand for vending machine services continues to increase, there is room for growth and innovation. Currently, vendors are looking at Big Data and IoT (Internet of Things) solutions to revolutionize the way they operate their vending machines.
Future of Vending Machine Business in Singapore
According to Euromonitor International, Singapore's vending machine market is predicted to continue expanding at an annual 1.8% rate up to 2020, reaching $92 million by 2020 (Statista).
The installed base of vending machines in Singapore keeps growing with about 1,000+ new units being added each year (Technavio). At this steady rate, the number of vending machines could reach 20,000 by 2020 , resulting in an estimated vending machine market size of over $100 million (Technavio).
Technavio also reports that the vending machine market in Singapore is expected to grow at a CAGR of over 7% between 2016 and 2020 . This growth is attributed to several factors including changing demographics, changing lifestyles, convenience trends, increasing labor costs for employers and the growing demand for instant on-demand services.
How to start your own business in this industry
For people wanting to start their own vending machine services business in Singapore, the following are some simple steps to take:
- Identify your target customer base.
- Pick a location that is accessible to many customers. Take note of its features such as floor space and footfall .
- Design your vending machines around what you want to sell.
- Ensure that your location is in a highly frequented area.
- Ensure machine remains well stocked of your products and that your vending machines are maintained and serviced regularly.
- Hire professional staff for a smooth running of your business operations. It is also important to be well-branded so as to attract customers with a positive image of the company.
You can start with only one machine at first, then slowly progress to operate multiple machines. Vending machines placing also plays a major role in your success, try to find a reasonably secure location that goes along with a high market demand for the products you are selling. Rest assured, your vending profits will increase the money flow of your company.