a coin or a bill into it and get a product, commodity, or
service and it's called a vending machine. From one-stand
gumball machines and pay telephones to ATMs, slot machines,
and even turn-style tollbooths, if it takes your money and
can't reach out to shake your hand, it's vending! But what's
it really all about?
The bulk vendors of America sell everything that Americans
buy that costs anywhere from a penny to a dollar. Today
it's more than gum, candy, and toys. Nowadays you also have
phone cards, gift certificates, and movie passes. However,
the core remains the perennially dispensed pieces like gum
Perhaps what would serve us best would be not only talking
about the state of the industry today, but also discussing
If I knew then what I know now. Ten Things You Should
Know To Be A Successful Player.
Some Ways The Industry Has Changed and Continues To Evolve.
and Trends We Can Look Forward To.
those famous last words practically roll off the tongue
as though uttered a thousand times: "If I knew then what
I know now." Said here not with regret, but with clear and
cogent hindsight. The bulk vending industry has remained
relatively the same more than it has changed. Find an item,
find a place to set up your machine, and wait for the phone
to ring with a customer saying, "That candy machine you
dropped off yesterday is empty. Can you come back and refill
it?" CU-CHING! If only it was actually that easy.
These are not the days when there was a mindset that burley
gangsters were supposedly operating cash cows to feed their
criminal empires. This is a kinder and simpler industry
that asks a very simple question: "How do we get the coins
out of our customers' pockets and into our coin boxes?"
And then it asks, "How do we get them coming back for more?"
How is it that a machine invented in the late 1800s has
remained essentially unchanged for 100 years? It's the simplicity.
It's fun dropping a coin into a slot and getting a prize.
Change the commodity, change the shape, even change the
purpose, it makes no difference. Vending is fun, and it
always has been alive and well. But, if you're going to
be a player and commit yourself to an industry that is as
American as sneaking into movie theaters, then how about
10 tips that can save you some real jawbreakers?
1. Vending is not a get-rich-quick proposition. If it was
everyone with a portfolio of tech stocks would be diving
in and selling IPOs on two-inch Power Ranger toys. It's
a good living if you manage your business the right way,
but riches come to those with patience, courage, and foresight.
The small operator has less exposure and less opportunity
for the big windfall. Even if you have the best location
in town, with a single machine your chances of making a
fortune are unlikely. The more machines you have working
for you, the better penetration you will have. This may
be obvious, but so many small operators think that if they
can get a few strong locations, they can retire. You have
to remember that even if you do make it big, you're doing
it one nickel, one dime, and one quarter at a time. Yes,
you can have a huge operation like the infamous Roger Folz,
but it takes time. You have to trim and prune your route
like a gardener maintains a hedge. Get rid of the weak and
dying limbs, and nurture the healthy buds.
2. An operator with a single stand in a barbershop is just
as much an operator as someone with 10,000 machines in chain
stores. The trick, according to veteran large-scale operator
and past president of the National Bulk Vendors Association
(NBVA) Fred Simon, is: "Always have new product. Even if
it's old stuff, even if they've seen it before, if a customer
sees that your machines are always being refreshed with
new merchandise, your chances for success are exponentially
increased. But most operators sell the same stuff year in
and year out all year long. Their line is predictable. Sell
what the market wants and you'll make money. Sell what no
one wants and you'll go broke. That's not only in the vending
business, that's in any business!"
3. Don't always do what everyone else is doing. Look for
new opportunities in the marketplace. George Herman, owner
of The Toy Factory in Calabasas, Calif., says, "Always look
for new and innovative ways to keep your customers coming
back for more."
Find new ways to do old things. The machines you're operating
may be 30-years old, but how are you positioning them? If
they're exactly like the ones next to them, why should a
customer choose your machine? In this case, you're relying
entirely on random sales. What can you do to make your machines
the ones that customer's choose?
The key to identifying new opportunities in the marketplace
is to think like a customer. If you're an operator, you're
probably not buying much from other operators' machines
so how do you know how your customers think? If you can
develop a customer mindset, you can anticipate their needs
and wants. If the items in your machines are not selling,
then you don't know your customers well enough.
4. Streamline your operation. Whether you have one machine
or a thousand, optimize the way you operate your business.
Eliminate redundancy. Clean up clutter. Make your customers
want to call you for information and more services that
you can provide them.
Maybe you have a small route of two-stand machines throughout
a regional area and maybe you can offer more. Perhaps the
locations need a game, a jukebox, a soda machine, or other
type of equipment. If you don't have anything else in your
warehouse, chances are good that you know how to get them.
If not, ask other operators or offer the location to a friendly
competitor. In other words, do him a favor by letting him
make the sale and the good deed will come back to you, eventually.
5. Create alliances with other operators, manufacturers,
distributors, the association, and customer locations; they
can help grow your business. Explain to them what you do
and how you wish to grow your business. Inform them that
their contribution to your success is as important as anything
else you do. Invite them to support you in what you are
doing and listen to their ideas.
I suggest this to you for three reasons:
It creates trust among adversaries and builds bridges
where before there were none.
It frees you up from the responsibility of doing all the
work all by yourself.
It encourages others to support you. The more people you
have working with you toward your success, the more likely
you are to reach your goals.
that all things don't go right all the time. In fact,
things go wrong much of the time. How many times have
you been a victim of Murphy's Law? Creating alliances
minimizes the likelihood of catastrophe striking and your
business being unable to withstand the blow.
6. Don't overextend yourself. In the early days, it was
OK to go out on a limb and take risks like buying 1,000
machines and warehousing them until you found locations.
Today, with constantly changing retail laws, if you're inexperienced
the risk of exposure is too great.
Evaluate what you can handle and maybe go a little beyond,
but not so far that if you fall you'll crack in half.
7. Understand the nature of the bulk vending industry as
well as the nature of your own business. You should know
that you need inventory and spare parts. Understand that
your route man needs to keep extra screws, gears, springs,
tools, WD-40, and other necessities in the truck so he doesn't
have to constantly be making extra out-of-the-way trips
that cost you money. Redundancy and lack of planning ahead
can kill a perfectly healthy operation.
A bulk vending route requires constant attention. If you
neglect even a part of it, the entire business will suffer.
However, if you can spot where your business is growing
and are on top of emerging trends, by trimming the fat and
staying lean you can be very successful in a business that
likes people who stick around for the long haul. Don't fear
the prospect of cutting locations that are not living up
to your expectations.
8. The business may change, but customers may not. Maybe
they like what you're providing them, maybe they don't.
The only way to find out is to keep in touch with your locations.
When you service your machines, ask questions. Make it obvious
to your customers that you care. Otherwise, when you go
back to collect your money, your machines may have been
replaced by another operator who did care.
9. Keep your machines clean. Among the feedback offered
by vending operators nationwide, a clean machine makes a
difference. A clean display, a shiny paint job, smooth glass
or plastic globes, a smooth handle, and a loose chute door
free of stickers and graffiti, cause people to drop coins
into the slots. "It's essentially a retail operation," says
George Herman. "People don't like shopping in dirty, disorganized
stores. A dirty machine is the same as a messy shop. A bulk
vending machine is basically an extension of the retail
10. Don't be married to any one aspect of your vending business.
If something isn't working for you or for your customers,
get rid of it. You may have loved an item so much that you
bought 10 million pieces, but if it's not selling, don't
force it on your customers. If your attitude is that this
is what I have, take it or leave it, then your customers
will probably leave it. Sometimes you just have to admit
that you made a mistake.
Give your customers as many choices as possible. There are
ways to sell that mistake: mix it with a more desirable
item, sell it as a double purchase, swap it with another
vending operator for something he may be looking to move,
or even sell it on E-bay. Just because you made a purchasing
mistake, don't make that your customer's problem.
It's easy to say that things change, but it's a little harder
to accept the fact that we have to change with them. After
all, in the bulk vending game, without change, you're out
Here are some ways that the industry has changed and continues
to evolve. In one respect, the business is exactly the way
it was more than 50 years ago. It's the same concept: put
a coin in a slot and get something in return.
Although the concept is the same, it's not as easy to be
successful. With a global economy and more manufacturing
than ever before, you must have the most up-to-date merchandise
available. I mean different stuff. There is a reason why
the toys of the 1960s that used to sell for a nickel don't
sell any more. Kids as young as four and five are more sophisticated
and more demanding.
They don't only want the tried and true Tom & Jerry,
they want Power Rangers, Rug Rats, Hey Arnold, and Lilo
& Stitch. They are exposed at an early age to more movies,
cartoons, advertising, and new items in the store; that's
what they want--whatever is new. The problem is that you
don't know how long they are going to want it. That's where
experience in the bulk vending business pays off. You've
been there, done that and are using your past experiences
to make better choices. You probably won't buy 10 million
items that you can't sell!
Perhaps from an insider's point of view, the most obvious
changed is the importance of legislative influence on the
part of the bulk vending industry. As far as alliances go,
the bulk vending group is pretty tight. Each year they spend
between $35,000 and $65,000 on lobbyists for issues ranging
from taxation and tax benefits to Internet merchandising
and support of the new golden dollar coin.
I asked Maurie Much, senior partner in the law firm of Much,
Schelist, Denenberg, Ament, & Rubenstein, as the legal
voice of the industry, what the bulk vending industry is
He explained that there are two key issues: (1) state taxation
and the implementation of the dollar coin.
Of greatest interest to bulk vending operators are issues
dealing with money and currency. In most states, there is
no sales tax assessed to a vending machine as a retail merchant.
There are legislators that want to change this. For a few
it might not be an issue, but for the majority of operators,
even a one-percent tax on revenues could put them out of
Much went on to explain: "We're concerned about environmental
issues, transportation and highway safety, and what the
federal government does with and about our money. Look,
every industrialized nation has a dollar coin or the equivalent
to it. The United States is controlled by special interest
groups that want to keep the dollar bill in wide circulation.
As long as that is the case, we cannot hope for a dollar
coin with any real certainty."
Is that of significant concern to Bulk Vending Operators?
I asked Bradley Ellison, owner of Sugar Daddies Vending
in Staten Island, New York, what he thought about the industry's
"narrow focus" of the issues that affect the industry?
Ellison replied, "This industry is stuck between the big
operators and the small ones. The dollar coin is meaningless
to me in my business. My customers--my locations--are dime,
quarter, and 50-cent stores. I can't get a dollar in my
locations. Why should I care if there is a dollar coin?
The association right now is focusing on the big dollar
operators and leaving the rest of us in the lurch. It's
representing only the interests of the heavy hitters."
But Richard Bolin, owner of Northwestern Mfg. Corp. in Morris,
Ill., disagreed, "There's enough room for everybody. If
the association and the industry can survive for 75 years,
I think we can work out the differences between us. Northwestern
has always been on the cutting edge of invention and distribution.
We're not only manufacturers, we're operators, too. We know
the concerns, because we share them."
It's not a "player's" industry any more. Anyone can enter
the ring and anyone can win if they have savvy instincts
and are in it for the long haul.
The most significant way the industry has changed over the
years, however, is clearly the vast variety of choices of
vending items available to the customer. Now a child with
a quarter or dollar has a choice of everything from vending
machines, video games, Internet, arcade games, home consoles,
cable TV, and the list goes on. Bulk vendors are not only
competing against other bulk vending operators, they are
competing with all these other forms of entertainment. Where
does it stop?
Here are some things to look forward to in the coming
years in the bulk vending business:
Look for operators to grow larger routes and broader businesses
with a wider array of services. With the cost of initial
investment coming down all the time in many areas, especially
in used equipment, resurgence in coin-op amusements and
commodities would not be at all surprising.
Italy McElroy, Director of Marketing for A&A Global
Industries in Baltimore, Md., sees it this way: "Vending
machines will become a viable method of retail merchandising.
They will be present in clothing departments of major retailers,
and they will grow to vend high-end items. Much like the
99-cents-only stores now selling items that retail for more
than $7 at Macy's, vending will sell CDs, mini-books, jewelry,
and perfume at a cost far less than at retail stores.
"With manufacturing costs of most new machines increasing
and customer demand for better quality products, the cost
of operating is demanding a fee increase to 50 cents at
the low end, and several dollars at the high end. The price
increase will alter the perception from cheap junk to cool
merchandise. In the next five years look for the $1 vend
to be the norm, and the $4 vend to be no big deal."
The industry is also looking at new ways to capture customer
attention. Brighter, flashier colors, interesting designs,
and talking mechanisms are all being market tested as you
Machines will take credit cards even for toys and candy.
"We're becoming a cashless society," says McElroy. "Even
if the dollar coin every gets pushed through in a serious
way, moms will swipe their MasterCard before they carry
Finally, we all want to know what's new and what's hot.
I asked Joel Heffron, president of Mr. Fantastic Vending
in Sun Valley, Calif., for his opinion. He manufactures,
distributes, and operates the new self-contained Mr. Fantastic
Superball machines that vend the hot superball items. He
says, "Kids want what's new. This is old and new at the
same time. A superball is one of the world's top selling
toys. We have made it even more accessible by selling it
in a handsome and stylish vending machine."
What else is new? The four-inch capsule/$1 coin vending
machines that Heffron manufactures in China and distributes
around the world. It takes the bulk toy machine to another
level. "Instead of getting a piece of junk that sells for
a dime or a quarter that breaks in one minute, we're selling
2,000 different types of toys in four-inch capsules that
double as banks for the kids to save their coins," Heffron
What's next? Where are we going from here? The Internet
has just met the small operator. Internet cafes have been
around for a while, but what about buying a gumball for
a quarter on the web and having it mailed to you? Or how
about sliding your American Express Card and paying for
a hot dog in a food machine? Or even a frequent buyer program
for gumballs, candy, food, and toys, so that when your credit
card returns to the machine, it remembers what you bought
last time and asks if you want the usual.
But the biggest change is coming in the way we use vending
machines. Once a novelty, now a convenience, vending is
making its way to becoming a necessity. Haven't enough time
to drop by Tower Records for a CD? No problem! Simply stop
by your handy, dandy, vending machine and buy a discounted
version of the same release.
What about finance? Maybe we'll begin paying our bills at
strategically placed payment Kiosks? Then there is the space
issue. Who will be the first operator of vending machines
in space? Certainly with all the people expected to live
on the International Space Station, someone is going to
want a can of Coke?
There is one thing for sure, wherever this business is going,
it will involve a lot of change--big changes, like the dollar
coin and the Internet and small changes like how we'll all
get along in one industry. Wherever we go, I hope we never
forget where we came from and the changes we've seen.
Michael J. Herman is a motivational speaker and corporate
sales trainer who specializes in making businesses run better.
His daily syndicated success column "The Motivational Minute"
is read worldwide. Herman's family has been in the vending
business for nearly 80 years. You can reach him by phone
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