OK, in order to not become vending road kill, don’t believe anything the seller is telling you. Sure the vending machine route is making $40 per machine per location. Sure the seller is just looking to unload what may be the most profitable vending route ever in the history of vending. Of course, when you actually ask to see IRS tax filings proving their legitimacy, they won’t be able to provide it. Don’t believe any spread sheets or book keeping forms they may offer to provide, these can all be faked. This isn’t meant to imply that they are trying to rip you off or that they are lying but consider that they are selling an asset and trying to get the best price possible. You, as the buyer, are also trying to get the best price possible and more likely than not, the seller is overpricing the vending machine route.

How then can you determine what the route is worth? The single only way to determine a route value from a buyer’s point of view is to only place a value on the used vending machines being sold. Yes, the locations do have value, the good will of the business has value, and the age of the vending accounts also have value, but not for our buying purposes. We are essentially buying a business with unknown variables. We don’t know what the machines are actually making. We don’t know if the businesses where the used vending machines are located are happy with the prior vendor (the seller). We don’t know anything about this business except how many machines are being sold and this should be checked and verified. It is possible for a thoroughly unscrupulous person to sell someone else’s machines but usually these will be stolen from a location and not still in place.

When making an offer on the vending route, ask the seller if you can go on a servicing run with him to check out the state of the used vending machines. If a route is very large, you would most likely just do a head check to see that the machines exist. But it is best to watch the seller service a few machines to see how the business owners react to him and gauge the value of the locations. Even though we are not placing any value on the locations for our buying decision making, the locations can give you an overall feel for how much future work will be required to turn this route into a money maker for you.

Another thing to keep in mind when making an offer to buy is how many different brands of machines are on the route and what kind of quality are they. When building a route, obviously you want to grow fast and keep your expenses low and used machines are a great way to do just that. But once your vending machine business starts to become rather large, a variety of brands can become a liability. You will have less compatibility of parts for when things break down and buying replacement parts sometimes isn’t worth the money. With vending heads going for about $60.00 brand new, a new coin mechanism for $25.00 doesn’t seem practical. And believe me when I say,  used vending machines are going to break down. Another small thing to consider with multiple machines is the sheer volume of keys you will have to keep track of and organize. This may seem like a small consideration, but think about having separate keys for the top and sometimes separate keys for the back and multiply that by twenty. When you’re trying to zip through your route, organizing your keys is just one more thing to slow you down.

Lots of great deals are to be had on vending machine business routes. Craig’s List is a great source for both routes and used vending machines. Like I covered in the biz ops and scams section, lots of people get ripped off early in their vending careers and never fully recover. If you shop wisely, you may find vending gold. There are people who have bought neglected vending routes and upon servicing the route the first time have made the buying price back essentially making the purchase free. While I hope you have the good fortune to find such a deal, even if just heed my advice to only consider the value of the machines in the route being sold, you will avoid getting ripped off.

History of the Vending Machine

The vending machine has been around for hundreds of years but it wasn’t until the 1880s that they came into widespread use. According to historical accounts the first vending machine was written about in works by Hero of Alexandria and was used to dispense holy water, it used a simple weighted mechanism that reset after each use. Amazingly, Hero designed his machine during the first-century but it wasn’t until the Industrial Age that vending machines came into more widespread usage. Two of the first “modern” commercial uses were selling post cards in the early 1880s in London and gum in train stations in the US. The Pulver Manufacturing Company essentially revolutionized vending in 1897 when they came up with the idea of adding moving figures to the machines to further entice customers to spend their coins; these automated machines eventually lead to the development of slot machines and pinball machines.

Modern Vending Machine Usage

Today the modern vending machine is capable of vending almost anything. In the US, the vending market is broken down broadly into 2 main categories: bulk vending and full line vending.

Bulk Vending Machine

The modern day bulk vending machine is not that far removed from the vending machines developed hundreds of years ago. These machines sell “bulk” products; this simply means loose candy or toys that are typically loose and unwrapped. Some of the more popular bulk products that are sold include nuts, M&Ms, Mike and Ikes, Hot Tamales, gumballs, and small toys like tattoos, key rings and jewelry.

Bulk vending machines are usually mechanically simple; they work with a spring type mechanism. A coin is inserted and the handle turned, the coin drops into the machine, product drops out a shoot and the handle springs back into its original position so that it can be used again. Most of these machines are made up of individual heads on separate stands or racks allowing the route owner to stock several different types of product at the same time.

Some of these bulk machines are more sophisticated with flashing lights and moveable parts that activate when a coin is dropped, but most are simple and require no electricity or refrigeration.

Full Line Vending Machine

These machines are usually much bigger than bulk machines and usually require electricity and sometimes refrigeration. The term full line indicates the selling of packaged chips, crackers, candy bars, soda, water and other packaged items for resale. These machines are becoming increasingly more sophisticated with bill changers, credit card accepters and temperature controls.

Although these are the two most common categories, vending is becoming increasing more advanced. 

Other Types of Vending

Amusement Vending

This category of vending includes children’s rides like those found outside major retailers, pinball machines, video games, crane machines and other game type machines.

Miscellaneous

There are other categories of vending machines that don’t clearly fall into either of these broader categories, but they are usually categorized under full line vending. Products that can be vended out of a vending machine that fall in this miscellaneous category include condoms, laundry detergent, cigarettes, electronics and buss tickets.

Unusual Japanese Vending Machine Offerings

Japan is a lot more advanced with their vending machine products. Not only are machines located on virtually every corner, but the products they vend are a lot more usual that the typical offerings in the US.

Here are some of the things currently being vended in Japan:

• Porn
• Alcohol
• Used school girl panties (these were made illegal, but apparently can still be found)
• Umbrellas
• Hot ramen noodles
• Bags of rice
• Charging stations for electronic devices
• Shoes
• Deep fried prawns
• Fresh flowers
• Eggs
• Fresh vegetables

Future of the Vending Machine

At this point the only thing holding the vending business back is public acceptance and imagination. In 2009 a small boutique hotel chain in the US, The Standard Hotel, partnered with surf wear company Quicksilver to sell retro swimwear to their hotel guests, the vending machine is selling board shorts and bikinis for about $75 apiece. The suits being vended are retro designs from the 1970s and 1980s but with more modern fits and fabrics. When vending goes this mainstream and this hip, you can easily see the long term potential of the vending machine.

Some of the newer vending machine offerings include machines selling iPods, cell phones and electronic devices. Machines selling ballet flat slippers have popped up recently in night clubs allowing women to get out of their high heels after a night of dancing. Vending machines have come a long way from when they were first introduced, but not much has changed really. The vending machine offers the customer cheap products in convenient locations while allowing the vending machine owner to vend products while keeping overhead low by not having to have a store front or employees.