Click the image to register New Products New Models New Channels New Marketing New Communication Yang Xuanyu, general manager of Liaoning Dandong Xuanyu Trading Co., Ltd., has been very busy lately, not only because the liquor products he represents have entered the peak sales season, but also because business expansion from new retail has added to his workload. After signing a cooperation agreement with Youpai Technology (Tianjin) Co., Ltd. (hereinafter referred to as "Youpai Technology"), Yang Xuanyu began to find suitable locations for more than 30 vending machines that will enter the Dandong area. In 2018, vending machines may bring him unexpected profits. Compared with new things like unmanned shelves and unmanned convenience stores, China's vending machine development is more stable, with the number of placements showing a doubling growth trend. Seeing the new opportunity, some food distributors have entered the market. What benefits can vending machines bring them? How to choose a partner company? How to choose placement locations? What risks need to be avoided in actual operation? Food Board invited professionals to answer these questions. What can vending machines do for distributors? Huang Haichen, general manager of Shaanxi Huatong Technology Chain Co., Ltd., has been in the food sales industry for more than ten years and once operated more than 700 supermarkets, reaching its peak. However, due to rising labor and rental costs, he turned his attention to vending machines. In Huang Haichen's view, reducing operating costs is the first role of vending machines, and the second role is to help retail terminals extend business hours and liberate human resources. Different from Huang Haichen, Yang Xuanyu believes that vending machines can help him expand more channels, such as supermarkets, enterprises, public institutions, factories, etc. In addition, some older products with longer shelf life can also be sold through vending machines, reducing losses caused by discount promotions. Xue Feng, general manager of Jiangsu Nantong Xixiangfeng Wine Co., Ltd., represents beverage products such as "Wahaha", "Zhongwo", and "Zhonglv". In 2017, he cooperated with Zongsheng Technology Co., Ltd. to introduce 50 vending machines. In his view, the pace of life is getting faster and faster, and young consumers want shopping to be more convenient and interesting. Ubiquitous vending machines not only make payment convenient, but also make them feel extremely happy. In addition, if terminal stores cannot complete sales tasks, vending machines can help share the burden and become a "pressure stocking artifact". Where should placement points be chosen for profitability? Currently, vending machines are commonly found in transportation hubs, tourist attractions, office buildings, schools, hospitals, large shopping malls, etc. However, distributors do not fully understand which points have higher revenue and gross margins, and they tend to grab everything during layout. Yang Xuanyu believes that vending machine layout should be differentiated from traditional channels, focusing on special channels such as factories, enterprises, public institutions, and large shopping malls, to achieve true channel expansion. Similar to Yang Xuanyu, Xue Feng also focuses on industrial and mining enterprises and includes retail terminals as key development targets, persuading store owners to join the vending machine ranks. During promotion, Xue Feng started from the pain points that vending machines can extend business hours and free store owners from the constraints of watching the store, persuading them to become his partners. Regarding point layout issues, Li Cheng, CEO of Youpai Technology with many years of vending machine operation experience, analyzed that based on revenue and profit conditions, first-class points include hospitals, schools, and factories; second-class points include transportation hubs, tourist attractions, and office buildings; third-class points include small office buildings, offices, and residential communities. Li Cheng said that due to high costs, most operators place vending machines in crowded places such as tourist attractions, schools, and stations, hoping to recover costs as much as possible. Now, Youpai Technology has reduced operating costs through various means, helping distributors activate some points that were previously overlooked. To illustrate this point, Li Cheng did the math. A vending machine in a university has monthly sales of 10,000 yuan, a gross margin of 40%, equipment depreciation of 1,000 yuan, and gross profit of 3,000 yuan. In a large company, a vending machine's monthly sales are about one-third of that in a school, i.e., 3,300 yuan, with gross profit of about 1,200 yuan, but depreciation is only 200 yuan, so distributors can also earn 1,000 yuan per month. In this way, the profit ratio of the two is basically the same. However, Li Cheng believes that different points correspond to different consumption scenarios, and distributors need to place vending machines that match them, because the usage fees of different equipment vary greatly. Currently, whether in large or small scenarios, the models placed are basically the same, especially in some small scenarios where large equipment is placed, which not only wastes space but also increases costs such as depreciation and electricity. What factors should be considered for product selection and pricing? Compared with other beverage and snack food distributors, Huang Haichen has a greater advantage, not only because he represents a wide variety of products, including not only regular food but also fast-moving consumer goods such as family planning products and stationery, but more importantly, because of his years of supermarket operation, Huang Haichen knows consumer needs and psychology very well, giving him an advantage in designing product tracks (i.e., the rails inside vending machines for placing products). From this perspective, before introducing vending machines, distributors should first understand the consumer needs around the points, and then supplement related products based on their own product situation. Currently, recommending vending machines to retail terminals has become the norm. In this regard, Xue Feng believes that distributors need to negotiate with store owners, allowing them to place most of their existing products, but also supplementing products they represent. Through negotiation, both parties can agree on the proportion of products in the vending machine, which not only gives the terminal autonomy and boosts sales of their existing products, but also completes the pressure stocking work for the store. In terms of product pricing, some distributors imitate first-line brands and raise retail prices. Xue Feng suggests that if distributors want to make achievements in the vending machine field, pricing should not exceed traditional channels. On the one hand, vending machines have almost no labor costs, so distributors' gross profit is guaranteed; on the other hand, although price wars have long been discouraged, in large and medium-sized cities, attractive pricing is also a useful means to gain customer goodwill, after all, most products are highly homogeneous. Is it necessary to set up a dedicated team for development and maintenance? This is also one of the most controversial issues. Some distributors set up dedicated teams to maintain vending machines and provide guidance to retail terminals. Huang Haichen's team currently has more than 30 people. He said that this is an important investment for the future market, and in the next three years, he will strive to place 3,000 or more vending machines in the Xi'an area. Unlike Huang Haichen, Yang Xuanyu does not consider setting up dedicated maintenance personnel for the time being, because labor costs are high, and sales staff already have delivery functions, so they only need to add one more work item to their visit routes. Similar to Yang Xuanyu, Xue Feng has not set up a dedicated team either, but he has systematically trained his existing sales team. First, he encourages sales staff to understand new things, learn new knowledge, and get out of the traditional mode of order taking and delivery. Second, he encourages sales staff to actively promote vending machine franchise business during visits to terminal stores, improving their sales skills, which not only stabilizes customer relationships but also increases personal income. Xue Feng emphasized that in order to save costs, distributors must strengthen training. In response to distributors' questions, Li Cheng said that Youpai Technology provides a complete set of management procedures and provides teaching videos and manual training for distributors, making it more convenient for them to manage machines without arranging more manpower. At the same time, by strengthening the positioning function of vending machines and supplementing with a digital management system, distributors can make timely adjustments and feedback based on market sales conditions. How to maintain to extend equipment life? It is understood that the lifespan of vending machines is usually 8-10 years, but due to high frequency of use and lack of systematic maintenance, the average lifespan of vending machines in China is currently 5-6 years. Considering that it usually takes 3-4 years to recover costs and make a profit, daily maintenance is crucial to obtain more benefits. Currently, some vending machines are placed outdoors due to usage needs, inevitably exposed to wind and sun. Li Cheng suggested that distributors can add canopies to reduce the disturbance of wind and sand. Xue Feng said that the company will suggest retail terminals place vending machines under the storefront windows. On the one hand, this can avoid restrictions from municipal departments; on the other hand, in a semi-enclosed state, turning on the machine's lighting at night can add a beautiful scenery to the storefront, making it look more fashionable. In addition, in order to avoid man-made damage and improve usage efficiency, Xue Feng requires sales staff to block the banknote entry. According to his observation, since the banknote entry is less than one meter high, it is easy for passing children to throw debris or insert game coins, affecting the normal operation of the machine. In addition, blocking the entry can also prevent damaged or counterfeit bills from entering. To further improve the safety factor of vending machines, some distributors have also installed 360-degree rotating cameras near the points, allowing them to view the surrounding situation in real time via mobile phones. Xue Feng said that the company gives this "home-watching artifact" to all retail terminals, with the reason "Someone helps you open the store, someone helps you watch the store, you can rest assured and be an absentee boss", which is deeply recognized by store owners. Finally, if distributors are still worried, they can also protect themselves by purchasing commercial insurance. Xue Feng revealed that in order to avoid unnecessary losses, he purchased property insurance for all vending machines. Once damage or other situations occur, distributors can be free from worries. As a pioneer in the implementation of new retail theory, vending machines seem easy to operate; just choose a good location to generate sales and quickly profit, but in fact it is not simple. Just in terms of transportation, a machine weighing about 700 jin (350 kg) is difficult for a trading company lacking corresponding preparation to transport from the warehouse to the corresponding point. As the saying goes, "Success comes from planning, failure from lack of planning." Before introducing vending machines, distributors must ask themselves whether they have made sufficient preparations before starting. Article from: Snack Reference (ID: lsck360)