--- title: "In the Vending Machine Business, Japan's Today May Be China's Tomorrow" description: "Japan has the highest density of vending machines in the world, but China is rapidly catching up. In 2017, capital investment and a surge of startups transformed the vending machine industry in China, driven by the potential for scale and profitability." author: "梁小妖" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-09-19" language: "en" canonical: "https://xinjignxiao.com/en/articles/in-the-vending-machine-business-japan-s-today-may-be-china-s-tomorrow-106ae79b/" markdown: "https://xinjignxiao.com/en/articles/in-the-vending-machine-business-japan-s-today-may-be-china-s-tomorrow-106ae79b.md" original_source: "https://mp.weixin.qq.com/s/jWjHBlzlLeBtRMK66Aa6sg" translation: "https://xinjignxiao.com/zh/articles/%E5%9C%A8%E8%87%AA%E5%8A%A8%E8%B4%A9%E5%8D%96%E6%9C%BA%E8%BF%99%E4%BB%B6%E4%BA%8B%E4%B8%8A-%E6%97%A5%E6%9C%AC%E7%9A%84%E4%BB%8A%E5%A4%A9%E5%8F%AF%E8%83%BD%E5%B0%B1%E6%98%AF%E4%B8%AD%E5%9B%BD%E7%9A%84%E6%98%8E%E5%A4%A9-106ae79b.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/in-the-vending-machine-business-japan-s-today-may-be-china-s-tomorrow-106ae79b/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # In the Vending Machine Business, Japan's Today May Be China's Tomorrow > Japan has the highest density of vending machines in the world, but China is rapidly catching up. In 2017, capital investment and a surge of startups transformed the vending machine industry in China, driven by the potential for scale and profitability. By Liang Xiaoyao Japan's today may be China's tomorrow. There is probably no other country in the world more fond of vending machines than Japan. Now, that statement should be rewritten! In the past, vending machines in China looked like this: Entering 2017, the vending machine scene changed dramatically: it started running wild. Data source: Jingzhun APP vending machine popularity trend What exactly caused the Vending machine (self-service vending machine/automatic vending machine), which had been cold-shouldered in China for over a decade, to become a hot commodity in everyone's hands? Some say it's the convenience brought by mobile payment; some say it's the development of automation and intelligent technology; some say it's the rise in labor costs. These three seemingly plausible reasons don't actually hit the mark. ● Japan has a total of about 5 million vending machines globally, with a ratio of 23:1 between population and vending machines, making it the country with the highest density in the world, bar none. Vending machines are ubiquitous in Japan, but the vast majority of Japanese people use cash, especially coins, not mobile payment as we might assume. Although mobile payment does bring great convenience to unmanned retail, it is not the driving factor in the final analysis. ● Automated vending machines appeared on the streets of Beijing, in subways, and airports over a decade ago, allowing self-service shopping and pickup through automation. This is not new, and there has been no real technological breakthrough. ● While the unattended model saves on service staff costs, it correspondingly increases operational costs. The salary of an operations staff member is clearly higher than that of a service staff member. Moreover, large-scale promotion requires occupying point locations (resource positions), which also increases operational expenses. In fact, labor costs are not reduced but shifted. The fundamental reasons that truly drove the qualitative leap in China's unmanned retail model in 2017 are two: **1. Capital bombardment** Attracted by the capital leverage games of shared cars, shared bikes, and shared power banks, Chinese VC institutions have achieved investment returns of 10x, 50x, or even more. As a result, capital began to pour heavily into tracks that could achieve scale and traffic. Coincidentally, the unmanned retail sector suited capital's taste: the sufficiently large imagination space of new retail plus a profit model visible in a short time. In this track, it is entirely possible to use money to build a supermarket or create a unicorn enterprise. Thus, starting from 2017, top VCs led by ZhenFund, IDG, Sinovation Ventures, and Matrix Partners China began to enter frantically, as if they had agreed to march into this field in tacit coordination. Data source: Jingzhun APP vending machine financing trends over the past three years **2. A flood of startups** Since October last year, when Jack Ma proposed the "New Retail concept" at the Yunqi Conference, entrepreneurs have rushed into this "conceptual blue ocean market" as if discovering a new continent. This is a very important time node because in October 2016, six new companies were established in the vending machine field (data source: Jingzhun Data), which is also the highest number of newly established companies in a single month in the vending machine field to date. "Hami Technology," which completed three rounds of financing totaling tens of millions of yuan in 90 days, entered the office self-service retail field at this time, providing Rubik's Cube containers for offices, with investors including Yunqi Capital, Yuanjing Capital, ZhenFund, and Dianliang Fund. Image: Rubik's Cube container launched by Hami Technology Subsequently, we saw the bustling investment market in 2017: ● In June, F5 Future Store secured 30 million yuan in A+ round financing from Sinovation Ventures and Chuangda Capital, followed by Alibaba's launch of the "unmanned convenience store" concept at the Taobao Maker Festival in July; ● In August, Xinhua Du's acquisition of Youbo Online failed, marking the end of Youbo's six years of stumbling entrepreneurial history and the beginning of its windfall period; ● In September, Si Jianghua, formerly of Alibaba and Dianping, entered new retail, and Bianli Xing announced the completion of over 100 million yuan in angel round financing, the largest investment amount in this field to date. At the same time, we are seeing various interesting vending machine projects in Beijing. Every category has room for vending machines, selling products ranging from food and beverages to work bento boxes, from red wine to jewelry, to steaming ramen, latte art coffee, and adult products that can be bought discreetly. Abroad, there are also professional vending machines for pizza, baguettes, vegetables, oysters, gold, and more. Without a doubt, you will see more and more categories of vending machines appear in the market. Convenience stores, unmanned convenience stores, and vending machines: who can change the world more? The chain convenience store model has existed for a long time. First, there are established chains like 7-Eleven, Lawson, and Quanshi, followed by e-commerce giants like Alibaba, JD.com, and Suning, and then convenience bee, which came from behind with an online-offline model to carve out a path. Unmanned convenience stores were a concept that became popular at the Taobao Maker Festival, using technology solutions to replace labor, making everything in the store appear fully automated. The seemingly perfect unmanned convenience store has been thrown into an awkward situation by the minimalist vending machine. Vending machines have simpler operation and payment processes, fewer and more practical SKUs, and lower costs. If you break down an unmanned convenience store, isn't it just a collection of vending machines? Guangzhou's F5 Future Store seems to use Youbo's unmanned vending model to operate a 7-Eleven-style convenience store. Thus, capital is highly likely to bypass the unmanned convenience store concept and go straight to the "vending machine" field. When talking about vending machines, we must mention Youbo. This is an interesting story: vending machines were originally a traditional industry, but by accident they became the vanguard of new retail. From initial skepticism, to bankruptcy rumors and broken capital chains, to the failed acquisition by Xinhua Du, Youbo miraculously became the industry leader in the current vending machine trend. Riding this wave, in addition to beverage vending machines, Youbo also owns Youchang, a mini KTV, and is successively launching self-service coffee machines, juice machines, wine vending machines, lottery machines, and even shared charging or shared umbrella devices, covering various offline scenarios and needs. Office shelves appear, vending machines feel awkward This field is changing so fast that just days ago everyone was chasing vending machines, and now the popularity of office shelves has overshadowed them. On the surface, the difference is that one is pay-then-take, and the other is take-then-pay. In reality, it's a battle of "costs," such as electricity, equipment costs, and product prices. Youbo disclosed in its first half of 2017 financial report that it had 62,000 vending machines, achieving product sales revenue of 570 million yuan with a gross margin exceeding 50%. According to industry insiders, the cost of a vending machine is between 24,000 and 30,000 yuan. At the lowest price, Youbo's total equipment cost is 1.5 billion yuan. If relying solely on product sales, it would take at least three years to recoup the investment. But if the same number of vending machines were replaced with shared shelves, the equipment cost would be greatly reduced, almost negligible. Therefore, startups entering the office scenario through shared shelves, such as Bianli Xing and Lingshi Ejia, can lower product gross margins and quickly occupy the office scenario with a "good and cheap" approach, rapidly scaling. Due to the special nature of the office scenario, many companies treat snack shelves as employee benefits, so even the point location fee can be ignored in this office unmanned retail model. Doing unmanned retail essentially requires clarifying two issues: high gross margin and scale. But the focus is still on scale; any unmanned retail category that cannot achieve scale is a rogue. In this sense, in the special office scenario, vending machines lose to open shelves. Fully open unattended convenience shelves deployed in relatively closed public spaces like offices The difficulty of unmanned retail lies in the supply chain, but the battlefield is in different scenarios. After weakening the roles of location and labor, the profit models for unmanned retail currently appear to be two: selling goods and selling advertising. In the goods-selling model, users always want more, better, and cheaper, so the competitiveness between different companies ultimately manifests in supply chain capabilities. The advertising model requires sufficient coverage area, with scale driving traffic. Whether focusing on selling goods or advertising, the endless stream of unmanned retail companies in the market are all fighting for entry points, i.e., scenarios. Currently, we see unmanned retail scenarios including airports, subways, stations, and shopping malls. Airports may be the earliest application scenario for unmanned retail, having developed for many years, but due to low repurchase rates, expensive point location fees, and high shrinkage rates, it has remained lukewarm. Similar problems exist in subways, stations, and shopping malls, which seem to have huge traffic but no good retention. Instead, people are more optimistic about the semi-closed office consumption scenario. Office retail (retail shelves, vending machines, refrigerators) is the new retail format closest to consumers and most likely to obtain offline traffic entry points. At present, the entire unmanned retail industry is still in the stage of large-scale expansion to grab resource positions. Capital and entrepreneurs have just entered, and subsequent competition will inevitably be fierce. The companies that ultimately win will likely be of these types: those that can quickly occupy the market and capture consumer mindshare; those that can quickly make breakthroughs in product form and model; but the ultimate winners will be those that can integrate industry chain resources, extend scenarios, and thereby upgrade their business models. Source: Jingzhun (ID: rong36kr) **The 3rd (CFIC) China FMCG + Internet Conference** will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting **1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions** to jointly explore a new chapter of cross-industry integration! **Core topics of this conference:** > * **How can the FMCG industry leverage B2B to achieve new growth opportunities** > > > > > > > * **How should the new supply chain behind new retail be built** > > > > > > > * **How can intra-city logistics help B2B achieve leapfrog development** > **Highlights of this conference:** > * **The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"** > > > > > * **Case sharing of excellent transforming and upgrading distributors** > > > > > * **Conference + exhibition upgrade: Hall 6 Internet Technology Exhibition strengthens matchmaking** > > > > > * **Alibaba Retail Link, Global Logistics Properties Finance, Eternal Asia Supply Chain, Best Store Plus, Yi Jiu Pi, Haiding: leaders from the most well-known enterprises in various fields will deliver speeches and share pioneering views.** > > **Registration is now open. Long press the QR code below or click "Read Original" to register.** Add friend with note "Conference Registration" Click the link below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: [2016 "FMCG + Internet" Summit Forum]() -END- --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671