Yesterday's article about the vending machine trend was well received, and many friends expressed interest in participating. But Feiyu's article today is to pour cold water on the idea, so that everyone can have a dialectical thinking opportunity and provide a reference for those distributors with transformation needs to make the most cautious investment. OK, dear readers, Feiyu is not talented, so let me share my shallow understanding.

Original article, welcome to share Feiyu has been paying attention to the automated retail industry for a long time. In 2013, the first article after the creation of the FMCG Elite Club WeChat public account was about automated retail convenience stores. In September this year, I also attended the 12th China International Self-service Products and Vending Systems Exhibition in Shanghai. Like everyone else, Feiyu also wanted to find industry trends and business opportunities at the most cutting-edge exhibition in the commercial circulation and retail field. Yesterday's article was very comprehensive, clearly explaining the background and current environment of the automated retail industry, and predicting the industry's blowout. But Feiyu, on the contrary, calmed down and carefully thought about the problems facing the industry's development. So, is it really as beautiful as we imagine? Feiyu believes that at this stage, the risks are still significant. I will elaborate from four aspects: 1. The degree of social civilization determines the scale of the industry First, Japan has the highest penetration of vending machines and the most developed industry globally. In Japan, whether in community parks or schools, in crowded commercial plazas or quiet back alleys, you can find various automated retail devices, selling a wide range of products including cigarettes, alcohol, beverages, snacks, bento boxes, and adult products. But Japan is still the only country in the world that has achieved such coverage and acceptance for vending machines. Even in equally developed European and American countries, vending machines cannot operate as smoothly as in Japan; they are more of a non-mainstream supplement to the social commodity retail system. In China, given the current level of civility, it would be a miracle if your equipment remained intact for seven days even on main roads, let alone in back alleys, without supervision. News reports criticizing the low quality of our citizens are common, but it doesn't help; your equipment loss is still your own. OK, this is why you see vending machines mostly in closed locations with property management, such as schools, factories, subways, stations, hospitals, and communities. Want to be like Japan? It won't change even in 10 years. 2. Scarce vending locations determine industry costs As mentioned above, considering operational risks and returns, equipment cannot be placed randomly, and the location of a vending machine determines whether it brings profit. Take a university in Wuhan as an example: first, a vending machine operator needs to pay a 5,000 yuan entry fee to enter the school (note: this is the price for the first mover; later ones will not get this price). The site rental fee, including electricity and communication, is 2,000 yuan per month. Excluding the entry fee, the annual operating cost per machine is 24,000 yuan. Let's use the sales data screenshot of Nongfu Spring's vending machine at a large hospital for analysis and comparison: Take one of the medium-to-good machines with sales of 900 yuan over 6 days, averaging 150 yuan per day. Even if we assume 365 days a year with no failures and 24-hour operation, the annual sales would be 54,750 yuan. With an average gross margin of 40%, the annual profit would be 21,900 yuan. After deducting the operating cost of 24,000 yuan, you would lose 2,100 yuan on this machine. And this doesn't even include the entry fee, storage, delivery, time costs, and interest on invested capital. Of course, some might say sales double in peak season, but they forget the discounts in off-season. Admittedly, some people with strong social resources can get lower rents, or even no rent except electricity. Well, Feiyu congratulates you; you are the winner in life. (With such good resources, you can make money doing anything.) Of course, there are still some cost-effective locations; otherwise, who would pay attention to vending machines if there's no profit? Operators are not stupid, but the premise is you can get them. Therefore, high-output locations are a scarce resource, and this resource determines the industry's cost. Careful friends who read yesterday's article may have noticed an opportunity that is a bit better than working: Nongfu is recruiting vending machine service providers. You don't need to bear equipment costs or pay site fees; you only handle site maintenance, delivery, and restocking, with a fixed monthly service fee of 7,000 yuan plus a subsidy of 0.15 yuan per bottle. This is a guaranteed income. As for operators who compete on capital and resources, I think it's better to forget it. 3. Social labor costs determine the rise and fall of the industry I think the significance of vending machines lies in two points: first, to save labor costs through automation; second, to facilitate consumer purchases. Vending machines are a commercial activity. The first point is the main reason for their emergence, and the second is a side effect. The reason Japan has so many vending machines, even selling meal tickets at restaurant entrances and cigarettes on the roadside, is that labor costs in Japan are very high. For example, Japan's minimum wage, including for part-time foreigners, is 850 yen, about 60 RMB, with a 25% night shift premium after 10 PM. This is a huge cost for merchants. Take selling beverages as an example: hiring someone to sell drinks all day, with a bottle selling for about 110 yen, after deducting labor costs and store rent (which is also a significant cost in Japan due to expensive land), how much profit remains? In China, labor costs and store rents are not as high as in Japan, but the costs of maintenance, technology, unexpected losses (such as theft), and technical barriers (some potential buyers may not buy because they don't know how to use the machine) are relatively higher for vending machines. So naturally, more people choose manual sales. In the past two years, the rapid development of vending machines is closely related to the rising domestic labor costs. However, since vending machines are a new thing for Chinese people, there is a lack of relevant talent and operational expertise, and the advantage of vending machines offsetting rising labor costs is not obvious, so the return on investment has not attracted much capital. Currently, many manufacturers and operating companies are still exploring to find a balance point to improve equipment profitability. Judging from the current trend of labor costs, the conditions for vending machine development will be relatively favorable in the next few years. 4. Consumer habits affect the speed of industry development Around 2009, when vending machines first came into people's sight, they were novel for a while, but then quickly declined. The reasons are: first, the technology was not advanced enough; many domestic machines broke down and were not repaired in time, causing people who were willing to buy from vending machines to gradually stay away and lose trust in such equipment. This is a hard injury. Second, payment methods were single and cumbersome: coins, paper money, and bank cards were inefficient and prone to failure. Fortunately, with the advent of the mobile internet era, mobile payment capabilities have become increasingly powerful. Simple, interesting, and efficient online payments have attracted a large number of young consumers. Our vending machine manufacturers are also constantly trying to please consumers with interactive games, one-cent sales, social promotions, and other activities to get closer to consumers, and they have achieved good results. But we also see that mobile e-commerce, specialty convenience stores, and traditional retail terminals like subway kiosks are making similar efforts, and their services are constantly upgrading. Honestly, in China, consumers still prefer to buy goods in small shops with staff and high service quality. The user scenarios that vending machines satisfy are: immediate needs (no nearby shops, 24-hour availability) and relatively rigid needs (thirst, heat). In such scenarios, vending machines actually provide a service, not price-oriented. Given the current coverage of traditional terminals, the space for vending machines to play is limited. Well, actually, Feiyu is still quite optimistic about the development of the automated retail field, after all, it is a future trend. Under current circumstances, for food manufacturers, especially in the beverage sector, vending machines play a greater role in competing for market points, in other words, an extension of deep distribution, just a fresh and interesting special channel. As for distributors considering investment transformation, if you have the conditions and resources, you can still have some fun. Disclaimer: All articles and images published in this public account are for internal communication purposes, and the source and origin are indicated in a prominent position. If there is a copyright issue, or the copyright owner does not wish to be published on this platform, please contact the editor through the various channels below, and the editor will delete it immediately. Founded in May 2013, it is the earliest, largest, and most influential FMCG platform on WeChat. 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