---
title: "Vending Machines vs. Unmanned Stores: Which Should You Invest In?"
description: "In recent years, 24-hour unmanned convenience stores have emerged, allowing customers to enter, select items, and leave without on-site payment. Will such applications completely replace vending machines? This article analyzes the investment potential of both vending machines and unmanned stores, considering factors like market saturation, operational efficiency, and future trends."
author: "New Distribution"
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published: "2017-07-02"
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# Vending Machines vs. Unmanned Stores: Which Should You Invest In?

> In recent years, 24-hour unmanned convenience stores have emerged, allowing customers to enter, select items, and leave without on-site payment. Will such applications completely replace vending machines? This article analyzes the investment potential of both vending machines and unmanned stores, considering factors like market saturation, operational efficiency, and future trends.

In recent years, 24-hour unmanned convenience stores have been emerging continuously. Customers can enter, select products, and leave directly without paying on the spot.
Will such application scenarios completely replace vending machines?
**Vending Machines**
The vending machine business, spread across high-traffic areas, has already undergone its first round of capital harvesting, with many investors planning to incubate such projects themselves.
Why has the vending machine, a form that is not new in itself, become popular at this time? Is it a good business? If you are an institutional investor or an individual investor with spare money, seeking offline consumer formats suitable for investment or franchising, these questions need to be clarified.
Here, I attempt to find answers through the following questions.
Since 2016, the overall offline physical chain business has entered a window period. An obvious reason is that online traffic opportunities are decreasing, almost exhausted. Therefore, entrepreneurs and investors are returning offline to seek new opportunities.
However, offline chain formats also have problems: profit margins are being compressed, and rental and labor costs continue to rise. In 2016, average employee compensation in China grew by 8%, while overall rents increased by 7%. Thus, "labor-reduced small-unit offline chains" have become a good choice, corresponding to vending equipment.
In China, there is one vending machine per 4,500 people on average, while in the US it is 35 and in Japan 23. This indicates extreme market undersaturation. With the popularity of mobile payments and opportunities from cyclical capital changes, the vending machine format, which has existed for a long time, experienced a concentrated outbreak at the end of 2016.
**2. How to invest in vending machines?**
Vending machines are a business that can recoup investment quickly. The payback period for a single coffee machine ranges from 4 to 6 months, and orange juice machines and ice cream machines are similar; mini KTVs may be faster.
However, retail rarely has economies of scale; it is a linear growth business, so we need to replicate profitable units on a large scale.
This has become an advantage for vending machines: compared to a store of hundreds of square meters, they are easier to complete channel BD, reduce channel costs, and enter long-tail high-traffic locations that stores cannot cover, such as office buildings, communities, and subway stations. Moreover, the channel implementation process is faster and more flexible.
**3. What are the concerns about investing in vending machines?**
To judge whether vending machines are suitable for entrepreneurship or investment, we must start from the basic logic of the retail format.
Most vending machines still sell beverages, snacks, and other FMCG categories, with gross margins around 40.49% (based on the first half of 2016 financial reports).
This kind of machine isolates people from items; you cannot touch the items, and you must pay before receiving the product. That's not all—sometimes you insert coins and the product doesn't come out. You kick it in frustration, and it dispenses many products, which is both annoying and amusing.
**Unmanned Convenience Stores**
Recently, unmanned stores popping up everywhere have stolen the spotlight. Let's explore their investability.
**1. Do they simplify the shopping process?**
We use a formula: Profit = Customer traffic per unit time * Traffic conversion rate * Average transaction value * Gross margin.
Because consumers are generally lazy, to make them spend, we must find ways to make shopping convenient and reduce shopping steps. We cannot make them take out their phones, scan QR codes, and pay—these all take time.
In unmanned stores, customers only need to scan their phones to enter, pick items, and leave. That's it. Customer traffic per unit time increases, the shopping process is simplified, and profits increase.
**2. Does breaking up retail reduce costs?**
In offline retail, the entry point for traffic is the store. Typically, an unmanned store carries three functions: production, sales, and experience (present in dining and some retail stores). Vending machines simplify this structure—cutting out the experience area and retaining only the production and sales units directly related to traffic acquisition and conversion, maximizing the efficiency of a retail unit in receiving traffic.
Imagine a 1,000-square-meter supermarket versus 200 five-square-meter vending points scattered across different business districts; the traffic they can receive is definitely different. That is, better breaking up retail units to receive traffic.
Therefore, at this stage, the unmanned store business can be considered a good business for investors—stable positive cash flow, rapid scaling through capital, building certain barriers (more likely regional), plus a trendy concept. Such projects can already excite capital.
**3. What products are suitable for such stores?**
First, high-frequency consumption; they should have standardized product characteristics, such as packaged snacks and boxed fresh vegetables.
Second, channel layout needs to be reasonable; opening such unmanned stores in subways, buildings, and communities is best.
Finally, categories suitable for automated selling should be light-decision items that consumers see and are willing to buy, driven by supply pushing demand, rather than heavy-decision, planned consumption categories.
**4. Does it have a future?**
Rising labor and rent costs, difficulties in online and offline retail—where will retail go in the future? These are all headaches. This year is the first year of artificial intelligence; many companies are eager to act, and upgrading traditional retail to smart retail is urgent. The Kuaimao unmanned store is a typical example of AI application in the retail industry; perhaps its emergence will bring new vitality to retail.
No matter which sharing economy product you invest in, you must look at it from multiple angles. Some are capital-driven bubble trends, while others are future scenarios.
**Source: Retailer Dao**
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