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Saturday, April 2, 2011

How to Build a Small Digital Vending Empire in 18 Months or Less with New Twist to an “Old” Business by Marc Charles

 Reprinted by permission

How to Build a Small Digital Vending Empire in 18 Months or Less with New Twist to an “Old” Business

Dear Entrepreneur:

I drove around Las Vegas recently with an entrepreneur who was hell bent on building a vending route cash cow.

I witnessed a twist to this old world business. 

He also proved me wrong when I scoffed at the numbers he was throwing around. It cost me an expensive dinner and drinks at Michael Mina’s in the new City Center.

Anyway, if you’re anything like me….the thought of running around town filling vending machines with candy, potato chips, and assorted personal items is NOT my idea of a great business.

But the idea of automated digital vending machines and kiosks is a different story.

Here’s the deal……

There are more than 42 million vending machines worldwide, representing sales in excess of $100 billion, according to industry experts.

Cashless digital machines account for about $32 billion of this mega-trend ... and there’s no end in sight.

In Japan, digital vending is huge! 

According to the Japan Vending Manufacturers Association, there are more than 6 million vending machines in Japan – and many of them are fully digital.

What Makes Digital Vending Different?

Old world vending machines are the ones offering things like candy, soda, snacks, cheap toys, and toiletries. Make no mistake about it – this is still a monster market!

But digital vending machines on the other hand, offer digital products like instant prints from your digital camera, music, movies, VOIP, gaming, gambling and phone charging ... to name a few.
Digital vending save time, money, resources and maintenance! They require less maintenance, physical inventory and manpower to manage.

On top of that, digital vending has skyrocketed into the 21st century. 

Get this….

You can buy digital machines today with “smart chips” which automatically send you an e-mail, text message, or other signal to inform you when the supply of a particular product is low or if the machine is screwed up. 

My approach to the vending business won’t appeal to everyone. 

My strategy calls for owning your digital vending equipment and concentrate on high demand digital products or which require almost no space.

You see……

Most entrepreneurs who enter the vending business do one of three things:

1)    Buy into a franchise and/or lease equipment
2)    Buy a vending route from another entrepreneur and/or work off a profit share
3)    Work for a vending route owner and split profits

I think the best way to approach this business is by securing the best locations and then purchase a digital machine to match the location.

More on this in a second….

The vending products most appealing to me are:
  • video entertainment (touch-screen games and video poker)
  • phone cards
  • Internet VoIP
  • massage chairs
  • digital ID photo booths
  • ATM machines
  • Breathalyzers
  • gaming and gambling
  • music and movie downloads
  • iPod and iPod nano (preloaded with music)
  • TracFone
  • disposable Motorola RAZRs
  • insurance
  • medical information
I realize most start-up entrepreneurs can’t afford to buy vending machines outright. 

If that’s your situation - don’t worry. There’s an entire industry built around financing vending machines for would be entrepreneurs like you.

Vending financing is another side of this business you might consider. 

You could buy the digital vending machines and sell them (via financing) to would be entrepreneurs. You could also provide consulting services and customized machine placement plans.

But I still think the best way to build a digital vending empire is to start small, own your equipment, and focus on high demand products.

Vending’s Dirty Little Secret

Hold your horses. Get your mind off the vending machine for a second and start thinking about buying or leasing locations.

Location is the key to success in this business.

Once a location is secured (I’ll show you how) you could purchase and place digital vending machines for it.

Then repeat the formula by purchasing additional machines and placing them in strategic locations.

Obviously, securing prime locations can be difficult…as my young start up friend found out.
But we’re entrepreneurs……we’re supposed to think on our feet and get things done!

One way to secure prime locations (and machines) is to buy them from entrepreneurs who want to get out of the business.

You could also negotiate for prime locations by offering owners a percentage of your sales. Believe me….people are receptive to residual income proposals. But don’t paint a pretty picture. Show property owners the ugly downside and underbelly of the business and this opportunity. 

Smart property owners will sell themselves, and most will be responsive to your offer.

In my opinion and research the 10 best digital vending locations are:

Train stations
Cruise ship ports (and onboard)
Popular nightclubs
Mega-malls with indoor entertainment
Large college campuses
Popular restaurants
Highway rest areas
Shopping centers and food stores
Hotels, resorts and casinos

Placing vending machines in key locations with a constant flow of traffic is a science. 

But digital vending machines typically require much less traffic to be profitable. 

On top of that, digital vending machines often receive more activity then the old world machines partly because they’re fun.

Companies around the world manufacture digital vending machines. I’ve listed some manufactures in the valuable resources section.

Don’t overlook digital vending machine manufacturers in countries such as China, Taiwan, the Philippines, and Viet Nam. 

In most cases, you’ll pay much less from manufacturers in these countries than you will from U.S. manufacturers. 

Granted, shipping may be an issue. But you’ll often find overseas companies will bend over backward to help a U.S.-based company or entrepreneur.

You could also partner with existing digital vending entrepreneurs in exchange for a percentage of the profits. By “partnering,” I mean you would oversee a section of a city or region for them to make sure everything is running properly.  (And remember, it’s easy to do that with the new machines that have smart chips installed.) 

Your Humble Host,

Marc Charles

(Ed Note:  Marc Charles is referred to as "The King of Business Opportunities" ....and for good reason. He should be known as "The King of Legitimate Business Opportunities"...because he's launched, bought, sold reviewed and advised on hundreds of businesses and money making opportunities. He understands legitimate opportunities. Marc has agreed supply League of Power members with crucial updates regarding legitimate business and money making opportunities.)

***Action Strategy***

My digital vending strategy is perfect for making money in this business.

Focus on a location first. Then buy (or finance) digital vending machines one at a time.

Learn everything you can about prime locations. 

Insider Tip: Large vending companies like Canteen or ARAMARK often sell or lease space in high-traffic locations.

You can also use a digital vending placement service (I’ve listed a few of them below.)

Your primary objective is to purchase and place one digital vending machine and make it profitable. 

Then duplicate the formula by purchasing and placing additional machines.

In 18 months (or less) you should nice venture generating income. 

On average a digital vending machine in a medium traffic area can generate around $4,000 per month net. If you have 6 machines placed in strategic locations it could mean $24,000 per month!

According to a recent article in the Christian Science Monitor Mall retailers generate about $300 per square foot on average.  Airport retailers average about $1,000 per square foot. Automated digital machines, by contrast, can earn between $2,000 and $8,000 a square foot or $4,000 and $30,000 per square foot in airports.
Your venture could be attractive to other entrepreneurs should you decide to sell too.

********Valuable Resources *********

Vending Location Services:

Trade Publications:

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