Vending machines are cool but there are instances where customers require greater utility than a typical vending machine can provide. The typical vending machine is small and stocks mostly unhealthy snacks and drinks. When you have a lot of space and can accommodate a significant inventory of healthy products, it makes sense to go with micro market vending instead.
What Is Micro Market Vending?
Micro market vending is running a self-service convenience store that offers more than the traditional vending machine by stocking what you’d typically find at your local healthy corner store, but without using a human point-of-sale (POS) employee.
Micro market vending emerged due to the limitations of traditional vending machines. You can only fit so many products in a typical standard-sized machine. Further, the design and configuration of a typal vending machine cannot accommodate some fresh foods and produce. With micro market vending, an operator ditches vending machines for temperature-controlled shelves, glassdoor freezers, and reach-in coolers.
Customers pick what they want from the shelves, coolers, or freezers, check themselves out, and pay using cashless payment solutions. Because the store is unattended and relies on customers’ honesty, micro markets work best in closed-loop environments such as office buildings, manufacturing facility floors, and apartment complexes.
How Do Micro Market Vending Businesses Work?
Unlike standard vending machines that are locked and customers have to pay before the machine dispenses the selected product, micromarkets allow customers to pick products first then pay at the self-checkout kiosk. Customers pay using cashless payment methods such as cards and mobile wallets.
Like any other business, you need to offer products in high demand. A typical micro market vending layout has sections for cold and hot beverages, snacks and candy, fresh foods, and impulse-buy items.
A location can run the micro vending business in-house or outsource it to a third party. Most locations prefer to outsource the function just as they would with a standard vending machine. An independent provider can pay a percentage of gross sales as a commission to incentivize a location owner to allow them to set up on their premises.
How Much Does It Cost to Start a Micro Market?
The cost of starting a micro market depends on the number of shelves, refrigeration/cooling systems, and inventory. For two fridges and two shelves, expect to spend about $10,000 to start.
You can keep your costs down by buying cheaper shelves or used fridges. The allure of a micro market is that it allows a location to offer more products to customers than a standard vending machine would. Also, the bigger your product range, the more money you stand to gain. Therefore, investing in fixtures that allow you to stock more products and make future expansion easy is the way to go.
While it is a good idea to keep startup costs low, you should have the following in mind while making investment decisions:
- Invest in reliable coolers and refrigeration. Food safety is paramount and you should ensure that the cooling and refrigeration systems are reliable.
- Stock all top micro-market sellers. In most micro markets, top-selling products include coffee, water, bagged snacks (including healthy options such as energy bars), cold drinks, and fresh fruits.
- Aesthetics matter. Having an appealing presentation is important. Choose good-looking shelves and enhance the appeal using internal lighting in the displays. Also, instead of handwritten signage, consider using professionally designed and printed signage.
You should consider getting easy-to-install fixtures that make future expansion easy and simple. Free-standing displays and buckets work best.
What Are Good Locations to Place a Micro Market Vending Business?
Micro markets work best in closed-loop locations because they operate on an honor system with no POS attendants. Further, as is the case with any vending business, you need a location with sufficient daily foot traffic. A location that sees more than 50 people daily is ideal.
Besides traffic, you want to consider the customers’ income level and the amount of time they spend at the said location. The more time they spend at the location, the better. The following locations make for great micro market vending
- Office buildings - put them in the break room
- Manufacturing and processing facilities
- Apartment complexes
- University campuses
- Hospitals
- Health clubs
- Hotels
- Military bases
The above locations are typically good even for traditional vending machine businesses. That said, with micro market vending, you will record a higher ROI per customer as the product selection is greater and you are freer to experiment with various offerings to find winners.
Are Micro Market Vending Businesses Profitable?
Compared to traditional vending machines, micro market vending businesses are considerably more profitable. According to Nayax, one of their customers increased sales at a vending location by 65 - 70% after adding a micro market.
A micro market vending location will likely get 18% more visits than a traditional vending machine location. The average micro market customer spends a lot more per checkout than a vending machine customer. This can be explained by the following factors:
- Fresh food and healthy vending. The layout of micro vending displays allows operators to carry more healthy foods. Some customers even buy complete meals at micro vending businesses.
- Wider product variety. Micro vending businesses carry more products than traditional vending machines. As a result, customers have more of their favorite products available.
- Visible package callouts. Because products are on open display shelves and baskets, customers can easily see package callouts. If a vendor is selling healthy organic products, callouts such as “100% organic”, “non-GMO”, “USDA-certified”, and “whole grain” are clearly visible. This is especially valuable today as consumers are increasingly seeking organic food alternatives.
- Better customer experience. Customers can select as many products as they want and self-checkout using cashless payment solutions.
The profitability of your micro market vending business will depend on your business acumen. Below are the steps you can take to make your micro market vending business more profitable
- Find locations with a lot of foot traffic. You want to install your business at a location that sees at least 50 people daily. The most profitable locations have more than 100 people who spend more than 5 hours on a working/school day at the facility.
- Stock in-demand products. Coffee, water, snacks, fruits, and healthy food do well in micro markets. You can experiment with your offering to gauge demand for various products and adjust the product mix accordingly.
- Include non-food items. Non-food items such as toiletries, personal hygiene products, aspirin, and antacids also do well in micro markets.
- Use a vending management system. A vending management system will allow you to be on top of things and avoid out-of-stock instances that may lead to lost sales. Such a system will also help with inventory control and avoid losses due to spoilage and sell-by-date write-offs.
- Offer a loyalty program. Running a retail loyalty program in a closed-loop environment can be very profitable. One way to do this is to design different loyalty memberships and offer discounts based on those rungs. This will encourage customers to spend more in your micro market and prioritize buying from you over other retailers.
- Open more locations. The more vending locations you have, the more revenue you’ll generate. You can use our vending locator service to find potential micro market vending locations in your city.
- Sell seasonal trendy products. Seasonal produce and trendy products excite customers and can spike revenues when they become available.
- Accept all popular payment options. At a minimum, you want to accept Visa, MasterCard, and Amex, and popular mobile wallets such as Apple Pay and Google Pay.
- Review sales data often. Reviewing sales data can help you make better executive decisions on what products to add or drop. You don’t want slow-moving products taking up a lot of shelf space.
- Find good suppliers. Profit is a function of the selling price and the cost of goods sold. You should source your products from bulk specialty suppliers that can give discounts.
- Manage operation costs. Keeping your costs low will help your profit margins. Some of the costs you want to keep low include warehousing, transportation, and equipment maintenance.
- Install quality fixtures. Shelves and other fixtures should be sturdy and long-lasting. You don’t want to incur unplanned large one-off expenses because of unexpected breakdowns.
- Mitigate theft with security cameras. Because micro market vending operates on an honor system, there will be some losses due to theft. Vendors report that such theft are often no more than 2%. Nonetheless, you can still take steps to eliminate theft entirely, including by installing security cameras and reporting recorded incidents to the property/office management.
What Are the Advantages of a Micro Market?
To a vending operator, a micro market has the following advantages:
- It allows an operator to offer a wide variety of products - increasing choice leads to more vending sales
- It gives the operator the ability to offer high-quality products such as healthy organic produce and meals
- Because an operator can customize the shelves and display, it can be more aesthetically pleasing than standard vending machines
- It is generally more profitable than standard vending machines
To the location owner/property manager, having a micro market on site has the following advantages:
- It increases employee satisfaction
- It provides employees with healthier snacking options and so leads to an increase in productivity
- It improves morale at the office
- Because employees can easily satisfy their hunger and energize, they experience less stress on the job
- Improved employee health contributes to fewer sick days
- It provides greater utility than a traditional vending machine because of bigger package sizes and greater freedom with display configuration
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What Are the Disadvantages of a Micro Market?
The main disadvantage of micro market vending is that it requires more capital to start than traditional vending machine businesses. With start-up costs starting at around $10,000, it may be out of the reach of some vending business operators. Further, micro markets require a large space in a closed-loop environment. Finding a suitable location that meets traffic and space requirements can take time.
