Vending machines make good passive income investments. Most vending machines sell snacks and sugary drinks. You can, however, curve a niche for yourself in your area with water vending machines. If you go about it correctly, your business will likely see greater success than the standard snacks and soft drinks vendors around you. In this post, I will explore the world of water vending machines and how to run a successful water vending business.
What Are Water Vending Machines?
Water vending machines either vend bottled water or dispense water from a tap to customers’ water bottles. You can sell water bottles in normal drink vending machines, such as the ones that usually sell soda pop and energy drinks. To vend water to customers carrying their own bottles, you need more elaborate vending machines that can filter water from public water systems.
How Do I Price Water Vending Machines?
As a rule of thumb, you want to shoot for a 100% markup on bottled water in a vending machine, provided the markup still allows you to be competitive given the local water vending competition. Because you can buy water bottles in bulk and get significant wholesaler discounts, you can get away with charging slightly more than 2X the purchase price in certain markets. That said, remember that the demand for bottled water is price elastic - beyond a certain price, your potential customers may skip your vending machine for your competitors’.
Are Water Vending Machines Profitable?
Since you can mark up water in vending machines by as much as 100%, water vending machines can be very profitable. To run a profitable water vending machine, you need to pay attention to the following four factors:
- The weather of the location. Water sells best in warm or hot weather. Cities where it is cold for most of the year aren’t ideal. States such as California and Texas are perfect for water and ice vending machines, as the weather is sunny for most of the year.
- Understand your potential customers. You want to set up a water vending machine where there is a clear need for it. At a fish harbor, for instance, people venturing out into the lake or sea to fish may need water to drink and ice to keep their catch fresh. Having a vending machine that dispenses both ice and water may be a hit in such a location.
- Foot traffic is key. Vending machines are best stationed where there is a lot of foot traffic throughout the year. You want at least 50 people to see the vending machine daily.
- Wholesale discounts will increase your profitability. Wholesalers offer vendors bulk discounts if they are willing to buy products in large volumes. Buying bottled water in bulk will lower costs, and allow higher vending profit margins.
The profitability of the vending operation will depend mostly on the type of water vending machine you have and where it is.
There are two types of water vending machines; one that sells bottled water (Dasani, Aquafina, Fiji, etc), and the type that dispenses filtered water to customers carrying their own bottles. The latter is unlikely to do well in locations where people buy water on the spur of the moment, such as shopping malls or walkable city main streets. Such a vending machine would do well where people would benefit from refills, such as:
- Amusement parks
- Playgrounds
- At the beach
- Near holiday resorts
- Gas stations
- Holiday inns
- Motor motels
- Camping spots
- Fishing piers/harbors
- Along busy roads, at a location where motorists can pull over
- Large city parks
A normal water vending machine selling bottled water such as Aquafina and Dasani will do well in the following locations:
- Gas stations
- Shopping malls
- Grocery stores
- College campuses
- In front of shops on main streets
- Gyms
- Airports
- Bus and train stations
- Office buildings
- Amusement parks
- Waiting lounges
If you want to sell water to people who want refills, you can also offer ice to increase your profit per location. Many ice vending machines also come with the capability to dispense filtered water. The best place to put such a machine would be next to holiday resorts, near a beach, or next to a busy road at a location where motorists can easily pull over.
Ultimately, the key to running a profitable business boils down to having decent margins, keeping recurring costs low, reducing unplanned one-off expenses, and working to increase the volume of sales. This should be true for your water vending business as well. If you keep an eye on your KPIs, you can run a profitable water vending machine business and even scale the operation to multiple locations.
Should I Only Stock Water in a Vending Machine?
Depending on location and the water demand, you can choose to only stock water or have soft drinks in the vending machine as well. Giving people a choice is always a good idea. You can have bottled water as the primary product in the machine and complement it with in-demand soft drinks such as Coca-Cola, Pepsi, and energy drinks.
In an outdoor location such as a concert venue or park where the demand for water can be high, it may not be logistically wise to add other drinks to the machine. The more space consumed by other drinks, the more restocking trips you will have to make as there isn’t enough of one particular type of drink or water to last long.
What Are Good Water Vending Machines?
A normal drinks vending machine should work just fine as a bottled water vending machine. Some of the brands you should check out include:
- The Seaga Envision ENV5B Drink Machine
- The Piranha G424 Drink Vending Machine
- The AMS Beverage Machine
If you want to vend water to people carrying their own bottles (refills), you can consider the following vending machines:
- The Everest Ice and Water Machine
- Kooler Ice Machine
Final Thoughts
A water vending machine can be a profitable investment if done right. With the right vending machine, business plan, and location, you will get a positive return on your investment, especially if you are in a state with favorable weather such as Florida, Texas, California, Louisiana, and others.
