Vending Machine Business Malaysia
Are you intrigued by the idea of owning a vending machine business in Malaysia? With its convenience and potential for passive income, this industry has captured the interest of many entrepreneurs.
In this article, I will share with you different types of vending machines, crucial considerations before making a purchase, estimated costs, potential profits, and more. Whether you’re a seasoned business owner or a newcomer, this article will provide valuable insights into starting a vending machine business in Malaysia.
Types of Vending Machines
The vending machine industry has evolved to cater to diverse consumer demands. In Malaysia, you’ll find an array of vending machines tailored to specific products. Here are some popular types:
- Snack and Beverage Vending Machines: These machines offer an assortment of snacks, candies, and beverages, making them suitable for offices, schools, and public spaces.
- Combo Vending Machines: Combining snacks, drinks, and sometimes even fresh food items, combo vending machines provide greater variety in a single unit. They are commonly found in high-traffic areas such as shopping malls and transit stations. This type of machine might be more expensive as the machinery is more complex. For example you will need a cooling system if you want to offer fresh food!
- Coffee Vending Machines: Designed for coffee enthusiasts, these machines serve freshly brewed coffee, making them ideal for offices, hotels, and public areas with a demand for quality coffee on-the-go.
- Ice Cream Vending Machines: Found in recreational spaces, parks, and shopping malls, ice cream vending machines offer a wide selection of frozen treats to satisfy customers’ sweet cravings.
- Personal Protective Equipment (PPE) Vending Machines: With the recent emphasis on health and safety, PPE vending machines have gained popularity. They dispense items such as masks, gloves, and sanitizers, providing convenience in public spaces.
Costs of a Vending Machine Business in Malaysia
Before starting your vending machine business, it’s essential to estimate the costs involved. Here’s a breakdown of the key expenses to consider:
- Initial Investment: The cost of vending machines can vary depending on their type, size, and features. On average, expect to invest between RM 5,000 to RM 20,000 per machine. Consider your budget and the potential return on investment when deciding how many machines to purchase initially.
- Inventory Expenses: Stocking your vending machines requires an investment in inventory. Take into account the variety and quantity of products you plan to offer. Consider partnering with wholesalers or distributors to obtain competitive pricing and favorable terms.
- Machine Maintenance: Regular maintenance is crucial to keep your vending machines in optimal working condition. Set aside a budget for routine servicing, repairs, and parts replacement. If you’re not comfortable performing maintenance yourself, consider outsourcing to a professional vending machine maintenance company.
- Location Costs: Depending on the location, you may need to pay fees or commissions to place your vending machines in certain establishments or properties. Evaluate the potential foot traffic and revenue generation of each location to determine if the associated costs are justified. Commissions can vary between 5% to 20% of your sales or between RM 200 to RM 1000 in case it is a rental agreement.
Potential profits of a Vending Machine Business in Malaysia
Profitability can vary based on factors such as machine placement, product selection, and market conditions. Do not trust the sales representative . Let me provide some sample numbers for illustrative purposes and how to make better estimation:
- Sales Volume: The number of sales your vending machines generate directly impacts your profitability. For instance, if your machines average 50 sales per day with an average transaction value of RM 5, you could potentially generate daily revenue of RM 250 per machine. It is very difficult to estimate the volume of a vending machine as it can be completely different from one city/item to another but I will give you the best way to estimate your sales volume below.
- Product Pricing: Determining competitive and attractive pricing is key to encouraging customer purchases. Suppose you have a snack vending machine with items priced at an average of RM 3 per item. With an average of 20 daily transactions, your daily revenue from this machine alone could reach RM 60.
- Operational Costs: Deducting operational expenses from your revenue helps calculate net profits. Consider expenses such as restocking, maintenance, and location fees. For example, if your monthly operational expenses amount to RM 500 per machine, your average daily costs would be approximately RM 16.60.
- Scalability: As you expand your vending machine business and increase the number of machines, profitability can multiply. For instance, with ten vending machines generating an average daily profit of RM 200 each, your total daily profit could reach RM 2,000. You then need to deduct the operational costs to get an idea of the net profit.
How to estimate the profits of a Vending Machine Business
The best strategy to estimate your vending machine profit is to go out into the field! Find another vending machine in this area (maybe a few streets away), estimate the traffic (number of pedestrians passing in front of the machine) and number of sales over an hour. Dividing the number sales by the traffic, you will get a ratio of sales per person.
Now you can go to the location where you want to put your vending maching, estimate the traffic over one hour and multiply this traffic by number of sales per pedestrian you got in the nearby street. If you multiply it by the item price you plan to sale, you will get a very good estimation of the potential profits of your vending machine.
Let’s take an example:
Assuming that in a neighbouring street, you find that 500 people pass by a vending a machine and you observe 10 sales over an hour, it means that the ratio is 0.02 (10/500).
If you go back to your potential location and you find that 650 people are walking in the street and that you plan to sale snacs at RM 4. Then it means that you will have a potential earning of RM 52 (0.02*650*4) per hour.
To get the most accurate market estimation, you should reproduce this experiment at different time and location.
Be cautious of Vending Machine Business scams
It’s important to exercise caution and be aware that scams can exist within the vending machine business industry. In 2021, multiple police reports have been filed against a Singaporean entrepreneur for scamming people in this industry. Stay vigilant and keep the following points in mind:
- Research thoroughly: Conduct proper research, read reviews, and verify the legitimacy of any vending machine business opportunity before making any commitments.
- Watch out for red flags: Be cautious of unrealistic promises, high-pressure sales tactics, exorbitant upfront fees, and lack of transparent communication.
- Seek professional advice: Consult with industry professionals or legal experts to gain insights and guidance when evaluating a vending machine business opportunity.
By staying informed, conducting due diligence, and trusting your instincts, you can mitigate the risk of falling victim to a vending machine business scam.