From my vantage point, it appears to me that our industry suffers from myopia – not literal nearsightedness, but a lack of imagination, discernment and long-range perspective in thinking and planning.
Maybe we got to our present state because it is easier to sell a business than it is to dig in and fight. At least that is why I sold my route. I was a small operator – one man, one truck, less than 100 units in the field. For me, it was easier to sell my route, especially because I got 85% of gross sales plus my truck, plus a bit extra for a few locations I sold off individually. I made the decision to sell after a location kicked me out because I tried to raise my prices by a nickel.
Today, I again run my own business within the vending industry. I still keep in very close contact with its members, especially in Arizona where I live. Arizona is unique because it probably is the worst vending environment in the United States. Don't get me wrong: when it gets to 120°F. outside, you do sell a lot of soda. But by some estimates, there are more than 1,000 independently operated vending companies in Phoenix, maybe 90% of which run fewer (far fewer) than 100 machines. Which means, bottom line, that it is not hard to find an operator who will gladly place a machine to sell a 12-fl.oz. can of soda or a 16-fl.oz. bottle of water for 50¢.
Around this operator base is a group of suppliers, route brokers and equipment dealers. I have seen a few of these dealers get into very dire financial situations lately because they are supporting operators who are not running sound businesses. From the perspective of these dealers, it is more profitable to sell a refurbished Automatic Products 4600 for $795 and collect the never ending repair revenue than it is to sell a new machine.
Unfortunately for the equipment distributors, these two-decade-old snack machines, which should have been scrapped a long time ago, are still being put into service, which curtails new machine sales and prevents new technology from being adopted. Distributors are unable to explain to operators why they should buy a new $3,000 snack machine when another operator can and will come into the same account with a refurbished antique, purchased at a quarter of the price, and offer the same perceived benefit to the location.
The patron, then, is left to walk up to this quaint-looking old machine, which has been surgically enhanced more often than Elizabeth Taylor, to make a purchase. He or she will use cash, of course, and will fervently hope that the product actually is delivered. These patrons are accustomed to shopping online, making purchases from Amazon or Zappos.com, which offer them a completely different experience. The National Automatic Merchandising Association's Dr. Michael Kasavana is right: The Internet is one big vending machine. Until we all stop and really think about the consequences of our actions as they relate to vending patrons, our industry – the original champion of self-service – will continue to suffer from the comparison with e-commerce.
Ultimately, everyone in the vending industry must take responsibility for where we are today, and realize that change not only is necessary, but is a good thing. I will have much more to say about this reality in the months ahead. In the meantime, think about where you see yourself in five or 10 years. Sometimes we get too preoccupied with running our businesses to see what we are doing and where we are going. I should know, because for almost five years, I did it too.
DAVID LEVINE is a former financial advisor and vending company owner. He now runs MB Media Brokers (Phoenix), which specializes in low-cost wireless retrofittable signage for vending machines. Founded in 2005, MB Media Brokers was born out of Levine's conclusion that the vending industry's potential is impaired by the current perception of vending. He believes that this problem can be addressed while providing additional revenue to operators. His solution is to use digital signage to convert the existing machine base into a massive network of digital billboards, capable of both broadcasting and advertising.