Redefining Convenience

Think of the last time you walk passed a vending machine – what did it sell? Pop and snacks. What else could it be, right? Interestingly, the Japanese have really taken the application of this technology to the next level, selling consumer goods across multiple categories such as consumer electronics, perishable food products, cosmetics, and clothing, etc. In the major cities where urban dwellers are time-starved, human capital and floor space are extremely expensive, vending machines are employed as a mainstream retail channel in Japan. According to national statistics, there is basically one vending machine to every 5 people!

So why are they so popular in Japan? Convenience! You can basically get anything from anywhere twenty-four seven. From hard liquor to life lobsters, from digital cameras to even used undergarments. The product assortment is broader than what you can ever imagine. As well, you can make purchases with or without cash; these next generation vending machines accept all sorts of payment medium such as debit card, credit card, and smart cards (similar to a Tim Card). Plus, some of them are equipped with ID card scanning technologies to prevent children from acquiring adult goods such as cigarettes, alcohol, and pornography.

To maximize the convenience factor and effectively reach specific target customers, merchants strategically place their vending machines at the optimal locations to maximize sales. For instance, vending machines that sell fishing baits are located at the most popular docks and fishing areas. In major motel districts, vending machines that sell alcohol and energy drinks are placed adjacent to the ones that sell condoms, providing customers with another kind of one-stop shopping experiences. Moreover, for customers who prefer to have minimal staff interference and public attention, vending machines can make their shopping experience a less stressful one.

Instead of solely making cash transactions, vending machines nowadays are also used to conduct promotions and enhance customers’ shopping experience at the same time. Many vending machines are uniquely shaped and designed to attract consumers’ attention. Some of them even have LCD displays to excite customers’ senses and facilitate their product selection process. Interactive videos, in-depth product descriptions, and other pertinent information are readily available at the users’ demand.

For the reason that automatic vending machine is a widely-adopted, mature technology in Japan, they are relatively cheap in the country. Coupled with the elimination of labour related costs and other fixed costs, the added convenience is offered to consumers only at a slight premium. In fact, products sold by vending machines are typically cheaper price compared to ones sold at conventional c-stores.

This ultimate combination of customer value has helped many businesses to achieve strong market penetration and realize significant profit margins simultaneously. Moreover, without the reliance on physical retail stores, vending machines can allow businesses to gain additional market penetration in even remote or less populated areas. It would be interesting to see how this technology will evolve and eventually swamp North America in the next 10 to 15 years.

Additional Photos:

1. http://www.photomann.com/japan/machines/
2. http://www.darkroastedblend.com/2007/09/vending-machines-craze-in-japan.html

YouTube Links:

1. http://www.youtube.com/watch?v=8fdz69vjSCk
2. http://www.youtube.com/watch?v=LT1dGtoa8gI&feature=related
3. http://www.youtube.com/watch?v=fBorZetbAKo&feature=related