October 30, 2010
Why Inexpensive Prizes Will Always Draw Customers
Bulk vending machines earn the loyalty of customers with their fun and inexpensive merchandise. Representing only 1 percent of the vending industry, bulk vending machines remain popular attractions at bowling centers, restaurants, mini-malls and movie theaters.
As owner of Rick’s Vending for 21 years, Rick Krikorian locates bulk vending machines in four counties throughout central California. As an active member in the National Bulk Vendors Association, Krikorian works also to advance the opportunities that exist for bulk vendors.
“Bulk vending is a great way to break into the vending industry,” Krikorian explained. “It does not take a great deal of money to get started. Bulk vendors can start out part-time and then add to the number of machines as they get more comfortable with their business.”
Krikorian places machines within a 65-mile radius of his home base of Visalia. He operates one-inch and two-inch capsule machines, plus machines containing bouncy balls as well as flat merchandise machines offering tattoos, stickers and football cards.
“The old favorites seem to never go out of style,” Krikorian said. “I place my machines in grocery stores, amusement parks, laundromats and pizza parlors – anywhere where there are kids. Small children love to put in their coin, turn the knob and get a great prize.”
Krikorian points out that part of the bulk vending machines’ charm is that they cost a customer between 25 and 50 cents to get a prize. However, proposed federal child safety laws will add significant costs to vending operators if they have to label each toy that goes into their machines.
“We are hoping that we will not have the labeling issue. Costs are higher because of all the testing that needs to go on now,” he noted. “We want to be able to still deliver a fun, quality toy or prize for 25 or 50 cents.”
The secret to success for bulk vending operators is finding the right merchandise for the right venue. Krikorian has learned that success in vending depends on a triangle that includes store owners, the children who use the vending machines and the vending machine operators.
“The store owners have to be happy not only with what is inside the machine but their commissions too. The kids want good prizes and we want the volume so that we produce a profit at each location. When the triangle works together, we all have success.”
Keeping merchandise new and fresh is critical for bulk vending operators. Depending on the venue, some machines are changed more than once a week, and customers, especially children, know when merchandise is dated. Many vending machine operators rely on their distributors for advice on what to stock in their machines.
“One time, my distributor told me about Bok Choy Boy and how this action figure was going to be one of the biggest sellers,” Krikorian recounted. “I thought he was crazy. Who wants something called Bok Choy Boy? I ate my words because this toy was huge. Britney Spears stickers were also really big about 10 years ago, and so the distributors believed that Ricky Martin stickers would take off too. Ricky Martin stickers were the biggest duds. ”
When operators are faced with unpopular merchandise, Krikorian believes its best to cut their losses and remove that merchandise.
“It’s better if the unpopular items sit on a shelf somewhere than in a machine. People won’t want to put a coin in if they see merchandise they don’t like.”
According to Krikorian, bulk vending machines also serve a purpose in that they become sometimes the only place where people can find a certain item.
“Super balls are hard to find in stores anymore. When kids want them, they come to a bulk vending machine and that is where they buy them. Football cards are also moving in this direction. They are not found in many stores, and when football season comes around, the kids want the cards so they look for the machines.”
Alabama-based Birmingham Vending has been a family owned operation since 1931. Today, Steven Toranto operates more than 1,000 vending machines, including capsule bulk vending machines, in various venues from bowling centers to movie theaters to pizza parlors.
“Some of the vending industry has taken a big hit, but bulk vending machines always have a strong following,” Toranto noted. “It’s true that the volume has to be there for people to make good money, but there is never a shortage of customers. If you put the bulk machines where children are – especially small children – they are found.”
Although most of Toranto’s machines are not bulk vending, he still appreciates their value, especially to people starting a vending business.
“This is a tough business, but starting out with bulk vending is a smart idea. The machines are not that expensive and they are easy to fill, so they are a great introduction into the industry,” he said. “We keep our bulk machines because customers have a definite loyalty toward them. Store owners like how patrons still look for them. Some customers go into a location because they know the machines are there.”
San Jose, California-based Acme Vending has been in Joseph Adragna’s family for 68 years. Adragna has witnessed many changes in the vending machine industry. Costs have risen on the supplier end, so prices have also risen for the vending machine customer. Even prices on bulk vending machines have doubled in some cases.
“The rise in price for bulk vending is unavoidable but not good,” he observed. “These machines target 5 to 12-year-olds, and these children are looking for a fun prize that is not expensive. It’s hard to charge more for a capsule or bouncy ball, but it has become necessary in today’s world.”
Despite the increase in costs, Adragna still views bulk vending as a constant in the industry, but he recommends that operators make sure to keep their machines cleaned and stocked.
“The vending machine has to be maintained regularly,” he said. “Since these machines attract small children the most, parents look to see that they are clean. As a bulk vending operator, you owe it to the venue and your customers to maintain the machines.”
As owner of 8 Ball Amusement in Mountain Home, Ark., Richard Williamson operates more than 300 machines through southern Missouri and Arkansas in bars, restaurants, theaters, taverns and bowling centers. Williamson prefers to have a variety of merchandise in his machines, and believes that updated merchandise is important for vending success.
“I rely on the distributor to tell me what is new and what is in, but there are items I don’t want, such as sports memorabilia, and I don’t like to keep certain themes with the merchandise either.”
With more than 37 years of experience in vending, Williamson has learned what his target customer base looks for.
“My customers are simple people. We do not have sports bars around here or preppy clubs or anything like that,” Williamson said. “They respond well to simple merchandise and prizes, and that is what keeps them using the machines.”
For more than 17 years, George Carque has worked his bulk vending business. Now, his son works with him, and C-5 Vending operates more than 200 machines throughout southern Nevada.
“I only do bulk vending,” Carque noted. “I never thought about expanding into other types of machines because I have had good luck with bulk vending.”
Carque operates one and two-inch capsule machines plus sticker machines and Sports cards machines in venues such as movie theaters, pizza parlors, restaurants and elementary and middle schools. This year, he also added bulk candy and gum machines. All machines are 50 cent devices with the exception of the one-inch capsule machines, which cost 25 cents.
“The candy and gum are new, and I put them in because of the economy. Adding more variety helped bolster my business.”
Carque looks to his distributors to inform him on what merchandise is hot and trending and what merchandise has fallen from popularity. When he discovers that a prize is not attracting customers, he removes it from the machines as quickly as possible.
“It’s better to have it sitting on a shelf than in a machine. A dud prize does not produce a profit.”
NFL cards and stickers are always popular in his machines, and they require Carque to replace merchandise about every three months. He leaves the football cards and stickers in his machines for all of football season, but as sports’ seasons change, so does his prize merchandise. Carque changes merchandise in his other machines approximately every two weeks.
“A successful bulk vending operator knows when to change the machines and when to let them be,” Carque said. “As long as small children see fun prizes, the machines will remain consistent winners. If you don’t maintain or update your machines when necessary, you lose your customers.” –