Japanese Vending Machines have proven incredibly successful and loved by the people, since its first appearance in 1888 selling cigarettes. Drink vending machines alone generated $27 billion (£13.9 billion) in 2010. Surely this business model can be modeled elsewhere? If it is so successful in one place then it certainly can be successful in another?
JAPAN, THE LAND OF VENDING MACHINES
Japan has a reputation for innovation, and its vending machines are often its flag-bearers. The machines offer an endless list of products including: fresh fruits and vegetables, sake, hot foods, batteries, flowers, cigarettes, clothing, lingerie, and, of course, sushi. Interestingly, the US has the most vending machines in the world, however, Japan has the greatest density. Statistics indicates that there are 5.5 million vending machines in Japan as of 2016. That’s a ratio of one vending machine for every 50 people.
JAPAN, THE FUTURE OF VENDING MACHINES
New “smart” vending machines offer cashless payment; face, eye, or fingerprint-enabled recognition, as well as social media connectivity. The vending machines of the future will recognize your identity and tailor their offerings to your interests and tastes. The hyper-customisation to appear via Google and Amazon by 2020 already exists in Japan. A ‘face recognition enabled’ vending machine decides for you. It already knows your favourite drinks and chocolate bars.
I was lucky enough to experience one of those at Shinjuku Station, Tokyo. When you are unsure about choosing between two or three choices, it can choose for you by scanning your face! This is based on big data analytics; the more face-scanning machines there are out there, the better the machine-learning. For instance, people from 30-yrs onward would prefer drinking hot milk tea, green tea or orange juice in the winter. Younger people prefer soft drinks in the summer. While the conclusions are relatively basic at this stage, the machines are learning every day…
EVOLUTION AGAINST COMPETITION
The rise of 24/7 convenience store or ‘Konbini’ (7/11, Lawson) vending machine companies need to explore fresh ways to keep people spending at their machines. The main demographic consists of middle aged male office workers.
As a result of the increase in competition, drinks company Dydo Drinco, for example, has started introducing vending machines that talk to customers with games where customers can win prizes, as well as a smartphone app for users to collect points and introduce more fun into the vending machine experience.
Market research projects that by 2020, 20% of all vending machines will be smart machines, with at least 3.6 million units knowing who you are and what you’d like.
IS JAPANESE VENDING MACHINE TECHNOLOGY TRANSFERABLE?
Why are these machines so successful in Japan and so difficult to find elsewhere?
Safety — a low crime rate
The Japan National Tourism Organization says that the country’s low crime rate is why there are so many vending machines in Japan — because the machines can be left outside and are rarely vandalised. Cases of vandalism do happen, but it’s very rare! In-built cameras can be found in most vending machines and have direct contact with various police stations. Vending machines are helped by the fact that in Japan, protests and demonstrations seldom turn violent or resort to looting. This helps to keep faith in the vending machine business, knowing property is rarely damaged or vandalised.
In the USA, as ‘Business Insider UK’ claims, “American vending machine companies don’t even consider operating stand-alone, street-side units,” due to fears of vandalism and property crime. Similarly, in 2015, there were around 1.3 million incidents of criminal damage of personal and household property in England alone according to Office for National Statistics. Perhaps, why it is difficult for other countries to emulate Japan’s vending machine system lies in the likelihood of crime against property.
93 percent of the Japanese population lives in cities.
Population density has unsurprisingly increased real estate prices for decades, just like any other major cities in the world affected by constantly increasing property prices.
As a result of high property prices and population density. There is a lack of room open convenient shops and store consumer good. As Business Insider UK claims, “Vending machines produce more revenue from each square meter of scarce land than a retail store can.”
A Fascination for Technology
Japanese culture is obsessed with automation and robots, journalist Tsutomu Washizu explained to The Japan Times in 2007. Washizu, who wrote a book on the history of vending machines in Japan, credits the Japanese people’s fascination to technological innovation as the main reason why vending machines are so popular.
“There is no other country that has so much automation. The Japanese people have a high regard for, and trust in, automated systems,” Washizu said.
Japanese people possess a deep desire for technological innovation which is an integral part of Japanese culture. However, basing on technological assumption is an oversimplification. In Japan, technology is based on convenience. It is to make easier for consumers to buy and companies to sell. Therefore, this isn’t not wholly an affection to technology but rather, a deep desire to make life easier for everyone.
In the UK we see vending machines as just plain, simple vending machines. Visually, dull and emotionally affectionate. In Japan, the society has embraced them, treating them as essential part of life.
Long Working Hours
In comparison to London and New York where the average working hour per day is ‘9–5'. Despite contracts claiming the 8 hour work day, it is common for employees to work 12+ hours a day on average this excludes the unpaid overtime hours which is often included in employees contracts in Tokyo. Due to the long working day vending machines are very popular among the citizens because convenience is highly valued. Vending machines continue to serve as an important aspect of convenient retail especially in the rural areas of Japan which eliminates the need for a sales person.
Vending machines are not uniquely Japanese
Vending machines are not uniquely to Japan alone.
Switzerland home to ‘Selecta’ the leading vending and coffee services company in Europe with a turnover of 740 million euros and 4,300 employees. With a global presence in 18 countries. It offers coffee, drinks and snacks vending machine. Japan on the other hand, possesses a more diverse range of vending machines as we have seen above.
In Italy, Claudio Torghele developed a machine that makes and delivers pizza in three minutes. The tomato-red machine, called ‘Let’s Pizza’, prepares the dish from scratch. A window in the front allows customers to watch as the flour is kneaded, the pizza disc formed, tomato paste and other ingredients spread on top and the finished creation baked under infra-red rays.
“This is not just a vending machine, it’s a mini-pizzeria. With the windows where you can watch the pizza being made, kids love it.”
The AVEX summit 2017 highlighted the longevity of vending machine existence in the United Kingdom. In 2017, the AVEX summit aims to “witness the latest of those vending machine transformations with an innovative approach to both content and presentation”. The Summit will be held between September 12–13 in Birmingham and will showcase the latest innovations and expertise from the vending, coffee and water sectors.
Interests from a Neighbor
In 2016, China held the Vending Machine Summit. There are growing interests from Chinese business corporations as an attempt to emulate Japanese vending machine success. Such a summit is convened through mutual need and ambition. The Chinese wants to open up new business ideas whereas the Japanese representatives pursued expansion overseas.
Already, Japanese culture is highly popular in China. This is particularly the case through the dominance of Japanese anime, such as, Doramon,Crayon Shin-Chan and more recent anime like Dragon Ball Super. Japanese cultural penetration does not just stop there. Its fashion is also highly desired among Chinese youths as well as its food and other household products.
Could we see an emulation of Japanese style vending machines in China? Could it prove to be profitable and successful?
Going by the size of the summit, we can acknowledge the Chinese market has potential for growth. According to the organizers, there were 14,000 visitors this year (an increase of 30% compared to the previous edition) 320 exhibitors, 15,000 square metres of exhibition space and 2,400 international visitors. This is evidence that the summit was well organised and clearly it was drawn interests from China in the vending machine industry.
The 4 reasons behind Japan’s vending machine success is as follows: low crime rate, population density, fascination for automaton and long working hours. Each reason alone cannot explain why they are so successful it is the accumulation of all the factors which contributes to its success. This is one model that is hard to emulate for the rest of the world, however, we cannot say vending machines are ‘uniquely’ to Japan. Nonetheless vending machines in Japan symbolizes the safety and convenience of the country. We can be quite confident China is a new market with plenty of opportunities for the next vending machine ‘boom’.