Vending And Bulk Toy
Bulk Vending is the sale of unsorted confections, nuts, gumballs, toys and novelties (in capsules) selected at random and dispensed generally through non-electrically operated vending machines. Bulk vending is a separate segment of the vending industry from full line vending – i.e., the snack and soda vending industries – and involves different products and strategies. Bulk vending represents less than 1% of the total vending industry.
History
Bulk vending dates back at least to the late 19th century. Vending machines were widely used in Europe before they became popular in the United States. In the early 1880s, the first commercial coin operated vender was introduced in London and stocked with postcards. In 1888, the Thomas Adams Gum Co. introduced bulk venders to America, using the machines to sell Tutti frutti gum on elevated subway platforms in New York City. In 1897, the Pulver Manufacturing Company added animated figures to its gum machines. In 1907, the round candy coated gumball, a staple product in modern vending machines, was introduced. In 1909, Emerson A. Bolen formed the Northwestern Novelty Company, selling the Yankee, a penny matchstick vending machine; Bolen's company is now one of the most prominent bulk vending machine manufacturers. In 1913, Ford Mason leased 102 machines and placed them in stores and shops of communities in western New York State; he would eventually found the Ford Gum & Machine Company, an empire of over 500,000 vending machines. In 1948, Oak Manufacturing opened its doors; it would become one of the largest equipment manufacturers in the industry. In 1949, Roger C. Folz purchased his first vending machine; Folz Vending was the largest operator of bulk vending equipment in the United States, owning and operating over 150,000 machines nationwide at their peak.
In 1950, the United States Treasury Department attempted to impose gambling excise taxes on bulk vendors on the grounds that there was no way for consumers to know for sure which gumball or other product the machine would dispense. For a short time, manufacturers installed viewfinders in bulk vending machines to display the next item to be vended. Vendors organized to found the National Bulk Vendors Association (NBVA), which successfully lobbied against the taxes, arguing that the items vended were of approximate or equivalent value. The NBVA has since lobbied on behalf of bulk vendors on a variety of issues; for instance, it joined the Coin Coalition which pushed for elimination of the U.S. one dollar bill in favor of the United States dollar coin.
From the consumer's perspective
Operation of bulk vending equipment is usually fairly straightforward for the consumer, involving placing the appropriate coin or coins in the machine and turning a knob or pulling a lever. If candy in a machine is low, however, and it appears unevenly distributed, the customer may wish to rock or whack the machine in order to knock some candy into the candy wheel, which is located in the bottom of the canister in the center. Depending on the design of the machine, though – which usually involves a wheel making a one-third turn with every vend – it may already be too late to ensure that the next vend bears fruit. A distinguishing feature of bulk vending is that the items are dispensed at random, so it is usually impossible to choose which item comes out of the machine next. A child trying to get a complete set of Britney Spears photographs, for instance, may end up with several duplicates; hence, the introduction of "trading cards" and similarly-themed products, with the idea that consumers will trade the duplicates with one another.
From the vendor's perspective
Advantages and disadvantages of bulk vending
Bulk vending is a hands-on business requiring research and planning, as well as sales ability and investment of time, to be successful. Many of the same considerations that apply to other small businesses, such as accounting, income taxation, liability insurance, and so on, also apply to bulk vending. On the other hand, some aspects, such as fixed costs and required seed money, are quite different from most start-ups.
Advantages of bulk vending
The gross margins in the bulk candy business can be quite high – gumballs, for instance, can be purchased in bulk for 2 cents apiece and sold for 25 cents. In addition, the machines are typically inexpensive compared to soda or snack machines. Both the machines and product are relatively portable, and the machines are easier to service than in other types of vending. In many states, bulk vendors are exempt from sales tax. Bulk vending may be a practical choice for an individual simultaneously working a full time job, because many venues that host bulk vending machines, such as retailers and restaurants, are open on weekends and during evening hours.
Disadvantages of bulk vending
Initially, the cost of insurance for a beginning operation may be cost prohibitive. Consequently, many beginning operators do not carry liability insurance on their machines. Complicating the situation is that there are limited companies which offer insurance for Bulk Vendors.
The business is susceptible to inflation because product costs rise higher than prices customers are willing to pay. Many bulk candy vending mechanisms are not equipped to accommodate price increases, unlike electronic machines. Locations often do not see a compelling need to have a bulk candy machine. Moreover, because locations know the machines are easily portable, it is not uncommon for bulk vendors to get kicked out of a location.
Vendors generally report that about 1-4% of their machines disappear annually, a problem exacerbated by the fact that machines are usually located close to store entrances, where they are easy to steal. Locations inside existing businesses can be in peril if the business goes bankrupt or evicted from rented premises. Machines have been known to be seized or liquidated by the host businesses' creditors, before the rightful owner has a chance to retrieve them.
Business opportunities
U-Turn Vending, for instance, sells an unusual machine that rotates on its base so that customers can choose between four, eight, or twelve selections. The best of the three continues to be the Terminator, an eight selection machine that is made of 14 gauge cold-rolled steel enabling it to stand up to the abuse that it may take. This piece of equipment seems to dominate the industry.
Machinery
General considerations
Vendors have a wide variety of machines to choose from. The selection of a machine is important because it can affect sales, time spent servicing the machine, willingness of locations to allow placement of the machine, and a variety of other factors affecting overall profits. Like a car, once a vending machine is placed in service, its resale value drops dramatically. This is especially true for machines that were overpriced to begin with.
Northwestern Corporation (established 1909) and Oak Manufacturing (established 1948) are generally regarded in the vending community as companies that sell high-quality bulk candy machines.
The ideal color of the machine may depend on the clientele. In retail locations frequented by children, an eye-catching red or yellow may be best. Chinese restaurants, for instance, typically favor red. In offices where adults are the customers, a more subdued blue, grey, silver, or black may be better. If a location has a color coordination, it may be good to keep with the color coordination.
Stands mostly come in two colors, black and chrome. Chrome has a tendency to rust when exposed to moisture from mopped floors, humidity, etc. Black stands suffer from the same problems, but can be repainted with inexpensive black gloss spray paint more cheaply than chrome stands can be rechromed.
Sticker adhesive can be removed from machines by applying lighter fluid and then rinsing with dish soap. To find out what cleaners work best on a particular machine, it may be good to keep a machine in the house and try everything on it to see what works. There are products that can remove scratches from canisters, for instance.
Machine types
The best choice of machine type largely depends on location. A gimmicky machine, such as one that has flashing lights following a gumball down a spiral, is better suited to shopping malls and other locations with many new customers visiting who are unfamiliar with the machine (and thus have not become jaded about it). For most locations, a simple single- or double-head stand is sufficient. In some high-traffic locations, a four selection machine is the best but can cause product to go stale in a location with fewer sales.
Separate head machines
Machines with separate heads are the ones most commonly encountered. Grocery stores, malls, and laundromats may have stands with a half-dozen or more separate head machines. Most of them have a large presentation area and allow the product to be seen from all angles, and therefore are more eye-catching than triple machines. Gumballs and toys sell well from these machines. Oak seems to specialize in separate head machines, although Northwestern also sells reputable separate head machines. Beaver Machine Corporation sells attractive separate head machines, although many vendors have reported that the machin
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