Japan’s Billion-Dollar Vending Industry: What the U.S. Can Learn
When it comes to vending machines, there’s no country that does it quite like Japan. The country has five million vending machines – that’s one for every 23 people. Reports show that Japan’s vending machines generate $33 billion in annual revenue. Clearly, they’re doing something right.
I was genuinely amazed when I visited the country recently, and was struck by the sheer density of vending machines in Japan’s cities, as well as by the diverse product offerings. Japanese consumers have their choice of fresh drinks and hot meals, as well as the latest in both technology and apparel. The sheer range of products available contributes to the market’s success. Meanwhile, the U.S. vending machine market, while still growing, really kind of pales in comparison.
But the reality is, it’s entirely possible for the U.S. to replicate Japan’s vending machine success. To do so, we must look at the key strategies employed in Japan and explore how these insights can be adapted to fuel growth in the U.S. market.
Embracing product diversity
Diverse product offerings in particular have driven Japan’s success in the vending machine industry. On-the-go shoppers in Japan can access products like umbrellas, 24-hour hot meals, and even luxury items such as wagyu and caviar. Given that Japan’s work culture is known for long office hours, the convenience of accessing everything from a machine is deeply ingrained into Japanese life. You’ll often find many vending machines bunched together so shoppers can pick multiple products and form a meal. And there’s no stigma about buying food from a vending machine instead of cooking at home.
While vending machines have also become a convenient option for busy Americans, the diversity of products they offer is considerably less than what Japanese consumers have access to. American vending machines largely focus on shelf-stable food and drinks. Also, these American offerings often skew towards unhealthy snacks rather than the healthy meals available in Japan. The American market clearly has a lot more room to expand in the range of products available.
The American market should take particular note of the cultural preferences of its target markets. For instance, New York is the number one coffee-drinking U.S. state, so vending machines in New York should prioritize variety in coffee beverages, while southern states could think about including fresh iced tea. They could also introduce seasonal and limited-edition products such as pumpkin spice drinks in the fall and partner with local brands to provide fresher, more relevant offerings.
How often have you tried to buy something from a vending machine, only to find it’s broken, jammed, or out of service? It’s happened to me more times than I can count. American vending machines just don’t have a reputation for mechanical integrity. To offer a more diverse range of products, the American market needs to follow Japan’s commitment to better technology and deliver reliable services.
Japanese vending machines are known for their dependability. This is largely due to the diligent inspections, 24-hour operations, regular restocking, and strict adherence to hygiene standards that these machines undergo. Many of these procedures are now optimized by technology such as sensors that monitor internal temperatures or sound an alarm if a part requires maintenance. RFID tags within the machines can notify owners in real time when products are running low.
Not only does the technology facilitate better maintenance, but it also enhances the customer experience. From a consumer perspective, most Japanese vending machines feature interactive interfaces such as digital touch screens. Recently, a Tokyo-based company debuted an “AI-cafe robot” that allows users to select from seven types of coffee beans via an app before receiving a fresh coffee. Some of these vending machines even double as Wi-Fi hotspots, which all enhance the customer experience and drive sales.
Distribution is critical
The Japanese market excels at strategically positioning machines in high-traffic areas like train stations, shopping centers, and office buildings. No public park is complete without at least one line of vending machines. Japanese vendors have established a comprehensive distribution network and have implemented effective restocking and maintenance. This ultimately leads to greater customer satisfaction.
Vending machines in America simply aren’t as omnipresent. Apart from schools or gas stations, I don’t expect to encounter a vending machine on a street corner the same way I would in Japan. U.S. vending machine operators should work to secure the right locations by considering more collaborations with manufacturers, suppliers, marketers, and government agencies. Partnering with official bodies can boost visibility, remove red tape, and unlock more accessible vending locations.
Unsurprisingly, Japan has already taken the lead on this. The municipality of Ako and a Tokyo-based pharmaceutical company called Earth Corp recently partnered to develop an emergency vending machine scheme. In this plan, vending machines unlock during earthquakes and other natural disasters and distribute free food and supplies.
I don’t think it’s too far-fetched to imagine American vending machines becoming as culturally relevant as they are in Japan. As we look forward, it’s worth considering the possibilities opened up by Japan.
By offering a wide range of products, utilizing innovative technology, ensuring efficient distribution and maintenance, and paying attention to cultural preferences, the U.S. can create a vending experience that truly meets consumer needs and desires.
Ben Gaskill is the co-owner of Everest Ice and Water Systems. With over 25 years of experience in Sales, Sales Management, and Training, Ben has a successful background in high-level sales strategies, business development, and calling on C-Level through end users selling both Capital Equipment and an extensive product line.