The Vending Dilemma

Being in a vending adjacent business, I often get asked questions about vending machines and their trajectory. Vending machines sound great on paper: you find a location (or maybe you even outsource that to a locator), then sit back earning passive income having to do nothing but occasionally restock.

A quick google search will suggest that the vending market is doing great. However, most of the sources on the matter are actually just blog posts from vending companies.  

What the Actual Numbers Say

According to IBISWorld, the vending machine industry has declined 1.3% a year on average between 2018 and 2023, although it did grow by 0.3% in 2023.

The picture actually gets worse when we look at how the average small vending business is doing. The total number of vending operators shrunk by 2.5% each year since 2018. This suggests that the vending market is consolidating, and that the little guy is being pushed out.

Changing laws also pose a big threat to industry operators. Since its implementation in 2014, the USDA’s Smart Snacks in School has introduced new challenges for operators who have machines in primary and secondary schools. The nutritional restrictions have created a limited selection that operators can supply, and unfortunately the approved items are not popular among the students. These restrictions have caused many operators with school locations to experience a 30-40% decrease in revenue. If more laws similar to these continue to be passed some vending operators will be forced to find healthy selections that will be profitable, or exit this industry segment.

This is in stark contrast to articles like this suggesting that the vending machine market is actually growing and at a fast rate. A quick look at their numbers reveals that they are referring to the global vending machine industry (a little misleading considering it was published in usatoday).

Global Vending Industry

The global vending industry is growing, but it is mainly driven by APAC markets, namely China, whose vending machine revenue is expected to increase from 28.91 billion yuan in 2022 to 73.9 billion yuan in 2027.

Not all Vending Machines are the Same

It is pretty clear that the vending industry is currently oversaturated, and undergoing consolidation. That being said, certain pockets of the vending machine industry are doing well. One example is micro markets, which has seen consistent double digit growth in recent years.

New, niche vending machines are constantly being developed, and they shouldn't be overlooked. For example, here is a balloon vending machine which I saw at a tradeshow last year, which could do really well in malls.

Powerbank Rental Stations

Powerbank rental stations have a lot of advantages over vending machines in 2024. For one, they are one-third the cost of vending machines. Despite this, they have the capacity to earn as much, if not more than a vending machine. Average Ion monthly device revenue exceeded $100 in July, and the top ten percent exceeded $700. Not bad considering retail price for an Ion device is only $850.

Powerbank rental kiosks are also an emerging technology in North America, and as a result, much easier to find locations for. More often than not, locations do not even understand what I am talking about as I explain our product to them.

Like everything else there are drawbacks, and not all locations do well. The bottom 10% of locations earned virtually nothing in July.

It is also a lot harder to predict exactly which venues a powerbank rental kiosk will do well in. While there is a wealth of data on vending machine and ATM returns, powerbank rental kiosks do not yet have the advantage of hindsight.

That being said, Ion kiosks are also much smaller than your average vending machine, and very easy to transport. If a location is not doing well, it is very easy to move it somewhere else. This may not be feasible, however, for someone who is relying solely on locators to source leads, as it can potentially get very expensive.

Ion Powerbank Rental Stations

If you are considering investing in a vending machine, I would highly recommend checking out our distributors page, to see if an Ion kiosk would be a better fit for you. Unlike other kiosks on the market, ours come equipped with credit card readers, so users do not have to scan a QR code and download an app in order to rent a powerbank. I think the benefit of this speaks for itself.