As I was once a student in Malaysia too, I’ve always dreamt of having a side income. However, I clearly had no idea how to get a good passive income nor have any idea where to learn from. Not until I stumbled across a vending machine in my uni, the vending machine kickstarted all the ideas I had in my mind and I believe that a vending machine is a lucrative yet potential passive income.
However, how can I do it as a student? Where to start? What is the startup capital? I had all these questions in my mind. I did a lot of research on it and definitely it helped me find out more about this business. I will give you a brief idea on how you can start one today.
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Understanding how the vending machine business work
Since the day I stumbled upon this business opportunity, I had only been doing more and more research understanding the whole concept and how to strive in this industry. I believe the most profitable business in this industry would be the ones selling the vending machine to us but however that business is for another day as the capital would be way higher than starting a small vending machine business.
With that said let’s dive into this business, to understand all about this business we first have to understand that there are various types of vending machines, which includes of:
- Drinks Vending Machine ( the usual vending machine that we see)
- Snack Vending Machine ( where small snack packs will be located)
- Hot Food Vending Machine ( a new concept but is definitely growing)
- Coffee Vending Machine ( getting coffee closer to coffee lovers)
- And much more vending machine that are in the market
Moving on, we need to understand our target market or audience. Let’s say if we were to place it in a university, our target market is lecturers and students. We have to understand their lifestyle and what they will really need. In this case, if the university doesn’t have a stationary store, starting a stationery vending machine business would indeed be great. On exam days, students need not worry about whether they brought their stationeries. Adding on to that , in a university where lecturers and students are often staying up late to finish up assignments and projects, drinks like coffee would indeed be a great choice.
Benefits of a Vending Machine Business
The main benefit of vending machine business is that you do not need to be there to really generate the income. Yes you are right, the stock will slowly decrease but maybe you will only need to restock it every once a week or even a month depending on the sales.If you are a student and you place a vending machine in your accommodation that will even ease your traveling burden.
Another benefit of this business is that it will grant you a headstart in your young entrepreneurship, having to run a business on your own by starting a small and easy business. Of course, based on the theory of high risk high return, this is a lower risk investment so do not expect extraordinary returns. However, it will be great and fun to test this new business model on your own or with some of your friends. This will also be a great experience in your portfolio, as it shows your experience and determination as an entrepreneur.
Adding on to that, this can be also an additional side income to add on to your main income. This would be a boost to your financial capability. This might ease your daily life and also potentially replace your daily job once you have enough machines running.
Steps for starting a Vending Machine Business in Malaysia
Step 1 – Choose the product you want to sell
Before starting any business you will need to do ample market research to understand the demand and supply in the market. In this case, you must know what the market is in need of. Choosing the right product is the most important step. If you want to start it simple, running a snack vending machine would be easiest as the temperature of the machine does not need to be too high or low meaning the monthly cost might be lower. If you were to run a drinks vending machine your monthly costs might be higher as your machine needs to be refrigerated 24 hours daily.
If you were to provide a snack vending machine you must be able to locate and find the best supplier in this sense. Your gross profit will definitely be your revenue minus your cost of goods sold. If you purchase your product at a sky high price do not expect your profit will be good. Adding on to that, checking for the expiry date is very important too. Users that get their product from vending machines tend to consume it almost immediately. Therefore you have to understand the expiry date. You can get products that are near expiry but DO NOT DO NOT EVER SELL EXPIRED PRODUCTS. This is the biggest red flag of your business and yourself.
Step 2 – Finding a great location
The second most important part of the vending machine is that it has to be at a place where it is convenient and hopefully not near any convenience store. This doesn’t have to be the best location but a good location will do, a location that many people will walk pass and potentially want to get a drink or two.
A few locations I had in mind were, having a vending machine in a university, shopping malls, community areas, arcades and much more. Not everywhere will let you have your vending machine there for free. You might need to rent a place or even purchase a location to be able to use your vending machine. REMEMBER for any location you pick, please have wifi and a plug point for your machine. There is no point moving a machine to a location that it can’t be powered. If you are a student your uni or your accommodation would be a good place to start as you can view your machine everyday.
Your location must not be hiding in a corner that no one walks to or a place where no one can see. Your location must stand out and must be easy to access. If users of your machine cannot access it easily, I personally believe that you might not have any sales.
Step 3 – Getting a Vending Machines in Malaysia
The vending machine price in Malaysia varies depending on the size, quality and brand. Usually in Malaysia they understand that people that wants to have a vending machine usually tends to do it for a side income. Therefore, they came up with a few types of packages for individuals and businesses:
- Purchase – This is where users with high capital can choose this business plan as you just have to pay right away to get your machine and do not have to monthly pay it anymore. Your gross profit will be your revenue minus your cost of goods sold. However this might be very pricey as vending machine can cost as much as RM 20,000 for a reliable ones.
- Rent-to-own package – This is for users that would like to own a vending machine business but might not have the financial capability to do that yet. You can just put down a downpayment and start monthly installing for the machine till you finish the agreed payment terms then the machine will be yours.
- Other packages often offer by sellers – You can purchase vending machine with their location from sites such as facebook marketplace or even mudah.my or there are vending machine sellers that are currently offering something known as the Guaranteed Rental Scheme Package.
Step 4 – Setting up a business
To be safe when doing any business in Malaysia, we recommend setting up a business to be clear that whatever you are earning is business revenue. This is most ideal legally and also ethically. You can either set it up as a sdn bhd or enterprise where you are the single owner or this is a partnership.
To set-up a business in Malaysia please read here instead.
Potential Revenue of a Vending Machine Business in Malaysia
Of Course there is no guaranteed profitable business in the world but it depends mostly on your business plan and ideas. How you run it is very important, whether you put in any effort for marketing and promotion.
Let’s say if you sold a drink for RM 2.50(soft drink) you can get it from a supplier or wholesaler for RM 1.50. Your profit margin tends to be around 50% – 100% depending on the price you aim to sell it at. That is just a brief range depending on how cheap you got it for. Of course there will be time when you bulk buy and get it at a cheaper price. And if you place it at a more premium area or high end area you can charge up to RM 5 for a soft drink. However, that is not logical for everyone, usually the market price is very standard and most people sell it around RM 2.50 to RM 3 for a can of soft drink. If the area around you have around 10,000 people daily and we aim 1,000 people walk pass it and only 100 get it a day you will have around RM 250 in sales a day with a cost of goods sold for around RM 150 daily. Meaning in a month you will get RM 7,500 in sales and RM 4,500 in cost of goods sold. Leading to a gross profit margin of RM 3,000. For a location like this we give it a rental costs and electricity cost of RM 800 and RM 200 of maintenance you might have the chance to profit RM 2,000 every month. However, you will need to restock it and keep your machine clean and hygienic.
This is just a brief potential revenue if your location is decent. However the risk are huge if you choose a location that is not this good.
Risk of a Vending Machine Business in Malaysia
The biggest risk of a vending machine business in Malaysia is the location. If you are at a location that nobody goes or it is at a corner that people don’t even know of. Logically, how can there be any sales? Even if you got all your products at the lowest price and a low price rental location, you will not get any sales if there is no crowd. Or a crowd that does not need the product you are selling.
Understanding demand and supply will be crucial to set up this business. If you are at a location that can’t afford the product you are selling, then there is no reason to even put your vending machine there.
Moving on, your deal with the supplier is very crucial too. If you paid it off immediately this is not for you to worry of but if you have any contracts with your supplier this is important. If you pick a package where the supplier settles the location for you, you have to consider carefully the location they picked. The location they have must be very limited due to the number of customers they have. AND if you put yourself in their shoes, if the location is so good, vending machines will get a higher return than expected, a return that none can imagine. THEY would have put their own vending machine there for their own profit. Is there any reason after they do so much market research they give you the best location. If I’m the business owner I doubt so I will do that.
Key Takeaways:
A vending machine business might be profitable today, but as time passes the cost of goods sold might keep increasing and your profit margin might not go too well for you. Having good connections with suppliers will be crucial to stay strong in any business.
The effort to open this business is considered low. BUT every business has its own risk of losing all its money please do consider that too.
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All the ideas, calculations and predictions are just a mere understanding and calculations based on theories and case studies. Please do note that following exactly does not guarantee success but rather it’s just a helping hand and a guideline to success.
Our aim is always to have a faster return on investment and a high monthly income! Follow our guides based on your own choices and don’t take high risk investments if you are not capable. We all want to be successful but take things step by step. We do not recommend any businesses as we believe every business is also a high risk business.
