Automatic selling is the sale of products through a vending machine, where consumers interact directly with the machine to access products immediately, without a clerk or ordering process as an intermediary. Merchandisers can install vending machines across a wide area to get coverage, without substantially increasing bottom line, as seen with opening new stores, which requires substantially more resources. Vending companies often offer franchise operations, where business owners can buy a franchise and the company provides the machines and products, while the business owner handles on-the-ground operations.
The types of products available through automatic selling can vary and are sometimes restricted by law. Some examples can include snacks, electronics, personal care items, and things like spare underwear or shoes. Automatic selling usually relies on high foot traffic or a captive audience at locations like airports, train stations, and clubs. Items in the machine may be priced higher than they would be in other areas of the market, with consumers paying a premium for convenience.
Some facilities may maintain a vending contract with a single operator who is allowed to install and maintain machines for the benefit of customers. The automatic selling agreement may provide exclusive rights, so the facility cannot work with other merchandisers. The seller pays a fee for use of the facilities, which may be flat or based on sales, depending on the terms of the agreement. Contracts may include stipulations on vending machine placement, the types of items in the machine, and machine maintenance.
This type of merchandising is very well suited to franchising applications. A single franchise may start with several automatic selling venues and build on these over time as it becomes profitable. The owner of the franchise can potentially keep adding machines until the market is saturated, at which point the seller may decide to move to a different market to maintain momentum. Franchises may also have exclusive agreements with their members, allowing people to dominate a specific territory, usually for an extra franchise fee.
The size of a territory can potentially be an issue for automatic selling, as the business owner needs to be able to visit all the machines to collect income, restock, and perform maintenance. Empty or malfunctioning machines may cause frustration among consumers, who could take them out on the machine. Automatic sellers also have to be alert to vandalism and theft so they can act quickly to address the issue and prevent more loss.