China&#;s unmanned retail transaction volume keeps going up. As predicted, by it will reach 1.8 trillion RMB and the scale of users will approach 250 million. According to the surveys, 83.6% of people are willing to continue shopping in unmanned stores, while only 4.8% are unwilling. Among people who have never tried, 66.5% have the intention to use unmanned stores, while only 8.4% are not willing to use them. These results show that the prospects of unmanned retail are broad, and consumers&#; attention and willingness to try are very high, which also means vending machines in China have a good &#;base of public opinion&#;.
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The vending machine is not a new invention and it has been into China for more than 20 years. But why it is becoming popular now?
1. Rising of Labor and Rent Costs
The data show that the labor cost in China has risen 5 times in the past 10 years. In , the salary of Chinese employees has increased by 8%, ranking first in the world and far higher than the average level of 2.5%. In addition, China&#;s overall rental growth is 7%. The rise in labor and rent costs in China has resulted in a reduction in the profitability of entity stores. This makes the vending machine an important role in the new retail scene.
On the one hand, the vending machine saves on rent and labor costs. On the other hand, the vending machine is able to quickly lay the channels and take the initiative in the development of the current retail industry. It attracts more and more attention from brands. Due to the gradual increase in rent and labor costs, the pain points of offline operators are mainly reflected in the reduction of gross profit caused by the constant price of commodities. Compared to convenience stores, vending machines are more flexible in site selection, which saves labor costs. As a result, vending machines with low labor costs and small footprint have become hot spots. The emergence of new equipment such as self-service juice machines, self-service coffee machines, and fresh food vending machines have made this format unparalleled.
2. Greater demands for Convenience and Immediacy
As income level increases, people&#;s demand for instant convenient consumption increases. The consumption environment for vending machine becomes more and more mature in China. Closer to the user&#;s daily life radius, the unique convenience, and immediacy of vending machines cannot be replaced by e-commerce. As the mainstream consumer groups become more young and wealthy, consumers&#; demand for convenience is growing stronger.
According to international experience, when the per capita GDP reaches 10,000 USD, consumer demand for vending machines will usher in an outbreak. At present, there are more than 30 cities in China with a per capita GDP of over 10,000 U.S. dollars, involving nearly 300 million consumers. In addition, according to market statistics, consumers&#; demand for convenience stores is in order of fast, good, many, and cheap. The consumers&#; convenience for daily cyclical consumption has far exceeded the sensitivity to price. Meanwhile, the process of urbanization continues to advance and the population is continuously concentrated. The area of public space suitable for the installation of vending machines, such as office buildings and subway stations, continues to increase.
3. Popularized Online Payment and Better Consumer Experience
In the past, vending machines in China was tepid. Poor shopping experience may be one of the reasons hindering its development. Firstly, there were many machine failures. Secondly, even in the case of small settlements such as the purchase of beverages, banknotes are necessary. And the banknotes are usually packed in the pockets of the clothes, which are often wrinkled. Therefore, the banknote jams in vending machines often occurred. Consumers became having no desire to buy beverages through the vending machine. At present, the Chinese vending machines basically implement access to payment platforms such as WeChat and Alipay. Consumers can complete self-service transactions with a few simple steps on mobile devices. In , after Alipay and WeChat entered the vending machine system on a large scale, the revenue of the biggest vending machine operator in China soared from RMB 180 million in the previous year to RMB 650 million.
4. Higher Operation Efficiency by Intelligent Technology
The intelligence of vending machines mainly refers to the installation of intelligent networking systems and displays on the devices. Connected to the network, operational efficiency of vending machines can be improved, and there is more room for imagination in the business model.
The back-end management system of intelligent vending machines can monitor commodity inventory and operation status in real time. With back-end data, operators can perform replenishment and equipment maintenance more programmatically, and reduce operating costs. Through analysis of sales data, you can optimize the position and commodity structure of the vending machine. The user can also use the APP to inquire about the location and merchandise of the nearby vending machine and buy it directly to achieve online diversion. Coupled with more timely replenishment, stand-alone sales can increase.
The value of smart operating systems for reducing management and operating costs is also growing. In the past, grass-roots operators completely depended on personal experience when picking goods. How many goods are picked up each day, and the out-of-stock situation at each point can only be estimated. Now we developed a back-office management system to accurately determine inventory management and plan distribution routes. Before the distributor goes to the warehouse every day to get the goods, the app will first check the data of the vending machine. The sites with low stock-out rate can temporarily be ignored to consider replenishment on the same day. Only the sites with high stock-out rate are collected, so a bill of lading with the name and quantity of the goods is automatically generated.
5. Consumer-centric Service Experience
In China, vending machines are no longer simply providing vending services but will provide high-end technology and service support in the field of intelligent sales. Through the advanced cloud-service management system, the vending machine in China can help achieve easy management and operation of the mobile terminal. So the smart retail terminal can quickly penetrate. At the same time, it can achieve a win-win situation for the company, franchisees, and consumers.
In other words, before the popularity of mobile payment, offline consumption data is out of touch with consumers. They don&#;t know who the user is, don&#;t know the user&#;s consumer preferences, and it is extremely difficult to operate the users in depth to improve the conversion rate.
With the popularity of mobile payments, offline consumption has changed from getting orders to getting customers. Merchants get user&#;s ID and location information through the offline payments. After the consumer&#;s online and offline consumption records are all connected to form big data, the user image of a single user will be abundant enough. Through big data analysis, the consumption conversion rate under online and offline users can be greatly improved, and the data value in the future will be greatly increased. Data insights have created the core competitiveness of vending machines. Compared with traditional retail, New Retail focuses more on consumer-centric services and experiences.
I know what you are going to think, vending machines are old-school and not really relevant in this digital age but let me prove to you the contrary with the example of China. Thanks to mobile payment, famous brands investing in it and new offers vending machines in china are being revived.
Vending machine in China, why is it an opportunity for foreign companies?
With the democratization of QR codes and online wallet vending machines are gaining in popularity. Once again, the convenience of this machine is up to today&#;s standards.
As you can see in the below picture, you can pay for vending machines with WeChat in China thanks to the QR code and online payment systems. Some even have a palm reader that facilitates your shopping experience.
Belonging to the RMB 226billion convenience store market (estimated in ) including stores you may know as FamilyMart, Alldays but also Lawson, autonomous retail should not be overlooked since it is expected to boom.
Note that China&#;s market size of vending machines reached RMB 19 billion in with about 60% year-on-year growth!
Read more about this CCFA Survey
Vending machines are particularly efficient to distribute any kind of product: from snacks to skincare and makeup products and during this epidemic times even masks and hydro alcoholic gel. This way of distribution is suitable for pretty much everything. It is also a good technique to have more locations (at a lower price since you do not need to pay rent or on-site employees) to sell products and thus cover more places.
Case study: Vending Machines with Luckin coffee
Read as well: Why did Luckin Coffee not outrank Starbucks in China?
It is the largest coffee chain in China (yes, Luckin Coffee exceeded Starbucks in this market). Thanks to its digital strategy and app, in only two years and a half, Luckin Coffee surpassed Starbucks which took about twenty years to get where it currently is. To get this fast expansion, Luckin operated at a loss and it worked! Some other companies (including Starbucks) even adopted the same strategy to grow faster. A well-crafted strategy with a free cup of coffee for when you download Luckin&#;s app, coupons, delivery but more than anything else, the big price difference with Starbucks which is very expensive. Luckin also determines where new stores will open according to its customers&#; location and recently chose to start selling coffee and some other products through vending machines. But how and why? Here are the answers:
Luckin Coffee will launch two types of machines: Luckin Coffee Express and Luckin Pop Mini. The first one will offer freshly brewed coffee while the second one will offer Luckin Coffee products and other types of products as water or sodas.
Luckin Coffee&#;s strategy is well done: it plans and guarantees to provide drinks that have the same quality and taste like the ones you can find in their stores. Moreover, it offers the same prices it customers may pay on e-commerce platforms. They will be able to place their orders on the store&#;s app, scan the QR code on the vending machine, pay through an online payment system and enjoy their drinks!
It is a good strategy since it offers the same products with the same quality and prices. The use of vending machines linked to the app is an efficient way to develop the physical network and the presence of the brand in Chinese cities. Choosing the right spots to place your machines is also a key point. For example, Luckin chose to locate its vending machines in popular locations such as malls, bus terminals, campuses, airports, &#;
How can you take a step forward in the China vending machine market?
As mentioned earlier in this post, the vending machine can be a great way to distribute your products in China. However, whether you want to launch your own vending machine-like Lukin coffee or want to rent machines in stores such as family mart or the metro station you are going to have to convince buyers and distributors that your products are worth the shot.
Being able to sell your product in vending machines where there is a lot of traffic can bring enormous exposure to your brand and would be less expensive than having to rent a local. brands that are now selling in these vending machines and convenience stores did not get this chance by randomly emailing distributors, they did real marketing work before that. They made sure their brand could get notoriety and were credible before even trying to negotiate with distributors.
Sames goes for Brands such as Luckin coffee. They work hard to gain the loyalties of their customers and they were able to launch vending machines and reach out to even more customers.
Here are some options for you to get exposure for your brands/products:
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Contact us to discuss your requirements of China Vending Machine. Our experienced sales team can help you identify the options that best suit your needs.
Use
WeChat
Making promotion through WeChat, the most popular messaging app in China with over 1 billion daily users, is essential. It allows users to chat, share text, images, music, and much more. WeChat offers you the possibility to share visible content with everyone from your official account and that is why it is a must for the spread of marketing content in China.
1. WeChat group
Having a WeChat group allows the information flow to be fast. It is an essential point to develop your brand image, send a message and notify your customers but also to initiate discussions about your product. Animating a WeChat group is helpful to develop the awareness of your company.
2. WeChat brochure
An efficient way to explain what your business is about, but also to inform about the latest releases. WeChat brochures are indispensable in your marketing strategy to simply explain to customers what you are selling, where, if it is a limited offer, and other kinds of information about your product.
3. WeChat mini program
All kinds of companies use the WeChat mini-program: it is like a mini-app in WeChat. It can be informative, entertaining, and commercial. Some brands like Chanel create mini-programs for the promotion of their events while others develop a mini-program looking like a game to promote their new product and educate their followers. Brands commonly use mini-programs to sell their products, offer delivery services, or as a mobile version of their website.
Users can easily access the mini-program directly from the mini-programs section of WeChat.
Weibo
Chinese Twitter, perfect for effectively disseminating your content and being commercial with coupons, game contests, etc. A popular platform offering a large audience, Weibo is ideal for reaching the target you have set. This app is also focusing on visual content which is perfect if you want to promote your products in vending machines. This will allow consumers to see how it looks and makes it possible for them to recognize it when they will be in front of one of your vending machines.
Read our Weibo Marketing Guide
Douyin
Douyin is the equivalent of TikTok in China. Very successful in this country, this short video app literally blew last year and became the second most downloaded app in ! With 500 million monthly active users, it has a relatively young user base (nearly 75% of them are aged between 20 and 34 years old). It offers you the possibility to reach Chinese youth, an audience that you may aim at and could miss without a presence on this viral app.
1. Douyin algorithm
The Douyin algorithm is perfect to reach out to the exact target you are aiming at. Douyin uses an algorithm system to show to each user contents they will be interested in. Make sure to use the # to distinguish your account and ads from any other that have nothing to deal with and be recommended to potential customers thanks to Douyin&#;s algorithm. You have to take advantage of it.
2. Douyin &#; Tiktok Ads are Cheap
Douyin offers a wide range of ads: open-up display ads (appears for a few seconds when you open Douyin), stickers ads, feed ads (ad video among the others, it is well received), and more.
Douyin is relatively cheap when it comes to advertising: of course, you can spend a million RMB in a communication campaign on Douyin, but other options exist. For example, the cost per thousand impression option exists for 50-60 RMB or also the cost per click option from 2-5 RMB to 20-30 RMB. It will allow you to have good control of your ad budget.
More on Douyin Marketing
3. KOLs (Key Opinion Leaders)
One of the most efficient ways to promote a product is to work with one or several influencers. Kols have already gained the trust of their followers base. Thus, you will gain the influencer&#;s followers&#; trust but also gain visibility since these influencers have a well-established fanbase. They have different options to promote your products: contest, reviews, give-away, hyperlink, etc&#; Knowing that trust is a key to success in the Chinese market, selecting the right influencers can be a real game-changer in your marketing strategy.
To sum up on Vending Machine in China
Being visible when you want to use a new type of distribution is essential in China, even more, if you want to use the vending machines channel. How does your consumer know that they can find your product in a vending machine just 100 meters away from their home? You have to tell them! You have to communicate about it!
Mini-programs and apps are a great way to promote your content. Chinese consumers use their phones for pretty much everything in their daily life, a lot more than computers anyway. Loyalty programs, online shopping, news, location of the nearest shop and vending machine, or even special offers!
So? Does the idea of using vending machines thrills you but you don&#;t really know how to proceed?
Still now in China but looking for reliable distributors, we have the perfect solutions for you, do not struggle anymore.
We are GMA, your Digital Marketing Agency of Choice to conquier the Chinese market:
Don&#;t miss your chance to be visible and present in the most popular places in China!
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