POTENTIAL PITFALLS TO WATCH
Although vending machines are less expensive than brick-and-mortar stores, they still require significant upfront capital. A new vending machine can cost between S$5,000 and S$10,000. For those who lease the machines instead, rental rates can cost up to S$800 a month.
There are also expenses for hardware, licensing, software, maintenance and the logistics needed for regular replenishment, not to mention losses from wear and tear, technical issues or vandalism.
Customer support is also an issue. When things go wrong, be it a jammed dispenser or a failed payment, there’s no staff on-site to fix the issue. Without a way to resolve issues instantly, instant recourse, brand loyalty can suffer.
A case in point: Amazon Dash Buttons. Designed to simplify reordering household products, they were discontinued after users found them unintuitive, lacked feedback mechanisms, and caused accidental orders.
Another example is Stockwell (formerly known as Bodega). The AI vending machine, founded in 2017 by former Google employees, installed smart vending machines in offices and apartment lobbies in the United States, aiming to replace convenience stores. According to TechCrunch reports, Stockwell was unable to find a sustainable or scalable model for its vending machines, despite raising over US$45 million. They ultimately decided to shut down operations in 2020.
