Chinese Vending: Inside the Lockers

by Country Sales Manager- MEI China
Country Sales Manager- MEI China
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on November 15, 2013 in Vending Trends | 0 Comments

The Chinese market is stepping into a new era of Vending.  A unique style of vending machine is growing in popularity with both operators and consumers alike.

This new type of machine that is changing the Chinese vending industry is a dense “locker” comprised of multiple rows of small doors for retail goods.  Multiple lockers are attached to a single vending machine, which serves as the payment location for the items for sale behind the locker doors.  There are no limitations to the objects and goods for sale in a locker, besides the physical size of the doors and as long as the vendor yields to local laws and regulations.  Therefore, operators have the opportunity to increase their sales volume by selling everything from snacks to batteries, all from the same machine footprint.  Lockers can also be set to different temperatures.  For example, one locker in the row can be set at room temperature for sundries and another can set to freezing for things like dairy products. 




 


Payment technology in China is rapidly advancing.  It has been adopted fast in traditional retail settings and is also becoming deeply integrated into the vending industry.  Payment technology at the locker vending machines are also keeping pace with the trends.  Consumers may pay with cash, as they always have, credit cards (which are a less popular option with Chinese consumers for small ticket purchases) or through newer technologies like NFC, mobile payment apps on their smartphones, e-purse, etc. 

The mobile phone apps though, available through providers like ‘Ubox online’, ‘Alipay’ and ‘We chat,’ are most popular among consumers and vending operators. The ‘We chat’ app is a newly developed, trending payment solution. 



Here’s how it works:

  • Consumers scan a QR code outside the locker door of the item they wish to buy while in the app
  • Once the app recognizes the code they will hit a "pay" button on their mobile phone
  • The account and payment will be validated through the app that the consumer has already registered for.
  • The door of locker will be opened in 2-3 seconds, once the account and payment is validated through the app. 
  • Operators may also give a discount or promotional offer on goods within the lockers through these mobile apps.

 

 



Like traditional cashless vending known in the USA and other parts of the world, network connectivity is a must when offering the mobile phone app payment choice at the locker machines. Because lockers are mostly being deployed in closed site, office building type accounts, WIFI or a GPRS signal are usually not a hurdle. Closed site locations are also ideal because they protect the locker doors from being vandalized and solve retail space constraints. These locations are a perfect fit for locker vending because they are often too small for a convenience store set up but traditional vending doesn’t provide the variety patrons desire.     



Interestingly, locker style vending is far less expensive than a traditional vending.
One locker is less than about RMB4000 ($600 USD), which is far cheaper than a vending machine which costs about RMB25000 or $4000 USD.

Ubox was the first company to pioneer this business model in early 2013. Since, they, and competitors who have entered the market with similar competitive solutions, have deployed thousand of lockers in the market. Locker style vending thus far appears to be good, viable supplement to conventional vending in China.



What do you think of these locker style vending machines for your local market and accounts?  Would there be a play for your business or is the locker style not as attractive as a Micro Market?  What items would you like to sell with this footprint that you currently cannot sell? 



 

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