By Sean Hoffman
As the progression of water vending finds its way into your market, what’s the residential water treatment dealer to do? Are these machines a serious threat to his/her business? How can you compete with such a low price alternative to what some people might consider costly in-home, point-of-use/point-of-entry (POU/POE) equipment? These are only a few questions franchise and independent dealers might ask themselves as they drive through their community and witness people refilling empty water containers at various water vending machines—be that a standalone kiosk or one outside/inside a supermarket or convenience store.
Many dealers recognize the viability of the water vending market as a profitable outlet for quality drinking water with many additional benefits for their business. Customers in this market segment are very conscience about water quality and have a strong desire to provide high quality, safe drinking water for themselves and their families. With the expense of softeners and undersink reverse osmosis system outside these families’ budgets, the alternative becomes either a treatment method offering less stringent quality, home delivery of bottled water or off-the-shelf bottled water sales. Home delivery can range in price from $5-to-$8.25 per 5-gallon bottle. Delivered and store-purchased water can cost anywhere from $ .49-to-$1.89 per gallon. The same high quality product can be purchased from a well-maintained water vending machine for $ .25 per gallon and sometimes even less (see Chart 1).
Tapping into profits
The financial benefit to the customer is tremendous. An additional benefit is that customers are becoming educated about the types of technologies required to produce the high quality water produced by a well-maintained water vending machine, which makes them potential future POU/POE customers. Still, surprisingly, many consumers who could otherwise afford in-home equipment are choosing water vending.
Although independent vending companies operate most water vending machines throughout the United States, more water treatment dealers are using their already existing resources to tap into this profitable market with this in mind. In addition to offering another source of constant revenue, many aspects of a dealer’s company profile lend themselves perfectly to owning and operating water vending machines. The most obvious is the dealer’s knowledge in servicing and maintaining such equipment.
The typical water treatment system within a water vending machines is very similar to many small commercial systems that most dealers already maintain. An understanding of feed water analysis, along with proper training and knowledge of filtering methods, is needed for the proper maintenance of a water vending machine treatment system. Cleaning and sanitation of the vending equipment will also be a necessary and a routine responsibility. Only additional knowledge on coin operation systems will be necessary. A strong reputable water vending machine manufacturer will be able to train and support the dealer once the unit is purchased.
The right choices
One of the most important aspects of choosing a water vending machine manufacturer is its ability to provide technical support for the machine owner. Selection of the right water vending equipment is crucial to the success of your vending project. As with any aspect of business growth, careful planning must be taken. An early hurdle to get over is understanding the local market. This should be the easiest step for all dealers.
Understanding the community’s perception of the city’s water supply will determine if you’re in a viable market and, since your retail residential water treatment business is a success, step No. 1 is already achieved. How is your business perceived? Do residents of your city, town or community trust your company’s name? If so, take advantage of that. Have the marquee of your water vending machine promote your existing business as well as give customers confidence your water vending machine is properly maintained by professionals that know and understand water treatment. Imagine it serving as a silent salesman for you and picture an attractive clean water vending machine at the local grocery store offering a reasonably priced bottled water alternative that has a tremendous profit margin and acting as a billboard for your residential business. If a customer using your machines likes your water but doesn’t want to handle bottles anymore, he or she will know exactly who to call.
There are basically three different styles of water vending equipment—indoor, non-coin operated machines; outdoor, curbside coin-operated machines; and freestanding water vending kiosks—again coin-operated. All styles of machines offer the additional opportunity to sell premium drinking water and each one has its own particular market. Indoor machines offer frequent grocery shoppers the ability to refill containers while shopping and paying for their purchases at the cash register. Most indoor vending equipment is found in areas where winter climates would hinder outdoor sales, although outdoor machines can be found from Alaska to Florida. Some considerations for indoor vending are going to be size of the equipment, placement of treatment equipment, ease of relocation (if necessary) and available floor space.
Outdoor vending equipment is the most common and the second possible outlet for drinking water. The most common outdoor equipment are fiberglass-housed water treatment systems with a coin operated dispensing systems. These machines offer dealers an opportunity to enter this market with a small capital investment, usually between $5,000 and $10,000.
Many considerations in placement of indoor equipment don’t affect outdoor machines. However, items such as access to the machine and any necessary plumbing requirements need to be addressed before installation. If water sales volume from a particular curbside machine is considered high, placement of a freestanding water kiosk can be pursued.
Water vending kiosks have become very popular within the Sunbelt of the United States and offer tremendous advantages for the water vending market. Drive-up convenience for customers is the number one advantage for kiosks. Many customers simply don’t want to hassle with the congestion of a grocery store, either inside with cashiers or with parking for a curbside machine. Freestanding kiosks can be customized to display your particular image or necessary architecture. Some considerations for development of a kiosk site should include planning and development with the city as well as with neighboring businesses. Manufacturers of kiosk equipment should have years of experience and be able to assist in all aspects of site development and appearance.
Many water vending machine owners who also have a retail water treatment business speak highly of their successes with the water vending market. Fred Girrard, owner of Nimbus Water Systems in Midland, Texas, owns and operates about 10 curbside machines as well as a window-mounted dispensing station at his retail location. Profits from the window machine are so great that rent for his retail location is never a concern. After all, hosting a machine at your place of business also helps tell customers you’re there for them 24 hours a day.
Water vending machines are one of the easiest ways for an independent dealer to immediately add additional income to his or her already existing business. They can easily be leased to an existing company with a good credit rating and two years of business history. A good water vending machine location should generate enough money to make the lease payment, cover operating expenses and clear a tidy profit. Additionally, the extra advertising and exposure will help increase foot traffic and sales at your retail location. Considering that the amount of water being purchased through vending machines has grown to millions of gallons a day, the time for existing water treatment dealers to profit from this market segment is now.
About the author
Sean Hoffman has been associated with the water industry since 1990. With a bachelor’s degree in psychology from Northern Arizona University, he currently is general manager for Aqua Star International in Tucson, Ariz. Aqua Star is a leading manufacturer of water vending machines from standalone indoor/outdoor units to kiosks and window-style vending displays. Hoffman can be reached at (800) 688-1858 or email: [email protected]