Technology brings innovative vending machines
Najihah S 
Vendpays Sdn Bhd founder Raymond Woo has identified Grade A offices, malls, colleges and hospitals to station the coffee vending machines

The vending machine has come a long way since its introduction in the 19th century. From newspapers and cigarettes to drinks and clothes, the machines offer not only convenience to consumers, they also give entrepreneurs a platform to make profit.

FocusM talks to two vending machine operators who share the challenges and rewards of this niche business.


Moving away from coin-operated machines

As technology advances, vending machines get more sophisticated. Today, there are machines with cashless payment. One of the latest features is the acceptance of QR codes using a smartphone.

This enables a person to use the machine just by downloading the code from a website. Once the QR code is tapped to the machine via a smartphone, the order for the item is made and it will be dispensed.

One company offering such vending machines is Vendpays Sdn Bhd. Since its establishment in 2015, it has installed two such vending machines in the Klang Valley and is in the process of installing eight more across the territory.

Founder Raymond Woo also came up with the business model for a micro café using vending machines after two years of studying the market and searching for the right machine.

“We took nearly two years to identify the right vending machine manufacturer and then the right coffee bean partner. Both are Italian companies with established expertise in their field. Combined with our QR code cashless payment solution and our online telemetry monitoring, we are able to provide a new business concept in the form of a micro café.”

Woo and co-founders Eldrick Koh and Lai May Sien invested RM500,000 to set up the business, including importing the vending machines.

The machines are called V Barista – with the V meaning value and virtual vending – and dish out coffee and chocolate drinks. Vendpays also partners with an Italian company Café Vergano to carry a specific coffee brew.

V Barista serves quality but affordable coffee

To ensure the quality of the coffee, the beans are replenished every two days. The vending machine grinds coffee beans and immediately brews a fresh cup of coffee priced at RM3-6 for the customer.

Woo came across the QR code vending machine, which cost RM39,000 per unit a few years ago, at a technology exhibition. “We were invited by Intel Lab Penang to participate in a digital display innovation and solution event. During one of the presentations, we got to see the interactive display of a coffee vending machine. That made us ponder on solving café issues and making freshly brewed coffee more (easily) available round the clock.”

Given the vending machine business is highly competitive, Woo admits there are challenges, especially in finding a good location. “We could only place our V Barista at locations with the consent of the landlord,” he says.

However, that does not deter the company, which currently has eight staff, from scaling up. Vendpays is in the process of installing over 20 machines by next year and looking at placing them in Grade A offices, MSC-status buildings, colleges and universities, contact or call centres, hospitals and shopping malls.

“What we are bringing into the market is a new way of doing business – to enable people to own a café without hassle. And we are not just bringing it to Malaysia but intend to offer this new business opportunity worldwide,” he says.


Inspiration from Japan

Venpower Sdn Bhd is a company that imports, installs and maintains vending machines. It was founded by Goh Seng Kiat, a self-service laundry operator, in 2013 when he saw the opportunity to include vending machines in his laundry shop.

After a few trips to Japan, also known as the Land of Vending Machines, Goh decided his new business plan was to become a provider of vending machines.

Venpower marketing manager Bridget Lee says Goh was “inspired by what he saw in Japan and that made him want to venture into this”.

With a capital of RM300,000, Goh purchased three vending machines and installed them in his laundry. He eventually became an importer of vending machines from Japan and invested another RM300,000 in his new business.

A year later, with 33 vending machines sold, Goh decided the company should also provide servicing as well as give advice to entrepreneurs interested in buying vending machines to start a passive-income business.

“People slowly realise that by purchasing a vending machine, they can earn an income without doing a lot of work. But the important thing is the location. This is where we come in and advise our potential clients,” Lee says.

Venpower then started selling new and salvaged vending machines in different categories, namely drinks and snacks.

The machines are typically priced from RM30,000 to RM48,000 (depending on the size and features) for new units and RM6,900 for salvaged ones.

In 2015, the company managed to gain the trust of Yeo’s, a major drink manufacturer, to become the vending machine operator for the brand. The agreement hiked the sales of its vending machines and to date, Venpower has sold more than 250 of them.

However, that does not mean profitability has been achieved. Lee admits not much profit has been made. She says because the business itself is in the “red ocean”, the margin is very low.

“We’re hoping that next year would be a better year for us and we wish to evolve the business a little more. You can have all kinds of innovative machines, but it boils down to how you carefully strategise (to attract consumers),” says Lee.

As there are already vending machines that dispense food such as fries and pizza, Lee believes there is potential to develop machines for other types of food.

Having spoken to many business owners, Venpower sees an opening in developing vending machines that can help food vendors sell their food.

Based on her experience, Lee says Asian food can be something that the company can leverage on.

“For example, your typical pau or dim sum. We’re thinking of a machine that can dispense them. They’re small in size and people can have them on the go.”

This article first appeared in Focus Malaysia Issue 261.