The operator of Sun 108 vending machines sees the pandemic, convenience and e-payments as catalysts for its sales, writes Pitsinee Jitpleecheep
published : 26 Feb 2022 at 04:00
newspaper section: Business
writer: Pitsinee Jitpleecheep
With the pandemic persisting, vending machines seem to be one of the few businesses flourishing as they offer a contactless distribution channel, providing safety for both sellers and buyers.
New vending machines are being introduced featuring food, instant noodles, fresh coffee, carbonated drinks and face masks.
Pitsnu Chokwatana, senior vice-president of vending machine distribution company Sun Vending Technology Plc, operator of the Sun 108 vending machine brand, sees continued development of the industry, with a wider range of consumer products in the pipeline.
Thailand’s vending machine sector is estimated to be worth 3 billion baht a year.
“At a time when consumers continue to seek out safe, hygienic, contactless ways to shop, vending machines are showing unexpected growth in demand,” said Mr Pitsnu, age 56.
He said during the pandemic, customers are looking for less face-to-face interaction and contact during purchases.
Vending machines give consumers added confidence when making a transaction, said Mr Pitsnu.
He said the pandemic is not the lone trigger for higher vending machine purchases. Another key factor is the development of new models that allow consumers to pay electronically.
The government’s economic stimulus packages link payments to digital applications, paving the way for familiarity with digital products. Increased use of digital payments can draw more players to the business, said Mr Pitsnu.
Given these business prospects, Sun Vending reorganised its strategy to expand via a franchise system in addition to its own investment, he said.
“We started a pilot project for a franchise business in Chiang Mai province at the end of last year and we expect 50 vending machines to be installed by the end of February,” said Mr Pitsnu.
Mr Pitsnu, the second generation of the Chokwatana family, joined Sun Vending Technology in May 2017 after working as a consultant for shoe and automotive firms.
“With an educational background in mechanical engineering, I feel happy working at the company because I love mechanics and love to work with machines more than people,” he said.
“Machines are more predictable than humans.”
Saha Group, the country’s leading consumer product conglomerate, has expanded its vending machine business for more than two decades, importing used vending machines from Japan for use in Thailand.
By the end of 2021, the company operated 14,628 vending machines, selling beverages, snacks, instant noodles and other consumer products, an increase from 13,340 machines in 2020. Sun Vending is a subsidiary of Saha Group.
Thailand’s vending machine industry is estimated to be worth 3 billion baht a year.
Saha’s vending machines provide four main types of products: cans, see-through items, cup machines and noodles.
The company’s revenue stems from selling items in vending machines, selling vending machines, and advertising on vending machines.
Sun Vending Technology reported revenue of 1.69 billion baht, 1.8 billion and 1.76 billion in 2018, 2019 and 2020 respectively, with profits of 132 million baht, 93 million and 55 million.
“In the early stages of the pandemic, it affected our revenue from vending machines, which were mostly installed at industrial factories, but we adapted by installing machines at new locations such as gas stations, MRT stations and condominiums,” Mr Pitsnu said.
He said the company plans to install 1,600 new vending machines this year, mainly located close to factories, with 30% situated at retail complexes, office buildings, hospitals and petrol stations.
With digital technology flourishing, the company’s vending machines have been designed to accept cash or electronic payments such as Rabbit card, Line Pay, Ali Pay, True Money, Wechat.
More payment channels are expected to be added to its vending machines soon, said Mr Pitsnu.
To reduce business risk, the company is exploring installing more of its machines at locations such as petrol stations, MRT stations and condo projects as many people still work from home, he said.
“Vending machines not only provide convenience, but also offer service around the clock,” Mr Pitsnu said.
Through the franchise system and its own investment, Sun Vending expects the number of its vending machines to reach 20,000 units in 2023, of which 2,500 are in the franchise system.
“There is still a huge opportunity to expand vending machines in Thailand. My challenge is not to be the leader based on the number of machines we sell or install. Our focus is profit margin,” he said.
“We expect to increase our profit margin to 4.1% this year, up from 3.7% last year. We dream of a profit margin reaching 7% after that.”
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