Vending the Rules

5 minute read

You deposit your coins and make your choice: dried squid or hair tonic, batteries or green tea, boxers or beer. It’s all enticingly on display under the fluorescent lights of a truck-sized vending machine parked in the lobby of Tokyo’s Shibuya Excel Hotel. The New Economy comes in a variety of offerings, and this is the ultimate in high-tech self-serve. Manufactured by Sanyo Electric, this fully automated mini-convenience store is part of a new generation of vending machines popping up in a country that’s long been obsessed with coin-slot culture. Sanyo’s Auto Shop Vendor isn’t just bigger than the Coke-and-coffee machines of the past; advanced mechanical engineering allows it to handle what was until recently an unthinkable variety of necessities and impulse purchases. “This is four vending machines in one,” exults Sanyo deputy general manager Misao Awane. “It holds 200 different products, at three different temperatures.”

Vending machines in Japan already sell just about anything one can’t imagine in a machineeggs, porn, rotgutand you see their familiar glow on remote mountaintops and temple grounds. Now, like the automobile and the breadmaker, the coin-op vendor is getting way smarter. The new crop is rigged up with video came-ras, touch-panel computer screens and optical sensors. And these are more than just bells and whistles. In many new models, wireless chips improve efficiency by alerting vendors when a machine is running out of Pocari Sweat or chips. This generation will also be able to hawk digital wares, from music and movies to paperless train tickets. And that promises to fundamentally remake the business by allowing vendors of electronic goods to bypass Japan’s complicated distribution system by restocking their machines from a remote computer. “With the new machines,” says Mitsubishi Research Institute analyst Yoshihiko Tamemoto, “logistical work will be replaced by the network.”

One gigantic network, that is. There are more than 5.5 million vending machines operating in Japanthat’s one for every 20 peopleand last year they raked in a total of $56 billion in sales, according to the Japan Vending Machine Manufacturers Association (JVMA). A few dozen companies compete to make what are the most advanced (and priciest) coin-op machines on the planet. A typical Japanese drink machine costs about $5,000, compared with just $3,000 for an American version, according to JVMA secretary-general Takashi Kurosaki. To meet Japanese expectations, he explains, “these machines have to be very versatile, with lots of functions.”

Omron Corp. knows all about versatility. A few years ago it pioneered the DCS (Digital Camera Station), which lets users make prints of photos taken with their digital camera. It also lets them upload images onto the Internet, freeing up digital camera memory for more picture taking. Customers can download the images onto their PCs when they get home. Last month, Omron upgraded the machines, allowing customers to download music from a satellite transmission system. These features cost about the same as a couple of soft drinks. Omron spokesman Osamu Harasawa envisions a DCS terminal that can electronically dispense movies or books onto PDAs or other portable devices. “Services are going to come together and be concentrated in a single point, like a train station,” he says. “No more running around to do all those errands.”

In fact, errands are already getting easier. Many Japanese convenience stores are fitted with terminals that function as combination ATMs and online shopping kiosks, offering CDs, concert tickets and hotel reservations. The next step, say industry experts, is to link conventional vending machines with Japan’s ubiquitous cellular telephones. In March, Japanese telecommunications giant NTT DoCoMo announced that it is teaming up with Coca-Cola Japan and Itochu Corp. to test a system that will link i-mode, the company’s Net phone service, with vending machines, allowing users to pay for drinks by pressing a few buttons on their handsets.

Some of the newest Japanese technology is being used to boost an old business: selling booze by machine. Prompted by a beverage-industry crackdown on underage drinking, several manufacturers have developed machines that can verify the age of the buyer. Kyoto-based Fujitaka, for instance, has installed sensors clever enough to read the birth date on a driver’s licenseand savvy enough to recognize a fake ID. Another breakthrough allows machines to send messages directly to maintenance workers, alerting them if a machine needs repair, drinks or snacksmaking distribution and upkeep more efficient. Sanyo, meanwhile, has devised a way to fight Japan’s rising crimea new drink dispenser made of a boltless, seamless piece of steel that they say is almost impossible for thieves to pry open.

Yet thieves will be sorely tempted by the ever-widening array of mechanically vendable goods. Fujitaka has created a machine that looks like a department store window and can sell everything from books to clothing. Hokkaido-based Handa Kikai Kigu is about to begin marketing the nation’s first cotton candy vending machine. (How many times have you had a hankering for cotton candy and found no vendorsor carnivalsin site? None? Oops, perhaps Handa Kikai Kigu didn’t do the market research on this oneor maybe, in Japan, if there’s a product, there has to be a machine to distribute it.)

From the wooden boxes of the 1920s to the hulking contraptions of today, Japan’s basic vending business has long been the same: someone had a yen (and some coins) and someone else had to drive around and restock those hungry machines with bottles, underwear or dried squid. Now, the paradigm-busting idea is that a growing number of vending machines are beginning to dispense digital data, altering the economics of a business once largely dependent upon a complex system of resale and deliveries. As vending machines lumber into the information age, future purchases will just as likely come off a network or satellite as the back of the truck. The only problem: you can’t remotely program more Cokes into an empty machine.

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