There's Gold in Them Thar Vending Machines!

Over the years, I’ve encountered a lot of strange things being sold from automated kiosk operations, from postal products and services to iPods to beer and spirits – although that last was in Japan, where they apparently sell much weirder things from vending machines, too. Some of these have been very impressive, such as the ice cream vending machines that use a vacuum pump on the end of a robotic arm to pull your purchases out of an internal chest freezer, or the ones that will thaw out a burger and fries, microwave them up to proper temperature, and dispense them – sort of an unhealthful T.V. dinner. But I ran across a news story today that takes the idea of there being gold in the vending machine business to a new level…

According to a story on the Gizmodo website a company in Germany is introducing a vending machine that sells actual gold bars and wafers – in 1, 5 and 10 gram denominations. The company is charging a 30% markup over the current market price, which worked out to be about $42 a gram when the story posted, but the machines check and adjust the price every two minutes, so they may have shifted by the time you get to the Frankfurt Airport and look. The website notes that given the high markup and small quantities involved it’s doubtful that these things will attract any real gold investors; the product is more of a novelty (and a magnet for thieves) than anything else. Although I suppose if they only install these things in airports, security may not be that big a problem; the real issue remains who will buy gold at those prices…

I’m not sure if the business model will work – they’re basically counting on customers wanting the unique experience of purchasing investment-grade substances out of the same type of device that you’d normally use to obtain pre-paid phone cards, munchies, or really bad coffee, which doesn’t seem like much of a basis for sales at a 30% surcharge. Granted, the novelty factor does work – I’ve purchased things from one of the advanced vending machines that sells iPods and accessories just for the fun of doing it, but all of those purchases were made at list price (e.g., the same price you’d pay in a conventional retail outlet) and under conditions where the convenience of getting the thing NOW outweighed the inherent risk of getting merchandise that doesn’t work with no way of returning it. It seems unlikely that gold will ever be a convenience item, and the company openly admits that they’re charging a huge markup on it, which just leaves fun…

On the other hand, I’ve been wrong about consumer behavior before. Maybe people will flock to the German locations where these machines are installed and pony up their Euros for the shiny metal wafers. If so, what other products will we start seeing in automated sales arrangements? Will you one day be able to buy jewelry, laptop computers, flat-screen television sets, or musical instruments in vending machines? Will this completely change the retail industry as we know it, or will these devices function more like the automated self-check you’re starting to see at more and more retailers, where live employees help you with everything about your shopping experience except the check-out process?

I would expect to see a lot of people – not just random bloggers, but a lot of folks in the vending machine and retail industries – keeping an eye on this project. Sometimes this sort of thing represents evolutionary change in an industry, as in the case of machines that sold bottles of cold beverage in the last century. And sometimes they represent expensive toys that never amount to anything, as in the case of the iPod vending machines over the past ten years. But most of the time, the only way to tell the difference is to wait and see…