HD Supply Waterworks, a distributor of waterworks infrastructure products, has relocated one...
Water vending is a growing, lucrative and environmentally friendly field, yet water dealers often overlook this viable option. Edward Gale, president of Chem-Free Systems, Inc., explains why this segment of the industry is both a smart and simple choice for water dealers looking to diversify their business.
Elizabeth Lisican: Why did entering the water vending arena make sense to you?
Edward Gale: After 42 years, I retired from the investment banking field and soon became very restless and bored. I developed some simple criteria to use before I selected a field of endeavor: I did not want to invest large amounts of capital, did not want a business that would take up too much of my time and the product would be in continuous demand and not be outmoded by some technological advance. Vending in general seemed to meet these standards but water vending was even better.
At the time that I decided to move forward, the vending of water into the customer’s own container was relatively new and dominated by three companies whose marketing efforts centered around supermarkets. The area where I live has hundreds of large multifamily apartment buildings, both rentals and condos. The machines being manufactured at that time were very large, costly—$5,000 and up—and required a good bit of technical knowledge. I decided to focus on designing a small, much less costly machine that I could place in the apartment buildings and would generate enough income to give me a quick payback of my capital investment. We now operate a significant number of machines in these buildings as well as many other types, such as mobile home parks, boat marinas, convenience stores, small neighborhood food markets, schools and colleges and so on.
Lisican: How has this segment evolved over the years?
Gale: This segment of the industry started, and is still dominated by, the supermarket locations as they generate the highest revenue. The cost of this equipment is more than $7,000 and up to $10,000; however, this high equipment cost, as well as the cost of paying and training a technician, along with very high commission fees, makes it difficult to make much profit. This leaves a very large niche in this segment that has yet to be filled.
Demand for treated water is growing every year since the vast majority of people do not believe that their drinking water is safe. Hardly a week passes that there is not a “new” revelation about what is actually in our water supply. There is a realization that the regulations only cover about 70 contaminants while each year thousands of new chemicals are being introduced into the marketplace and many of those find their way into the water supply, unchecked and unregulated. This makes for a very bright future for those in water treatment industry and specifically for those who treat drinking water.
Vending water from machines is very popular in many Southern tier states and is just becoming more popular and acceptable in the northern states. With very low entry costs, obvious familiarity with the product and minimal time needed, water dealers should add this product line to help improve their income. Clean water is not a product that will go out of fashion, has seasons or has any real vending competition when it comes to delivering water conveniently 24/7. It is natural for water dealers to cash in on this growing segment.
Lisican: Why is water vending a smart option for diversifying one’s water business?
Gale: Vending water is a very logical step for water dealers for a number of reasons. They have the knowledge of the various products in the field, they are aware of the local water conditions and what treatment methods are best suited for use and they enjoy a good reputation in their community. This makes getting locations easier. Entry into the field requires minimal capital. The dealer does not have to buy anything until they secure a location, hence no inventory is needed. We usually deliver within 48 hours after payment has been made. No special skills are needed to operate the equipment, certainly nothing that they do not already know.
Once the machine is operating, service consists only of changing the filters on a timed basis and replacing the ultraviolet lamp once a year. Visiting the machine for simple cleaning only needs to be done once every two weeks. The dealer will find that operating this equipment, even multiple units, will not interfere with their everyday business and the revenue will help smooth out the ups and downs encountered by every dealer.
The biggest advantage of vending water is in two areas: you will never run out of product and lose sales since there is no restocking needed. Additionally, water is what we call the “universal common denominator” product. Everyone needs water daily. Operating costs run under 10% of the gross; 90% goes directly into your pocket. wqp