Taiwan’s Yallvend Conquers Japan with 6-Minute Vending Machine Upgrades

Taiwanese IoT startup Yallvend has achieved rapid growth across Japan and Asia with its proprietary technology that upgrades existing vending machines to cashless payment systems in just six minutes. CEO Duncan Huang leverages over a decade of experience in the vending machine industry to develop a simple solution requiring no hardware modifications. His innovation transforms cash-only vending machines into next-generation smart systems integrated with mobile payments like Apple Pay and Google Pay, plus cloud-based inventory management.

During the COVID-19 pandemic in 2020, the company contributed to Taiwan’s government mask distribution program, gaining widespread recognition for its innovative identity verification system combining facial recognition with ID confirmation. This achievement established the company’s technical credibility and laid the foundation for international expansion. While initially unplanned, the strategic pivot to the Japanese market emerged from deep understanding of Asia’s vending machine market structure.

The company now dedicates 80-90% of its resources to the Japanese market, serving approximately 6,000 vending machines nationwide from Hokkaido to Okinawa. Huang’s team has accumulated deep technical knowledge through collaboration with Japanese companies, creating decisive competitive advantage in this specialized market environment. Across Asia, the company has deployed 9,000 units in a market of approximately one million machines, steadily building presence while preparing for the next growth phase.

Unlocking the Industry’s “Tacit Knowledge”

Huang’s entrepreneurial journey began with extensive hands-on experience in the vending machine industry. His first career involved three years at a company providing cash payment systems for vending machines, parking lots, and coin laundries, where he gained deep understanding of the technical challenges and market structure fundamentals of the vending machine industry. This experience provided comprehensive knowledge of technical challenges, customer needs, and the entire industry ecosystem.

My first job was at a company handling cash payment systems for vending machines. During those three years, I gained comprehensive understanding of the industry’s technical challenges, customer needs, and overall ecosystem. (Huang)

This experience became the foundation for later technical advantages in business development. Particularly important was experiencing operational challenges at the ground level, enabling him to develop solutions focused on actual operational efficiency improvements rather than mere technology provision.

Later, he invited several team members to establish his first company, engaging in IoT smart home and building businesses. However, in 2019, he identified new business opportunities by combining IoT systems with vending machines, founding Yallvend. The crucial factor at this turning point was accurately recognizing market environment changes as IoT technology proliferation brought digital transformation waves to the traditional vending machine industry.

Interestingly, the initial strategy focused on Southeast Asian markets. In emerging markets like Singapore, Malaysia, and Thailand, the rapid transition to cashless payments suggested high demand for vending machine smart upgrades. Conversely, the Japanese market was perceived as having high entry barriers due to intense competition among established players in this mature market. At this point, full-scale expansion into Japan was not anticipated.

However, deeper market analysis revealed structural characteristics of Asian markets. Seventy percent of Asia’s vending machines consist of second-hand Japanese equipment, all operating on Japan’s proprietary protocols. After ten years of use in Japan, these machines are sold to countries like the Philippines and Singapore, but Japanese companies don’t release technical documentation for each country, making third-party technical support extremely difficult.

This structural challenge became a significant business opportunity for Yallvend. The deep technical knowledge of Japanese protocols that Huang’s team accumulated through collaboration with Japanese companies since 2007 became the decisive factor in overcoming these entry barriers. As a result, they became virtually the only company capable of providing Japanese vending machine solutions in Southeast Asia, enabling partnerships with 4-5 companies in the first year despite being a small team.

Southeast Asia to Japan – An Unexpected Pivot

Building on Southeast Asian market success, Huang gradually began seriously considering Japanese market expansion possibilities. This strategic transformation was driven by several important factors.

First was recognition of technological superiority. Through Southeast Asian business development, it became clear that the company’s knowledge of Japanese protocols represented competitive advantage difficult for other companies to replicate. Beyond merely non-public technical documentation, actual operations require detailed troubleshooting and optimization know-how acquirable only through years of hands-on experience. This “tacit knowledge” possessed by the company was judged to be the key to Japanese market expansion.

Japan’s vending machine industry’s technical distributed structure was clearly outdated in the IoT era, and we judged that providing integrated solutions would enable differentiation. (Huang)

Second was the attraction of market scale and potential. Japan’s vending machine market boasts approximately 4 million units, overwhelmingly larger than Taiwan’s 100,000 units or Southeast Asia overall. Moreover, with government-led promotion of cashless payment adoption, demand for existing vending machine smart upgrades was predicted to expand rapidly. In this massive market, leveraging technological advantages to capture a certain share could dramatically expand business scale.

Third, analysis of existing player trends became the decisive factor for market expansion.

Japanese vending machine manufacturers achieved success over long periods, but this very success may have reduced motivation for innovation. While China saw rapid proliferation of next-generation vending machine functions like large monitors and gaming features, Japanese products remained limited to traditional functions. We were convinced that by bridging this technology gap, we could provide differentiated value propositions in the Japanese market. (Huang)

Fourth, timing also played an important role. The COVID-19 pandemic dramatically increased demand for contactless payments, transforming vending machine smart upgrades from mere convenience improvements to hygienic necessities. This market environment change provided tailwinds for new entrants.

After comprehensive consideration of these factors, the decision was made to enter the Japanese market in earnest in 2021. Though originally unplanned, it was judged that technological advantages, market scale, competitive environment, and timing all worked favorably for the company.

6-Minute Solution Technology Innovation

Yallvend’s Vending Upgrade Kit (VUK) is an innovative solution that comprehensively addresses fundamental challenges facing traditional vending machines. Conventional vending machines suffer problems of non-functionality approximately 10% of the time due to mechanical failures, out-of-stock situations, and insufficient change, creating major obstacles to operational efficiency and customer satisfaction. Additionally, lack of network connectivity made inventory and restocking management inefficient, while countermeasures against fraud like counterfeit coin insertion were difficult.

VUK solves these challenges through three simple yet effective components: a palm-sized modem (with 4G communication capability), 4G antenna, and QR code stickers. This small kit enables addition of mobile payment and cloud management functions without any hardware modifications to existing vending machines. Installation takes just six minutes and can be easily performed without specialized technicians.

Our solution is like a 4G router, but a specialized 4G router equipped with vending machine communication functions. Customers purchase the hardware components from us and install them in vending machines. The hardware maintains internet connectivity and transmits all vending machine information to our cloud – inventory quantities, sales numbers, machine operational status, online/offline status, everything. (Huang)

Particularly noteworthy technically is accommodation of Japan’s uniquely complex protocol environment. Due to JVMA (Japan Vending Machine Manufacturers Association) regulations, Japanese vending machines use structures where payment processing and data collection operate on completely separate, different network connections. This distributed structure was clearly inefficient in the IoT era. Each component required independent network connections, making integrated data management and analysis difficult.

While complying with Japanese technical standards, VUK integrates everything into a single hardware unit linked to the cloud, realizing completely integrated solutions for operators. This enables operators to efficiently manage hundreds, thousands, or even tens of thousands of vending machines from headquarters.

The core of technological innovation lies in this integrated approach. Traditional systems managed payment data and operational data separately, making comprehensive analysis and optimization difficult. VUK realizes real-time inventory management, immediate sales data collection, equipment operational status monitoring, and online/offline status tracking on a single platform.

Furthermore, VUK integrates advanced functions absent from traditional Japanese products. By adding large monitors and gaming functions popular in China to Japanese vending machines, business models can expand from mere product sales to experience provision. Customer reactions have been very positive, and these differentiating functions enable market share capture from existing manufacturers.

The Invisible Wall Called “Trust”

The greatest challenge in Japanese market expansion was entirely different from technological advantages – it was gaining “trust.” Huang clearly recognized essential differences between Southeast Asian and Japanese markets. While price competitiveness was an important differentiating factor in Southeast Asian markets, reliability and continuity were prioritized above all in Japanese markets.

If I describe the Southeast Asian market in one word, it would be ‘preference for affordable options. But if I describe the Japanese market in one word, it would be ‘trust.’ In meetings with Japanese companies, silence continued after greetings, and substantive communication was completely impossible. This experience made me understand that language barriers were not merely communication issues but fundamental obstacles to building trust relationships. (Huang)

This insight became fundamental to the company’s Japanese market strategy. The first major barrier was lack of basic communication capability. During the initial 2020 visit to Japan, English business development was anticipated, but reality was quite different.

To address this challenge, Japanese speakers were hired and local personnel gradually increased. A Tokyo branch was established in 2022, strengthening local support systems. Currently, three local staff are stationed in Tokyo, constructing dedicated sales and technical support systems for the Japanese market. However, securing linguistic communication capabilities was merely the entrance to the trust-building process.

The more fundamental challenge was adapting to Japanese corporate decision-making processes and corporate culture. In Japanese corporate procurement processes, track record and recommendations are extremely important in evaluating new suppliers. The question “Who is using your product?” is always asked, and without appropriate answers, companies are excluded from consideration. For new entrants like Yallvend, this was a typical “chicken and egg” problem. Without track record, deals with major companies were impossible, and without deals with major companies, track record couldn’t be established.

To break this vicious cycle, Huang devoted extraordinary effort to acquiring the first customer. The first equipment was installed at a small, unknown station in Hokkaido, but even for a single unit installation, engineers flew to the site to perform the work. Subsequently, small-scale implementations of 20-40 units were accumulated in Tokyo, but these small-scale achievements were insufficient to attract major company interest.

The decisive turning point was success with a large-scale campaign with UCC (UCC Coffee Okinawa) in Okinawa. This project demonstrated comprehensive results including marketing effects beyond mere equipment installation. This success story led to widespread industry recognition of the company’s technical capabilities and execution strength.

The campaign’s effects were dramatic. Major companies like Suntory, Asahi, and Kirin, who previously refused even phone approaches, began actively engaging in business discussions. We became remembered as ‘that company doing crazy things,’ and our innovation and challenging spirit gained recognition. (Huang)

This success story demonstrates the special nature of trust-building mechanisms in the Japanese market. Simply showing technical specifications or price competitiveness was insufficient – corporate reliability needed demonstration through actual results. Moreover, this demonstration process was gradual and time-consuming, making application difficult for companies seeking short-term results.

Yallvend’s current success in the Japanese market is supported by strategic partnerships. Particularly important is the case of expanding trust relationships built through Southeast Asian business achievements to the Japanese market.

The company’s current main partner in the Japanese market was a traditional Japanese company with Malaysian subsidiaries.

We had previously built good business relationships with this company’s local subsidiary in the Malaysian market, demonstrating our technical capabilities and execution strength. When the Malaysian subsidiary CEO was promoted back to Japan headquarters in 2020, he provided a gateway for Japanese market expansion. (Huang)

However, even with this connection, building actual cooperative relationships required 2-3 years.

Personal trust relationships and corporate trust relationships are separate dimensions of challenges, and building the latter required longer-term track record accumulation. (Huang)

During this period, Yallvend continuously accumulated small-scale achievements in the Japanese market, strengthened technical support systems, and worked to improve local brand recognition.

This partnership strategy succeeded due to combining mutually complementary strengths. The Japanese company could provide long-cultivated customer relationships, deep market understanding, and reliable support systems. Conversely, Yallvend could provide innovative technical solutions, rapid development and improvement capabilities, and cost competitiveness.

Cultural bridging functions were particularly important. Having partners who understood Japanese corporate decision-making processes and business practices enabled efficient market approaches. Conversely, through our technological innovation and market adaptation flexibility, partner companies could also explore new business opportunities. (Huang)

Concrete results of this partnership include current growth to serving approximately 6,000 vending machines nationwide across Japan. Particularly interesting is how this partnership model has become a reference case for other overseas startups entering the Japanese market. It demonstrates possibilities for reducing entry risks while accelerating growth through strategic cooperation with appropriate local partners rather than independent market expansion.

Beyond Vending Machines

Technology expansion actively proceeds into fields beyond vending machines. Already successful is the employee card system for JP Morgan.

We provide systems enabling employees to obtain stationery and other items from vending machines using employee numbers at JP Morgan offices in Japan, Taiwan, Philippines, and Singapore. This case demonstrates important application possibilities for our technology in B2B markets. (Huang)

This B2B solution enables companies to achieve welfare management efficiency improvements while employees enjoy more convenient workplace environments by introducing employee ID-based authentication systems replacing traditional cash payments. This system attracts attention from other companies as a model case demonstrating new vending machine utilization methods.

Additionally, the derivative product Coin Machine Upgrade Kit (CUK) has been developed. This targets coin laundries and game centers, operating at approximately one-fifth the cost of 4G communication through Wi-Fi connections in environments with numerous machines at single locations.

In places like game centers with many machines in one location, using 4G for everything becomes extremely expensive. CUK uses Wi-Fi, reducing communication costs to about one-fifth. (Huang)

This strategic cost adjustment enables approaches to broader market segments. Full-scale expansion into the game center market is planned for 2026 as a new market segment. “Japan’s game center market has unique characteristics requiring integration of sophisticated payment systems and entertainment functions. We plan to establish differentiated positions in this specialized market by leveraging our technological advantages.”

As a technological differentiation strategy, the company focuses on introducing advanced functions to the Japanese market.

Specifically, these include interactive large displays, gaming and entertainment functions, AI analysis-based personalized product recommendations, and even augmented reality (AR) technology-utilizing experiential sales. These functions evolve vending machines from mere product sales devices to customer experience platforms.

Market reactions have been very positive, particularly earning high evaluation from younger customers. By providing experiential value impossible with traditional vending machines, not only sales improvements but also brand engagement enhancements are realized. This success accelerates market share capture from existing manufacturers.

AI Transforms Vending’s Future

Yallvend focuses intensively on developing next-generation services utilizing massive data collected from IoT devices. Currently, detailed data including sales data, inventory status, equipment operational status, and customer usage patterns are continuously collected from thousands of vending machines. While this data was previously managed individually by each operator, Yallvend’s platform enables integrated analysis

Initially, we positioned all collected data as customer assets and refrained from secondary use. However, rapid AI technology development has enabled provision of value-added services utilizing this data. (Huang)

Current AI utilization projects under development include operational efficiency optimization, demand forecasting sophistication, and dynamic pricing support – services directly contributing to customer profitability improvements.

Particularly noteworthy is restocking plan optimization through AI analysis. AI analysis can scientifically optimize restocking timing and quantities previously dependent on veteran worker experience and intuition.

Even new workers can achieve veteran-level efficient operations by following AI recommendations. This function also contributes to solving staffing shortage problems troubling operating companies. (Huang)

Further advanced applications under development include dynamic inventory adjustment among multiple vending machines, product composition optimization considering seasonal variations and regional characteristics, and demand forecasting linked with weather forecasts and event information. These functions evolve vending machine operations from traditional “install and wait” businesses to “data-driven optimization” businesses.

AI technology applications extend beyond restocking operation optimization. Through customer purchasing pattern analysis, optimizing product placement according to time periods and seasons, predicting best-selling products, and strategic proposals for improving individual vending machine profitability have become possible.

“For example, coffee demand increases in morning hours while soft drink demand rises in afternoons – by learning such patterns and dynamically adjusting product placement and inventory quantities accordingly.” (Huang)

Such AI-driven operational support systems enable vending machine operators to transition from traditional experience-based operations to efficient operations based on scientific evidence. This particularly contributes significantly to solving industry labor shortage problems.

Taiwan to the World

Funding strategies are implemented in stages according to business expansion. In the 2023 Series A round, approximately 60 million New Taiwan dollars (about 3 million USD) was raised from Taiwan’s Abico Group and Wistron Group. These investors provide not only funding but also strategic support for Asian market business development.

Many Taiwanese investors understand vending machine market specialization and recognize Japanese market importance. However, for actual market expansion, they recognize that funding provision is the most effective support form rather than direct business support due to this niche nature. (Huang)

This understanding maintains good investor relationships and secures continuous support for long-term growth strategies.

The currently progressing Series B plans to raise approximately 3 million USD. These funds will primarily be allocated to Japanese market business expansion, technology development acceleration, and expand into new market segments. Particularly, Tokyo office expansion will significantly strengthen Japanese market support systems.

Specific fund usage includes first, strengthening Japanese market sales systems. From the current three-person structure, personnel will be increased in sales, technical support, and customer success areas to construct more comprehensive service provision systems. Second, investment in technology development will expand, particularly accelerating AI function sophistication and new value-added service development. Third, funds will be invested in specialized technology development and market research necessary for entering new market segments like game centers.

Japanese investor development is also actively pursued, with plans to further strengthen business foundations through local fundraising.

Japanese investors tend to emphasize market achievements and growth potential over technical details. We’ve reached the stage where we can present this as a promising investment opportunity based on current business expansion achievements. (Huang)

This fundraising strategy reflects the company’s long-term vision. Currently deploying 9,000 units across Asia, sufficient growth opportunities exist in the approximately one-million-unit market. Particularly in the Japanese market, government-led cashless promotion predicts rapid expansion of existing vending machine smart upgrade demand over the next five years.

Currently, Yallvend concentrates 80-90% of resources on the Japanese market. This strategic concentration reflects deep insights into Japan’s unique competitive environment.

Japanese vending machine manufacturers achieved success over long periods, but we analyze that this very success may have reduced innovation motivation. (Huang)

However, building on Japanese market success, future expansion into other mature markets is envisioned. Europe is particularly noteworthy.

European vending machine markets aren’t as large-scale as Japan’s, but cashless payment proliferation is advancing and environmental awareness is high, creating possibilities for our technology to provide value. (Huang)

Long-term North American market expansion possibilities are also under consideration. While North America’s vending machine market is large in scale, technical requirement levels and market structures differ significantly from Japan and Asia, requiring careful market research and technical adaptation.

The company’s competitive advantage in global expansion lies not in mere technology provision but in customization capabilities adapted to local market specializations.

Our strength lies in deeply understanding each country’s vending machine industry technical characteristics and business practices, then optimizing solutions accordingly. This capability becomes the differentiating factor from other general IoT companies. (Huang)

To achieve sustainable growth, continuous investment in technology development continues. Current R&D projects include next-generation communication technology (5G) compatibility, more advanced AI analysis function development, and environmentally considerate solution research. These technological innovations will maintain competitiveness capable of responding to future market changes.

Ultimately, Yallvend aims to establish position as a global leading company driving digital transformation in the vending machine industry. Using current Japanese market success as a springboard, ambitious visions encompass deploying company technology and services throughout the Asia-Pacific region and eventually in Western markets. Preparations include steady infrastructure development across all aspects: human resource development, technology development, and partnership strategies.