In our previous blog, we acquainted you with the various hurdles that can surface while setting up a vending machine business and how to get around those obstacles with ingenuity and technology. In this article, we shift our focus on the plethora of opportunities that a vending machine business offers, making it an extremely lucrative and opportune investment in the contemporary times. We will also discuss how to maximise the potential of these opportunities to get optimised returns on your investments in this business.
Digital India Revolution
Spurred by the Central Government’s policies and initiatives, India is gearing up for the Fourth Industrial Revolution riding on the back of the “Digital India” campaign. Coupled with demonetization in 2016 and Jan Dhan-Aadhar-Mobile (JAM) trinity, the digital revolution in India has translated to increased broadband connectivity, higher smartphone density and massive data consumption uptake among users. As a result, e-payments have received a major boost in recent years, with penetration significantly increasing in rural parts of India as well. This provides an unparalleled opportunity for a vending machine operator to enter this untapped market, potentially unlocking millions in revenue as there is a huge demand-supply gap in the retail sector in such areas currently.
Future of Retail: Phygital
Experts from McKinsey & Company corroborate that the future of retail is phygital which is poised to transform the customer shopping experience forever. The physical and digital world in retail can no longer be working in silos, rather they have to work in tandem in order to be able to provide an exclusive personalized experience to customers, thereby driving sales – both in volume and revenue. In such a scenario, a smart vending machine business is uniquely positioned to take advantage of the phygital wave as it combines a real-time physical shopping experience to the customer while the digital customer insights and real-time inventory status work behind the scenes to ensure a seamless and hassle-free shopping experience.
Emergence of D2C Brands
The phenomenal rise of direct-to-customer (D2C) brands has been attributed to their digital marketing strategies and leveraging customer shopping insights. But as the mobility restrictions imposed by the pandemic gradually lift, many of these “digital-first” companies are now turning their attention to exploring the physical space combined with their digital solutions to increase their customer acquisition rates since scaling a brand becomes much easier with physical presence, as reported by YourStory.
As D2C companies continue to foray into profitability, smart vending machines can be a considerable net worth and brand perception augmenter for these companies. Expanding the horizons of their omnichannel approach, these D2C brands can capitalize on smart vending machines as an alternative sales channel. These machines provide an easy distribution channel for their offerings and can also help in predicting demand by getting real-time insights into sales based on user preference and location. Smart vending machines can, in fact, also help these D2C brands in deepening their customer insights and analytics as well. The user apps of these brands can offer free samples of their product (to be collected from the vending machines by scanning a QR code) in lieu of completing a user preference survey or through gamification which can enrich these companies’ customer preferences database as well as raise brand and product awareness. To know more about how smart vending machines can be a game changer for D2C brands, read our blog here – https://blogs.vendify.in/smart-vending-machines-the-missing-piece-in-the-snacking-d2c-industrys-success-puzzle/
Opportunity as a Side Hustle
Perhaps the most luring benefit of starting a vending machine business right now is that with the availability of a plethora of end-to-end technology solutions for smart vending machines like those of Vendify’s available at nominal monthly subscription models, one can start this business as a side hustle. With cloud based technology, remote monitoring and refilling of machines can be planned and carried out with minimal human efforts on a single dashboard. This offers a great opportunity for budding entrepreneurs to set up machines at strategic locations and stock them with revenue-generating products, thereby earning money without significant time and financial resources investments.
Setting up a vending machine business, also known as automatic merchandising, requires no specific skill set and can generate a passive income for the owner in the long term. The startup costs are also relatively lower than other ventures. On top of it, the risks on investment are also comparatively lower because one can always start with the most popular products based on the demographics to gain initial traction and gradually foray into products which yield more profit margins.
Increasing Demand for Niche Offerings
Vending machines are no longer seen as just a convenient option for affordable (and often unhealthy) snacks and beverages. With companies like Country Delight and Licious identifying the white spaces in the supply chain of certain FMCG products along with cosmetics companies like Sugar and Nykaa eyeing profitability through accessible beauty products, vending machines are poised to be a big part of the sales strategy of these companies entering niche domains. The customers are also more inclined to try new products once they physically see them.
One discerning trend that has been observed post the pandemic is the driving up of demand for healthy food products. With concerns about immunity coming to the fore during the pandemic, healthy food products are being seen as a way to redeem the neglect brought about by lifestyle changes in recent years. While this pattern is currently being seen in urban educated and brand conscious consumers, the rural parts of India are also catching. Niche companies like Forbidden Foods are cashing in on this opportunity and taking the retail-first approach to reach the customer directly in a faster manner, increasing their sales by two times from the pre-pandemic period.
Upcoming Aggregator Model in the Vending Business Ecosystem
Gone are the days when setting up a vending machine business meant having to buy machines, employ people for their restocking and collecting cash from them. With each component in the supply chain now available in a compartmentalised way, all an entrepreneur looking to enter this business has to do is to adopt a piecemeal strategy and synchronise all these components to work in an orderly fashion. One can lease the (sometimes already installed) vending machines and take a complete digital payments approach to reduce hassles. Delivery companies like Zypp Electric, Delhivery, etc. can be onboarded to pick up the refilling stock from the warehouse and deliver it directly to the vending machines, thereby reducing the need to employ permanent staff for delivery operations.
A one-stop solution like that provided by Vendify can work as a technical aggregator to bring all these components together on a single platform, in order to enable faster and efficient monitoring and control of the operations with a single click. Even existing players in this business can take advantage of the IoT SaaS provided by Vendify because our hardware and software solutions can fit into any existing machine making them technologically compatible for remote monitoring, digital payments and cloud-based logistics and inventory management. To know more about how you can increase operational efficiencies to the tune of 30% in your existing or upcoming vending machine business, write to us at email@example.com.