The digital world provides an expansive universe of potential to every brand. And with the pandemic, the march of Indian retail towards digitization has only hastened. This hastening has brought to the fore unmanned automated retail, which allows for each customer to have a personalized shopping experience with minimal human interaction. And smart vending solutions, which are an essential part of unmanned retail and self checkout, are increasingly becoming a part of Indian retail’s digital umbrella, along with e-commerce, delivery apps, and cashless digital payments.
What does this mean for brands and entrepreneurs? Our CEO, Aroon Khatter talks about the digital future of retail through vending machines and unmanned retail in India. Why and how brands can go digital-first with the help of smart vending machines and unmanned retail solutions in India.
1) Smart vending machines are seeing robust growth in India and the world, what according to you is the reason?
Chief executive of the National Health Authority of India, Ram Sewak Sharma stated that India has 1.18 billion mobile connections, 700 million Internet users, & 600 million smartphones, which are increasing 25 million per quarter. And because smartphones have become ubiquitous, it has increased the customer’s appetite for instant gratification. To match such needs, businesses are constantly having to come up with newer solutions.
An IDC research stated that two-thirds of the CEOs of Global 2,000 companies will shift their focus from traditional & offline strategies to more modern digital strategies to improve the customer experience before the end of the year. Why? Because with each passing day the customer’s need for instant gratification is increasing. We all know that right now, when it comes to purchasing something, it is ‘Buy online & wait!’.
Through Vending Commerce (VCommerce), automatic vending machines in India address a lot of these problems. People do not have to wait for their order. They get it right where they are, right when they want it. The whole experience is contactless and the products is available 24*7. This is not just retail, this is smart retail.
2) Which industries do you think will benefit from the digital-first approach provided by VCommerce or automatic vending solutions and machines in India?
In my opinion, the consumption-theme oriented companies i.e FMCG companies will benefit the most from VCommerce.
For example, let’s say a kid asks his/her parents for an ice cream, at midnight, when restaurants and food apps are no longer delivering. But a smart, unmanned vending machine downstairs in their apartment complex common area can be an accessible purchase point, and that too instantaneously, without any waiting.
There was a preconceived notion, at least in India, about vending machines being only useful for products like packaged snacks at airports. But that is fast-changing. One of our clients at Vendekin, Gadre Sea Food, is in the ready-to-eat seafood business. With our help they’ve installed automatic vending machines in societies, which dispense prawn biryani! All a customer has to do is walk down, make a touchless, cashless payment through their phone, and pick up a prawn biryani with zero-wait and no human interaction. And this is just one example. We have created similar smart vending solutions for Chitale Bandhu, a major snack player in Pune and even a local paan shop called Shaukeen! Apart from providing an extra sales channel, these vending machines also help in increasing their brand recall.
3) According to you, how can traditional businesses become digital-first?
FMCG brands like these have successfully evolved into a billion-dollar industry. In the process, they have adopted a digital-first approach to optimize their internal operations and processes. With the pandemic their customers too increasingly expect the conveniences of a digital-first approach, so in a way it is inevitable. It might take another few years, but it is already happening. We have already had success with several legacy brands like Chitale Bandhu & Haldiram’s adopting Vendekin’s VCommerce platform and technology as part of their omnichannel sales strategies.
Vending and unattended retail operators/SMEs are also finding ways to digitize their operations and sales. Vendekin helps them go digital-first by setting up new avenues of sales with smart vending solutions, or VCommerce.
I truly believe that the next digital wave will be led by SMEs: kirana and other mom & pop stores & small FMCG producers.
4) Now if such businesses plan to go digital, what are the challenges in store for them? Specifically, for those dealing in FMCG products?
The challenges completely depend on the type of business. Let’s take the case of any new FMCG brand. They want to increase brand recognition, recall and increase sales. They go digital by starting an ecommerce website and paid marketing on social media platforms to drive traffic to the website. This is a fairly knowledge-driven and time-consuming process. In some cases, their target audience might still not bite, because they cannot taste it or try it on. There is no way to try out a sample and then place an order. Additionally, there is no seamless avenue for the brands to reach out, engage with and get feedback from a consumer who has tried their product.
This is where such new FMCG brands can benefit from Vendekin’s VCommerce platform and vending machines. Installing vending machines in strategic areas, allows people to see, taste products, engage with and buy from the brand.
5) What are some takeaways from vending superpowers like USA & Japan and fast growing powerhouses like China?
According to data, India has the highest fintech adoption rate of 87 percent as opposed to the global average rate of 64 percent, making it a prime destination for digital payments. Similarly, India has the highest mobile data consumption rate, adding as many as 25 million new smartphone users every quarter.
In retail, snack consumption has gone up by 20% year on year. This means that there is definitely a need. But still vending machines were missing in the infrastructure. Why? because they weren’t profitable enough. Vending was a cash-driven business, with high capital expenditure and very low profit margins.
Vendekin’s smart vending solutions have helped existing vending business increase sales and reduce operating costs.
The next thing Vendekin did was to focus on increasing the gross profit margin for vending entrepreneurs, by getting the best possible rates directly from the manufacturers. With just an increase of 2 to 3% in gross margins, you will see unit economics in the return of investment in vending machine change. And as a result, the number of vending machines will increase.
There is 1 vending machine for every 23 people in Japan whereas in India, every 1 machine has 10,000 people. So the potential really is enormous!