After returning from the USA in 2013-14, Aroon Khatter started his entrepreneurial career in the e/m/governance and virtual and augmented reality solutions space. While running the venture, a candid discussion in 2016 with his IT professional friend on ‘period emergency’ and how vending machines were not intelligent enough to interact via mobile, sparked a thought in Khatter’s mind. He realised that while there are multiple platforms to order cabs, food from restaurants, etc., not a single platform was present to offer personalised services from vending machines and unattended retail kiosks.
This led to a lot of research, minimum viable products (MVP), and trials for two years, after which in 2018, Khatter finally launched ‘Vendekin Technologies’. The company operates globally including India, the USA, Europe and MEA and has already clocked 4 million+ transactions by catering to 4 lakh users. About 35 per cent of all vending machines in India are enabled by Vendekin while the company has access to more than 20 per cent of all unattended retail kiosks/machines globally.
How it all started
When the period emergency incidence happened in late 2016, demonetisation had happened in India and UPI payments were gaining steam. Khatter had then presumed that there must be some smart solution existing in ‘advanced’ countries like the USA, UK, and Japan but to his surprise, all the vends and kiosks were actually ‘dumb’ machines.
Says Khatter, “Looking deeper, I understood there is nothing seamless. I had the team to experiment and do certain MVPs. I decided to make a prototype for a sanitary napkin dispensing machine because that’s where the problem was identified, and simultaneously got a lawyer to do a prior art search. It took nearly five months to build the first MVP. That was a rudimentary thing just to enable the payment and dispensation. Initially, we called it ConviPay (from convenient payment). Then we realised we are not just providing a payment mechanism. So, we started developing other features like transferring data to the cloud, our backend software that manages sales, purchase orders for the owner of the machine, etc.”
“To make an app interact with a device is not easy. Building the product-market fit (PMF) has been quite an exercise in learning. However, we continued our efforts because we believed that if there are mobile phones everywhere and there are people who want to interact with vending machines, the middleware needs to be built,” he said.
“Ajit Nair, who is with me from the first day, took care of the technology part while I also learned about electronics on the job. The software and hardware combination built a certain intellectual property (IP) that allows us to stay relevant. We are also digitising the supply chain for the vending machine owners as well,” said Khatter.
Adding value incrementally
Vendekin name was derived from the combination of ‘Vend’ in English and ‘Ekin’ in Sanskrit meaning simple. Khatter says, “We are making vending simpler. We are basically an enterprise resource planning (ERP) tool for vending or unattended retail. We also have the ability to integrate with ERPs of larger companies.”
“India is a nascent market. We tested our ‘retrofit’ solution in the smaller market and then took this solution to millions of machines globally. Over the last three years, we have retrofitted nearly four thousand vending machines in India, which is 50 per cent of total machines in India. We are the first hardware-enabled SaaS (software-as-a-service) platform that has taken its solution global,” he added
Vendekin did the first trials in Bengaluru with a multinational brand. Initially, people didn’t take vending seriously but with the Covid-19 outbreak and lockdowns, vending came back in trend.
Sharing his experiences during the initial days, Khatter said, “Outside India, investments were already made. In India the infrastructure was absent. E-commerce and digital payments have evolved just over the last decade. There were POS terminals and nobody found the need to incrementally work on top of that to optimise further. Besides, India is the only country which has the maximum retail price (MRP) on products. Retail is under pressure due to minimal margins, inflated supply chain costs, higher investments, and rising labour expenditure. On the other hand, the customer’s expectations continue to surge as digital disruptions keep raising the bar for personalised service.”
E-commerce and quick commerce companies are making losses per order. With funding drying up, they will also move towards optimisation. This is where instant commerce (vending machines and kiosks) will grow, believes Khatter. “The highest selling products and groceries will be put in unmanned kiosks in housing societies to address requirements. So, vending will eventually be a mechanism that allows brands to take their stores closer to their consumer as a supplement for e-commerce and quick commerce. To accelerate the automated future of retail in India, Vendekin has partnered with global and national retail giants like Cantaloupe USA, Sandenvendo USA/EU, Nestle Europe, Coca Cola, HUL and Godrej,” Aroon stated.
Vendekin is also working on ‘reverse vending machines’ for recycling various products. Khatter said, “We are working with a Swedish company to collect plastic bottles for recycling. Users will put plastic bottles in the machine and get money in return. We are digitising the entire process to connect the payback to the consumer into their digital wallet or send it to the royalty program of the retailer. In India too, as we end single-use plastic, the government will have to incentivise recycling. Reverse vending will also have a huge potential in India.”
Khatter says, “Vendekin hardware and software captures various data points such as who is buying, what and where are they buying, etc. This data is not shared with anyone and is GDPR compliant. FMCG brands which don’t have access to last-mile data can make larger-level decisions using the last-mile data with Vendekin. This allows for effective management of the consumer lifecycle. The vending machine is just not an extra point of sale but it also becomes the door into the minds of the consumer.”
Instant commerce for small entrepreneurs
Khatter believes that people buying from e-commerce are going to continue to do so, but the quick commerce companies will eventually start charging a very high delivery fee which in turn will make the business unviable. Vendekin will look forward to partnering with quick-commerce companies to allow their users to purchase from the vending machines.
He says, “While driving to Goa, I once saw an ice-cream cart vendor pushing his cart over a flyover near Karad. I realised that the only reason why small business owners can’t own a vending machine is due to a lack of finance. If Vendekin becomes an aggregator platform, banks can underwrite and these entrepreneurs can put multiple machines in their areas and be self-sufficient.”