Vending business techniques that a classic business should adopt

Vending due to its mobility often becomes a kind of driver, followed by other companies. To increase profits, businesses should focus on adaptability and speed of decision making. In this article, I, Maxim Mnyakin, the founder of the network of automated photo studios Lilophoto, tell you what techniques a classic business can adopt from a vending one.

A year and a half ago, during the pandemic, my partners and I opened a new business that has no analogues on the market – the world’s first fully automated photo studios. Now there are 4 points in Moscow, the fifth one will open next month and we are actively negotiating with five more largest shopping centers in Moscow. Before that, I was engaged in offline business, so I understand what strategies can be implemented by entrepreneurs with a more understandable and simple product.

Concept of modern vending business

Vending business is the sale of goods and services using automated systems without the involvement of sellers and managers. Through vending machines, you can buy ready-made goods (coffee, snacks, hot meals), get industrial goods at enterprises, take photos and videos.

January 2023 came out a study that provides data on the volume and dynamics of the smart vending machine market. Due to the COVID-19 pandemic, the total volume of the vending business was estimated at $1.77 billion in 2021.

By 2028, the adjusted amount will be $3.15 billion, with a compound annual growth rate of 8.6% during the reporting period.

His estimate of the size of the global market for industrial vending machines gives British consulting company Douglas Insights. Growth is projected to be from $2.51 billion in 2022 to $3.49 billion in 2028, with an industry CAGR of 7.2%.

I think that the most important feature of vending, which can be considered both as an advantage and a disadvantage, is that when buying or in the process of providing a service, the client does not interact with a living person. On the one hand, the buyer is not approached with intrusive offers, on the other hand, the entrepreneur does not have the opportunity to quickly close objections.

In 2022 classic business faced with sanctions. Among the negative factors that had the strongest impact on small and medium-sized enterprises, 64% of respondents attributed the decline in demand in the domestic market. Another 34.2% noted a shortage of personnel, and 26.5% spoke about the break in supply chains, 19.1% of respondents indicated the difficulty of import delivery.

In my experience, vending successfully overcomes most of these limitations using effective practices.

1. Deep segmentation and study of the target audience

To enter a new competitive market or maintain your current position, it is important to understand what product and for what audience you offer.

In vending, first of all, the patency of the place where the device is installed is assessed. The greater the flow of people, the higher the likelihood and frequency of a purchase. Therefore, we placed our photo studios in large shopping malls in Moscow – in a year and a half we have 50+ thousand users. The figure is not exact, because often 2-3 people come. That is, the number of unique users is still greater.

Also study the audience in a particular location: depending on the goods or services offered, it is important to understand the solvency of potential buyers, the range of interests and needs that devices can close.

2. Thoughtful visual packaging

How show numerous independent studies, 85% of respondents make choices based on color. Another 93% of respondents say that the determining factor for a purchase is the visual component.

Purchases in vending machines are usually referred to as impulsive. The buyer has 6-7 seconds to make a decision: buy coffee from a vending machine, shoot in a photo studio or walk by.

It all depends on the service or product you provide. If these are non-food items, the client must immediately understand what he can buy or what service he can receive. For example, in our photo studios, thanks to some exterior design solutions (photos and a screen with a promo video), the client immediately sees that we are talking about photo services and photography.

It is important for a classical business to think over not just the packaging and color scheme, but to work on the associations that arise when a product or service is mentioned.

3. Clear interaction with the product

To test the operation of the devices, a group of specially trained people is often involved, who test the machines within the company and constantly improve the functionality.

The client of the vending machine has no one to ask questions and if he has difficulties, he does not complete the purchase and leaves. In e-commerce, the average percentage of such incomplete purchases or “cart abandonment”, according to research Baymard Institute, is 69.8%. In the vending business, the indicator decreases due to several components: most often there are no additional taxes and fees, no registration is needed, the final cost of a product or service is immediately clear.

For some branches of the vending business (vending machines, selling bottled water), the one-click purchase statement is true. For more complex services (sales of travel, medical products), simple step-by-step instructions are developed that work on the principle of “move on”.

To work out the objections of the client, you should always have the contact telephone number of the hotline, as well as e-mail and instant messengers, in a conspicuous place. Specialists can remotely check the information and solve the problem here and now. Also enter the possibility of a refund or bonuses for subsequent services.

4. Fast decision making

As the experience of the pandemic has shown COVID-19 and the subsequent period of socio-economic turbulence, the vending business was able not only to maintain volumes, but also to enter new markets and occupy vacated niches. Transition to automated sale Personal Protective Equipment (PPE) has reduced inventory by 50% and reduced operating costs by 30%.

Vending is willing to introduce new technologies: the use of telemetry and face recognition systems, barcodes and machine learning capabilities. Similar technology uses the BCRS Malta vending machine network, which works in partnership with digital transformation experts NIU x ANCHOVY. The intelligent system of vending machines allows you to get information about the containers accepted, consumer preferences, and their social portraits. In the future, the database is planned to be used in the field of public catering and sales.

Under the sanctions, I recommend classical businesses to quickly adapt to the surrounding reality and establish the logistics and service process: offer products for various audience segments, switch to the use of digital technologies.

5. Cashless payment

Cashless payment facilitates the interaction between the client and the machine: fewer actions are needed to make a purchase. Such devices offer complex solutions that work in the “cash + software” format.

Purchases can be paid by bank cards, fast payment system, at a glance from Sber. The client has the opportunity to choose which check to receive – paper or electronic by mail and SMS.

Cash self-service in a classic business helps to cover the needs of customers in a standard set of products and services. The equipment can be in demand in retail (chain stores “Ribbon”, “Magnet”), at food courts and medical centers, dental clinics.

6. Eco-friendly and energy saving

Now formed a separate direction is eco-friendly vending (eco-vending). One of the first projects was the installation of vending machines for receiving plastic. There are several large companies in Russia that install vending machines, receive and process containers (bottle bank, RT-Invest). Vending machines are installed in retail chains where you can turn in plastic and get money or points and exchange them for goods. The format allows you to get additional benefits for both the consumer and the retail chain.

In devices that offer ready-made food and drinks, they are gradually replacing reusable plastic dishes with paper ones, instead of plastic spoons, wooden ones are used. Back in 2019 Chhatrapati Shivaji Maharaj International Airport (CSMIA) in Mumbai introduced a complete ban on the use of plastic in all transactions, including the food trade.

In our photo studios, for example, the service of receiving photos in electronic form is becoming more and more popular – customers also receive printed pictures, but the use of printing is reduced to a minimum in comparison with the digital format. Such sustainable innovations not only save our resources and energy, but also enable consumers to make a choice in favor of “green” solutions. The business is expanding the base of potential customers who are ready not only to buy a product, but also to become brand advocates.

The principles of vending can and should be applied in a classic business. Efficiency can be measured in several ways: revenue growth, reduction in the number of bounces, the number of repeat calls and purchases.