It is quite often that the most ludicrous idea turns out to be the most successful and this is certainly true for budding entrepreneur, Hari Shotham.
The internet has proliferated the pay and click consumer based on the ability to purchase at their convenience but before there was the luxury of the internet, there was the humble vending machine. Now the Melbournian man has taken this ‘old’ format with an innovative approach to retail by creating the first physical shop in Australasia made entirely of vending machines.
The Vitamin Warehouse in St Kilda, Melbourne, stocks vitamins - as the title suggests, along with perfumes, phone accessories and soft drinks. The most popular item is perfume purchased by women on a night out. Shotham aims to expand his range beyond nonperishables to fresh coffee, juices and ‘anything that can fit in a vending machine.’
After a short time living in Hong Kong, Shotham realised the potential of the vending machine and the gap (slot) in the market. Back in Australia, he originally approached shopping centers with the idea that he would lease the machines full of vitamins. They declined.
There are currently 13 machines in his St Kilda store reportedly turning over more than $1000 each a week. He aims to extend this to twenty machines by the end of the year as well as expand into another suburb.
Despite the automated shop operating 24 hours a day, there are no retail workers, assistants or managers to run the store which allows Shotham to undercut the prices of the competitors quite significantly. He joyfully boasts that his can of 99c coca cola is the cheapest you can buy in Australia. Managing the shop can be done from the comfort of his home as he sits back and simply monitors his business by accessing the store surveillance cameras through his mobile phone.
Once the purchase or lease of the property is secure, there are minimal overheads and maintenance compared to a traditional retail stores. As well as minimal overheads, human error and the threat of theft is very low as everything is secured inside the machines.
A vending machine store is the first of its kind in Australasia but the rest of the world are not being left behind in the archaic potential.
As more and more companies are moving away from the traditional physical store to creative means of distribution of their products, of these methods, vending machines seem to be the rising trend. According to an IBISWorld report, after 5 straight years of decline, revenue for the US vending machine industry is projected to rise and hit 7.7 billion by 2019.
Vending machines in the US have taken the deploying all kinds of products from burritos to $1000 cans of caviar. Kelly Stern, founder of Beverly Hills Caviar installed her first ‘automated boutique’ to give customers a direct access. The machine now pulls in 10 percent of the company’s total sales.
“If we can minimise the humans in our company, then we prefer that,” Stern said. “When you have physical employee, you don’t have a life. Ask any restaurant or supermarket business.”
Do you have a great (or silly) idea that has potential? Check out our Ebook for advice on small business startups.
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