High profit and low operating cost business. The aim of this business idea article is to come up with a high profit business idea that can be started with minimal investment and that anyone can start. The idea is written in detail covering problem statements to investments. Moreover, if you want more information I promise to get back in a week.
Introduction.
Today we will see how the self-help business model can take space in the traditional retail business ecosystem. When we think about self-help retailing the first thing that comes to our mind is a shop without a shopkeeper, recently the e-commerce market leader has introduced a self-checkout shop where you pick up goods as you like and instantaneously get the billing done then simply come out of the shop without standing in the queue of the cash desk. Isn’t it fantastic? Let us see if we can ideate a similar doable with a small investment.
This is crazy in India, is not it? If you think that in the Indian context this model of business is absurd then you are making a mistake, this model of business is not new in India and in fact one of the oldest forms of business, if you ever go to Mizoram and visit the countryside can find shops without shopkeepers, they sell vegetables, fruits. Here, to buy, customers must keep the money in a container placed there as per the price tag and then can take it away.
Being a resident of NE I have visited hundreds of times various parts of MIZORAM and on spotting such shops my middle-class mentality provoked me to ask my Mizo companion whether the people take undue advantage of it ever, and every time I asked so, the answer buzzed in my ear with a loud “NO”.
Self-help shop: Vending machine.
So, it is not new, at least for India. Now let us see what modern-age business can be like in this model. We have heard about vending machines and have experienced a few in the airport or railway station. With the increasing popularity of vending machines in India, we have seen the business model mostly restricted to hot beverages, sanitary napkins, cold drink can, and that too in places like mall, airport, and railway stations. In this business idea I am intending to break this default catchment preference and product variant limitations.
Why vending machines business?
The scope of selling packaged food products through a vending machine is enormous in the Indian FMCG retail market.
How? This question may arise in your mind. Let me elaborate in terms of its utility, placement, cost, and operation.
Firstly, It gives simple, convenient, and quick access to products, suppose you live in a large residential complex where a cold drink vending machine is placed in the lobby where you can buy as quickly as possible and even at odd hours like midnight. Secondly, a vending machine occupies a small room, operates 24 hours, can keep the products fresh, and can stock enough.
On the other hand, the operating cost is also exceptionally low as it does not require a big space or attendant. The operating costs we can consider are the cost of electricity (equivalent to the size of a domestic refrigerator), rent for a small space, and cost of maintenance. This is one of the reasons for considering vending machine retailing as a high profit business. Hope you get the answer!
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How to do vending machine business? [Low operating cost & high profit business]
Please target premium packaged FMCG products that are not perishable, this will give you higher revenue and a good margin. Please note, that placement will also be a crucial part as mostly you will deal with the premium category and in nonmarket places, your target segment should match with the placement.
The cost of a machine will vary on its size and functionality, there are many variants, here I will consider the SMART VENDING MACHINE (I am not promoting their business, this is just for understanding purpose) only, as it works with a credit card, debit cards, UPI on the spot as well as through apps. Also, customizable with the physical features of the products.
Investment required to start this high profit business.
Currently, in the Indian retail market, there are startups who are giving franchisees where they charge fees per installation and products they supply. If you want to start independently and with a small investment, like 4 vending machines in 4 residential societies, to start the business you will need around Rs 15 Lakhs.
You may also start this high profit business with one unit of vending machine.
Each machine will cost you around 1.5 to 1.75 Lakhs, and to load the machines with products (FMCG) you need around Rs 1 Lakh (Rs 25K each). With this, you also need a small warehouse and inventory, and a carriage van which will cost you around 5 lakhs (You may take a used van or finance from a bank). Please target premium packaged FMCG products that are not perishable, this will give you higher revenue and a good margin.
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Important things to remember before you start this high profit business.
Please note that placement will also be a crucial part as mostly you will deal with the premium category and in nonmarket places, your target segment should match with the placement.
This high profit business will give you a quick return on your investment, if the placement and product selection is correct you may get the ROI within 24 to 36 months.
The premium category FMCG products give a 20% + margin and since the price band will be on the higher side the revenue will also be fat. If you keep stocks of Rs 25K (5 essential variants) in each vending machine you can expect 4-5K sales daily which will aggregate to six lakhs revenue and 1.2 lakhs margin.
There are lot many categories you can deal with like fresh foods, packaged foods, and grocery items but before you decide please take enough knowledge in both the end, machine types and their feasibility plus products availability in the premium category and their margins.
Hope you have understood the high profit business article, if you want more information you can write to me.
Best of luck!
