Vending – a business without loss

Vending – a business without loss

Times change and vending machines become more common. The vending business is being established alongside the development of the service sector. Statistics prove that the development of vending is directly dependant on the level of urbanization.

As we continue the topic of vending (vending is a type of retail sales via machines) that we began in the previous issue of the "Azerbaijan Business" magazine, we want to develop further the idea of its implementation within the realities of Azerbaijan. As we have already noted, Azerbaijan has fallen behind at least 100 years in the application of vending machinery. As a result, little attention has been paid to the opportunities of earning income from these simple machines, the working principle of which has been known since ancient times. The system of "money from me, goods from you" was even implemented in the temples of Egypt. They had special installations and would "pay and buy holy water" without the involvement of the augurs. Of course, there were no cases of payment being avoided, because there was no human factor involved. The modern entrepreneurs who understood the advantages of those first machines earned tens of billions by efficient use of vending machines.

Vending Argenta

If we leave aside the 9-digit turnover of the most successful businesses, it is worth starting the business with even one machine. At least it is a better alternative for small retail sales than hiring a number of sales people, or a private taxi business. Generally, even if the machines (vendors) are used with a limited variety of goods, they are much more profitable, because they do not require extra expenses such as paying workers salaries. First of all, you have to find such workers. In the second place, who guarantees that those salesmen (in a retail sales network) will fully comply with all the required moral/ethical criteria? Another problem is that the employee might become sick, not come in to work for different reasons, or might even be tempted to be not entirely honest in his own personal interests. On the other hand, a machine is a programmed mechanism, which is why it does not have the negative aspects so characteristic of people. Above all, unlike a salesperson, the machine is located in a favourable spot and will be under control for the entire day. We should note another advantage. Sometimes there is not enough space to locate a counter for sales in crowded locations, such as a railway station, airport, hotel, student cafeteria etc. But the machines require a space of only 2-3 square metres and sales of cigarettes, telephone cards, coffee, or similar goods will be very successful in such spots. To cap it all, we are talking about a reliable producer like the Spanish "Azkoyen" (AzVen is the official distributor for "Azkoyen" in Azerbaijan), and there can be no doubt that the business will be sustainable and profitable.
-The executive director of the "AzVen" Company, Joshqun Jabrayilov, talked to the "Azerbaijan Business" magazine about features of the vending business.


J.J. - The "AzVen" Company was established in 2006. I can confidently say that "AzVen" is the pioneer of the vending movement in Azerbaijan. The main principle of the activity of the company is to develop vending in the country as a new market. "AzVen" is the official distributor of the famous "Azkoyen" brand and is responsible for the sales of vending machines, their free installation and service. Other than that, we also import ingredients from Spain especially for the vendors we support. Thus, "AzVen" offers a full spectrum of services to its customers.


AB - Why vending machines? You must admit that it is quite unusual for Azerbaijan, even if it is not entirely new.


J.J. - That is true, the population is theoretically aware of the machines, but in fact they are a novelty. At present the turnover of the global vending business is counted in billions. The machine networks between countries can exploit hundreds of thousands of machines. For example there is one machine per 20-40 people in Japan, South Korea and a number of European countries. Other than being super profitable, this business is also a manifestation of modern technology. That is why Azerbaijan is an attractive location for their application.


AB - Who is your target audience? Who will buy the products you offer?


J.J. - "AzVen" Company is also planning to cooperate with anyone who wants to engage in private vending-business, as well as with big companies, the airports, bus and railway stations, hotels, business centres, health centres, universities and schools.


AB - How many machines are necessary to start a vending business?


J.J. - This business can be started with a single machine, but we would advise the purchase of a couple of vendors to gain more income and to cover expenses in a shorter period of time. Well, you can judge yourself. One machine can bring in an income from 100 to 1000 euros a month. Now it is easy to calculate what the income will be if you have 10, 50 or 100 machines!


AB - Which machines do you offer?


J.J. - We offer a series of vending machines for hot and cold drinks, cigarettes, telephone cards and snacks. The machines have familiar designs and are very capacious. At the same time they take up very little space, being very compact. They are of perhaps the same size as a normal refrigerator. All of the machines are equipped with a self-cleaning system and money slots adapted for local coins. I would like to say that those money slots were made in the "Azkoyen" plant to our order. They do not only receive the coins, but also return the exact change. You must agree that this is a magnificent feature for a "salesman". Generally, we have various machines in the company and all of them have different features. For example, we have two types of coffee machine: one makes instant coffee, the other makes ground coffee.

Vending

AB – What about traditional tea?

J.J. – Well, of course. Moreover, we are not going to offer just black tea, but also green tea, lemon tea, mint tea, camomile tea etc. All of these types of tea can be purchase from hot drink machines. For example, let me say a couple of words about the features of the Veneto model from the series of hot drinks vendors. That model is mostly for those who enjoy classical espresso. The machine is supplied with a coffee-grinder which grinds the beans during the process of making the coffee, to preserve the classical recipe.

AB – What if an entrepreneur who has just started his business has only one coffee machine. What can he offer his customers in summer?

J.J – A refreshing module was added to the Veneto model last year. So now we offer not only real coffee (not Nescafe!) and other hot drinks, but also milk shakes and other cold drinks. AB – Excellent! Then probably, in this era of information technology, the vending machine can also calculate the income… J.J. – Exactly! The Veneto model has a number of advantages, such as a self-diagnostic and self cleaning function (programmed with a timer), an on/off timer, a programmed list of alternative prices, changeable front panels, programming free extra bonuses etc. At the same time this machine can take care of the register and transfer the information to a laptop, portable printer, or an electron key. Thanks to all of these features, the owner of the vendor can access any information he wants, even if he is away. That information can include the amount and type of goods sold, or the money received and returned.

AB – Who takes care of the service under guarantee of the machines? Does the company, so to speak, plan to bring in experts from the “motherland of the producers”?

J.J. – Our experts, who have been especially trained at the production plant in Spain, are capable of carrying out technical service both during and after the guarantee period, without a need for foreign experts. So, there are no problems. Everything is quite clear. If you want to start a small business and you have researched all the possible options, then why not begin a vending business? Let’s calculate! If you want to start a taxi business, you have to buy a vehicle worth at least 10-12 thousand dollars. If on one side of the scales we put the price of petrol, which increases day by day, and the fact that the taxi business has also greatly increased lately, and we put a monthly income of 400-500 dollars on the other side, we will soon see that our expenses will not be covered any time soon. Well, let’s do the same calculation for a vending machine. The numbers will change immediately. The income from just one machine (and the cost is half that of a car) will be about 500-1000 dollars, so we can easily cover our expenses in 8-10 months.

The capacity of a coffee machine is 700 cups a day. But if you are just starting the business and if that machine is expensive for you, the “AzVen” company can offer you a smaller model, with a capacity of only 210 cups a day. You could even place that machine on an office desk. Churchill’s famous words also refer to our situation if we change them a little bit: “The socialists think that gaining income is a sin. Well, I think that the real sin is to suffer loss”. Of course, there is no need to incur any damage, because there are ways to earn money. Entrepreneurs, who are just starting a new business, buy a vending machine, and… calculate your incomes!

The vending-machine models offered by “AzVen” Company
«Veneto» hot drinks
«Lugano» hot drinks
«Tempo M» hot drinks
«City Lz» hot drinks
«Palma-B» cold drinks
«O . ce-4» cold drinks
«Palma-Mz» cold drinks and pides
«Palma-H» snacks
«N-Series» cigarettes and telephone cards

Historical facts: In the 17th century, a vending machine for pipe tobacco was placed near a pub in England. The first vending machine in Japan was installed in 1904. That machine, which sold stamps and postcards, was fixed on a letter box.

“AZERBAIJAN BUSINESS” magazine