With support from the Strive Community Innovation Fund, Novek will develop an IOT-enabled vending machine for a new product: washing powder. Washing powder is a multibillion-dollar market globally—US$5.5 billion in India and US$3.6 billion in Indonesia—and the application of this technology could help boost retailer sales globally. This product is widely sold by micro-retailers, with demand for different quantities depending on customer needs. This machine will help micro-retailers better serve their customers, leading to more sales and revenue, by:
1. Enabling sales of very small quantities.
Today, small businesses are constrained by the fact that their customers want to buy household staples in varying quantities, but packaging quantities are fixed. Smaller packet sizes are simply unavailable for some product categories and cost disproportionately more per gram or milliliter when they are. This means that small businesses cannot adequately serve customers who are only able to purchase micro-amounts, often on a daily basis—a consumer preference that is common in low-income areas. Novek’s vending machine will enable businesses to dispense micro-quantities of washing powder, from as little as 100 grams. This will give businesses the opportunity to increase their customer base and sell more. The impact of this has been proven by Novek’s cooking oil dispensing machines, which have led to a 50% to 100% uplift in sales for retailers.
2. Reducing stockouts.
One of the biggest challenges for small retailers is that they are unable to obtain a consistent supply of commodity products. Stockouts represent missed sales and lost revenue, and potentially the erosion of customer loyalty. As Novek’s dispensing machines are tech-enabled, they can give distributors real-time visibility into a retailer’s inventory and trigger the restocking process. This increase in supply chain reliability should lead to an uptick in sales and customer satisfaction.
3. Increasing profit margin through saved packaging costs.
Manufacturers will pass on part of the savings generated from eliminating packaging cost to micro-retailers. This could represent a significant revenue increase per unit, particularly for small quantity purchases, where packaging can represent between 30% to 40% of the cost of the product.
4. Boosting ability to compete with larger retailers.
The dispensing machine will enable small businesses to guarantee their customers that the product they dispense is genuine and hygienic, giving them the ability to compete with larger retailers that are increasingly encroaching on their customer base.
These benefits to the retailer are all complemented by the significant reduction in single-use plastic. Plastics account for 15% of the world’s carbon budget, they are a major driver of climate change, and they are extremely damaging to marine environments. Encouraging fast-moving consumer goods companies to consider distribution models that reduce plastics in the supply chain could significantly reduce carbon emissions.
Novek builds IOT technology for dispensers and vending machines for micro-retailers. Novek currently has devices or machines at over 800 locations throughout Kenya, directly or indirectly providing technology to over 200 businesses. The fastest-growing line of business is IOT-enabled cooking oil dispensing machines, which are specifically targeted at small businesses. These machines are placed at kiosks (micro-employers that are owner-operated or have one to two employees) and dispense quantities of oil that match varying consumer budgets (from US$0.5 to US$5) while eliminating packaging. The tech platform provides manufacturers visibility that allows both them and small businesses to maximize sales while offering channels such as mobile money payment processing for stock.
Novek’s partners include Nestlé, Coca-Cola Beverages Africa, and Population Services International.