In a world dominated by retail shops and rapidly growing ecommerce and quick commerce providers, Daalchini is shaping new retail experiences for Indian consumers by redefining how they access products. While experiences may vary—some finding it easy and others hesitant—founder Prerna Kalra firmly believes in her innovation. She asserts that vending machines are enhancing out-of-home consumption in a way that quick commerce primarily addresses in-home needs, ultimately boosting consumer convenience.
While talking to BW Businessworld, she stated, "Quick, convenient, hygienic, and a large assortment. These are the reasons people are moving towards vending machines as compared to retail outlets."
Excerpts:
Why choose Daalchini when there's already an established system where people can easily visit shops and purchase items? While speaking with some users, they mentioned that time isn't a significant factor for them. So, what led you to believe this system should be replaced, and what inspired your vision for Daalchini?
Trend is changing for out-of-home consumption. People are moving from retail to vending machines, shopkeepers to vending machines, primarily because of convenience. This is also because of assortment or they feel that buying through this method is more hygienic, and more tech-savvy. It's quicker for the customer.
The trend for out-of-home consumption is changing. People are shifting from retail stores and shopkeepers to vending machines, primarily due to convenience. They also appreciate the wider assortment, perceive it as more hygienic, and see it as a more tech-savvy option. It’s quicker for the customer.
What is your target audience? How do you identify this demographic and how do you decide the demand of particular products?
Most of our customers are between 18 to 40 years of age, primarily young professionals. Around four crore people are working in the private sector and another three crore students studying in graduate and postgraduate colleges, which makes them the right target audience. More than 50 per cent of our vending machines are located in workplaces, factories, and colleges.
'Anything, anytime, anywhere' is our tagline. It represents providing anything from snacks to personal care, wellness, or hygiene products for this target audience. Whatever they need can be supplied through our vending machines.
Aside from office premises, where do you generate the most revenue—hospitals or colleges or somewhere else?
About 15 per cent to 20 per cent of our vending machines would be there in colleges, PGs, and co-living spaces. Students who are there in college or university are a very large audience.
How does the supply chain work? Does anyone from your team go and fill that vending machine or any other process? And what operational challenge do you see when you try to expand?
We have a large network of franchisee partners who do this. However, the first and foremost challenge that we see, after solving for consumer education in terms of the supply chain, is that you only have 30 to 40 stock-keeping units (SKUs) that you can place in a vending machine, unlike a retail outlet where you can place hundreds or thousands of SKUs.
So, those 40 SKUs have to be curated in a way that aligns with what the consumer wants. And that curation is not one-time but occurs every 15 days. You have to look at the data every 15 days, continuously innovate, remove products that aren't selling, and then place the right set of products that the consumer may want, all while ensuring that the supply chain doesn’t get disrupted.
The vending machine concept is newer for Indian consumers. What marketing strategies are you following to make people aware of the vending machine, especially in tier-2 and tier-3 cities?
Our strategy has been very crystal clear that we will target these pockets, and factories as one.
Because there you get early adopters who would then buy your products and then you refer them within that factory. In 45 45-day time period, we can capture a maximum number of customers within that captive location.
And then you move on to more locations within that vicinity. So first was factories and workplaces. Second is hospitals and colleges within that city. And then into high transit points like metro stations or railway stations or bus stops. So this has been our strategy when we capture any particular tier-3 town. And onboard the locations for that tier-3 town.
You mentioned that the customers from Delhi NCR are different from tier 2 cities. Is it based on the consumption pattern or anything else you noticed?
The consumption pattern is one very important aspect. It is not the same as from tier 1 to tier 2. It varies within tier 2 also. Within tier 2, the consumption patterns of factory people are different than in a college or a hospital.
the way people interact with devices is also different. Because in tier 1 or basically in metro cities, the consumer likes the ‘do it yourself’ (DIY) solution. However, in tier 2, and tier 3 towns, it is more voice-assisted or some kind of assistance required for the initial onboarding for the customer.
Do you see QuickCommerce as a competitor?
What quick commerce is doing in the in-home consumption market, we are doing the same thing in the out-of-home consumption market. I would say that if we tomorrow start placing our vending machines in residential apartments. That may come as a competition.
How does the Dalchini earn in this whole process? Do mention the performance of the company in the last quarter and even in the last financial year.
For the last seven to eight months, we have been earnings before interest, taxes, depreciation, and amortization (EBITDA) positive as an organisation. The sale of products at the kind of assortment that we are offering is one large source of revenue. The second is the subscription. The consumer's subscription or the convenience fee that we charge, whether to a corporate or whether to the customer who's buying from our vending machine. And third, is the brands who are advertising on our platform.
What is your short-term growth plan and long-term growth plan? And where do you see Daalchini in the coming two or three years?
Japan has about 12.5 crore population and they have 55 lakh vending machines. For every 20-23 people there is a vending machine. We are very far off from there. As of now, we see that there is a huge opportunity. If you look at India, there are about 2.5 lakh MSMEs. Every MSME can have at least one vending machine for their employees. That's at least the bare minimum that is possible. So, 2.5 lakh is very clearly possible. And this is just about 40-50 per cent of the target audience that we have. The other target audience, which is schools, colleges etc, we are not even talking about that.
As of now, we have just scratched the surface when it comes to the available market.
