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PAGITA - The platform digitizing the world of vending machines

Periodic Reporting for period 1 - PAGITA (PAGITA - The platform digitizing the world of vending machines)

Reporting period: 2018-02-01 to 2018-07-31

The main objective of PAGITA overall innovation project is to let European customers paying purchases on vending machines by using a virtual wallet, without need of cash.
PAGITA is a mobile commerce and mobile marketing solution for Automatic Vending Machines (the “VM”) and it enables Automatic Vending operators (the “Vending Companies” or “VC”) to accept orders and payments from customers’ smartphones, without need to rely on coins or banknotes. The solution is composed by a Mobile app, a micro-computer installed on vending machine and a web portal providing data an statistics to vending companies.

Problem. The automatic vending market has high operating costs due to cash management and theft. A large portion of vending machines are “unintelligent”, they do not communicate any info on current stock and they do not enable optimization for logistics. Vending operators cannot collect any information on their customers and their purchasing patterns.
Opportunity. Every day, 90 million food and drink items are purchased by European consumers from a vending machine: there are on average 130 Europeans per vending machine, and this ranges from just over 60 in the Netherlands to 895 in Russia. Most part of vending systems are placed in workplaces (over 80%), as they facilitate employees to grab a quick snack in between breaks without the need of placing an order and waiting for it to be processed . Around 20% of the vending machines are found in the so-called “public vending sector”: these machines are located in schools, universities and other educational establishments, at public authorities, in hospitals, petrol and service stations, hotels and at train stations, in tube stations, airports and public areas. The increasing consumer preference toward cashless payments is a favourable trend observed in the market. The acceptance of payments through technologies, such as Near-field Communication (NFC), is instrumental in driving public interest owing to the easier, faster, and contactless modes of payment . These modes help in decreasing the cash management costs and subsequently decrease threats such as theft and vandalism: indeed, cash management and associated costs (theft, damages, insurance,…) may account up to 15% of an Automatic Vending Machine revenue. Indeed, the automatic vending has some intrinsic peculiarities which cause direct costs or hinder revenue growth. Those are: Lack of information on customers profile, lack of information on sales and available stock, lack of direct marketing tools around the points of sale, cash management costs (logistic, insurance,...) theft and related damages (including missed revenue for machines out of order).
PAGITA wants to address those issues, reducing the cash utilization (and thus the costs and risks associated), and transforming the interaction with the customers using digital technology. PAGITA enables the Vending Companies to save on these operational costs and to collect business intelligence information on sales and customers; in addition, it allows customers to avoid using cash for purchase in vending machine. After having tested its solution in Italian market (the main European market as per number of Vending machines), PAGITA is now addressing the European market. The feasibility study has the purpose to validate on EU market the Italian business case. The objectives of the feasibility study will be then:
PAGITA feasibility study was carried out in the period 01/02/2018 to 31/07/2018. The study was aimed at validating market acceptance and technology viability of PAGITA solution.
The team of Pagita carried out a desktop market study, aimed at assessing the market conditions of targeted countries (Italy, Germany, UK, France, Spain). The structural data of single market were assessed and we identified a list of potential customers. For each company, two dimensions were considered: turnover and number of vending machines operated. Trends of local market were assessed as well: we applied the Customer Trend Radar to identify our technology priorities. Finally, the competitors map was updated.
The market validation study was aimed at collecting and assessing direct feedback from potential customers. Pagita participated as exhibitor at Venditalia, the international fair on vending technologies. The fair allowed to collect feedback from over 130 potential customers and to better finalise market segmentation.
Besides market validation study, Pagita carried out a pilot test. The project was aimed at testing Pagita solution on real working condition. The pilot was run un 4 vending machines operated by World Matic Srl, a vending operator located in Italy.
Marketing and communication was an additional important task that allowed Pagita to achieve further visibility among brand and investors community: fairs, startup competition and public events were targeted in this task.
Last but not least, the in depth knowledge acquired on vending sector suggested Pagita to look for business alliances. Pagita signed a collaboration agreements wiht 2 Itaian SMEs , that will be the base for the development of and evolved solution targeting European vending sector. The project will be submitted for funding to EC under SME PH2 framework .
Over the next few years, mobile commerce in Europe is expected to grow at an average compound annual rate of 42%. While online and mobile commerce sites will continue to offer a default account-on-file payment mechanism, the trend will be toward variations on one-click buy, either through a proprietary buy button in the app or on the site or through a third party. The entire commerce process and customer experience can be reimagined, resulting in very new and different ways to do business: e-wallets are beginning to provide physical-world payment capabilities. Effective implementation of e-wallets and mobile payment technologies in Europe require the providers to face and solve two main challenges: 1. Interoperability. 2. Security.
Most part of competitors provides solution that still require manual interaction from the customers , are customised for a specific use case, i.e. control of employees of vending companies to avoid thefts or simply allows payments . All competitors require installation costs that may range from €110/installation of Peachwire up to €300 of Mei. Those competitors generally supply specialised modules based on micro controllers for each basic service (for instance: remote sales monitoring, temperature control, tilt alarm, …), and their modules do not share any external service (such as connectivity), do not interact amongst them, and have different management platforms. PAGITA, instead, uses a Linux micro computer with specialised drivers to interact with the vending machine, and this enable us to provide multiple services based on a single piece of hardware, with virtually unlimited expandability. This is very important if you consider space is a scarce commodity inside a vending machine, and this is often a hard limit to the introduction of new services inside old vending machines.