The Present Situation:
In Kenya motorists spend an average of 37 minutes waiting
for their cars to be washed at standard car washes.
This presents a lucrative opportunity to offer a paid-for experience that engages and entertains them while they wait, well something
better or rather an alternative to a mobile phone, soda, beer or idle waiting.
Context
·
No. of Cars on Kenyan Roads – 4.8
Million
·
No. of Car Washes in Kenya – Estimated at 3,000
·
Average visits to a car wash – Once a
week
·
Set up of Car Washes – Basic, Standard, slightly
advanced, Advanced
·
Time spent at a car wash -
Average of 37 minutes
How time is spent while waiting for car to be washed:
·
On mobile phone – 38%
·
Observing - 18%
·
Leisure (Food, Drink) – 32%
·
Other – 12%
Motorists are not necessarily dissatisfied with
their current experiences but there is room for an alternative more exciting
activity.
The
Opportunity
Offer a time-killing, engaging experience during the wait.
Ideally the activity should self-run; and not require your
physical presence or that of other of your staff; a passive income opportunity.
Additionally,
it should involve minimal effort from the car wash staff.
Payment could be through coins or mobile money.
When the ideal is not possible then you have to adapt to a less
ultimate model.
Standard
stand-alone car washes in urban and peri-urban areas would be the best
partners.
How it Will Work
Motorists will engage in the activity as they wait for the cars
to be cleaned.
Why an Experience (Activity)
Instead of a Physical Product
The opportunity is in filling the time that motorists use when waiting for their cars to be
washed. A physical product will not adequately do this.
A physical product is often purchased once or in longer
intervals. It also lacks the excitement and challenge inherent to an experience.
Thrill is a key selling factor, and stimulates repeat sales.
An experience is also likely to be unique while a physical
product could be found in many other places.
Characteristics
of The Possible Product
·
Should be ‘new’ and not simply one of
the common products available in the market. (Think beyond pool tables and dart
boards)
·
Should be easy to learn and use for
the motorist. Nothing requiring more than five minutes to learn.
·
Should be an experience that can be
found on mobile phones, at home or such other place.
·
Can be ‘completed’ within the time
the car is cleaned. Nothing taking an hour to get maximum enjoyment.
·
Should take minimal space. Most car
washes are squeezed already.
·
Should not make customers exhausted.
Nothing that makes the motorist sweat.
·
Should be mentally stimulating, have
a thrilling or discovery element to it.
·
Should require minimal input of the
car wash staff. Ideally should self-run.
·
Should require minimal maintenance.
·
Should have barriers high enough to demotivate the car wash from offering such
products on their own.
·
Should be difficult to duplicate.
·
Equipment should be of such a cost
that you get Return on Investment within a reasonable time.
Product
Possibilities
Best products should be coin based or mobile money based. The
barriers to developing such products are continually going low.
·
A simple but challenging arcade game
·
Grip tester or other strength test
machine (Coin operated)
·
A touchscreen games with custom
content such as fun quizzes.
·
A virtual experience (virtual
headsets etc.)
·
A mini golf
·
A strength challenge
·
Other relevant possibility.
You could have a product custom made
too guided by your creativity or internationally available markets.
Kariobangi Light Industries is a
viable option. The cheaper the product, the quicker and better your returns.
You will also expand faster.
Possible
Business Models
·
Leasing: Provide equipment to car washes at a
fixed rental rate.
·
Revenue sharing: Partner with car washes to share
profits generated from the activity.
·
Independent operation: Lease space within the car wash and
manage operations directly.
Pilot
·
Location: A
peri urban town in Embu
·
Pilot
Duration: One Day
·
Setup:
Standard
·
Total
no. of cars served by the car wash in the day: 37
·
Experience
offered: Jenga puzzle
·
Cost
per puzzle: Kshs.20
·
Staff:
1 – own staff
·
No
of motorists who played: 16
·
Conversion
rate: 43%
·
Total
revenue: Kshs.20 * 16 = Kshs. 320
·
Revenue
share: 50:50
·
Carwash: Business: Kshs.160: Kshs.160
Observations:
ü
The conversion rate was higher than expected.
ü
Conversion rate was projected to grow higher.
ü
Car wash wasn’t next, within or near an
entertainment spot
ü
Choice of activity was weak because it required own
staff.
ü
With own staff a higher conversion rate would be
required to make the business sustainable.
ü
Activity provided poor revenue monitoring by both
car wash staff and the business
ü
Still activity was exciting enough
ü
An autonomous coin or mobile money based activity
is preferable.
ü
With a self-running activity, a lower conversion
rate could still be profitable.
Back –of
–the – Envelope Calculations
Quick
calculations to help us get a simple idea of revenue possibilities. Return on
Investment (ROI) will depend on the cost of equipment.
Revenue Share:
·
Assuming there are 3,000 car washes in Kenya, with a 10% adoption rate within 1 year (300 car washes).
·
The average daily revenue per car wash is Kshs. 100 per day (5 motorists paying Kshs.
20 each).
·
Monthly
revenue per car wash: 30 x Kshs. 100 = Kshs. 3,000.
·
Total
monthly revenue (300 car washes): 300 * Kshs. 3,000 = Kshs. 900,000.
·
Revenue
share: Car wash: You.
·
Your
revenue share: Kshs. 450,000 per month.
·
This would be profitable if self-run.
·
Major expenses will be in maintenance.
·
Kshs.
20 is considered a standard low-level fee that motorists won’t
hesitate to pay. However, for a more advanced experience, you could charge as
much as Kshs. 50.
·
The
assumption of 300 car washes is based on the desire and capacity to expand
nationwide. However, you could start with fewer locations, even 10.
·
Also, consider the capital required to scale to 300 car washes. If the cost of one piece of equipment is Kshs.
100,000, then 300 car washes will require 300 * Kshs. 100,000 = Kshs.
30,000,000. If the cost is Kshs. 20,000,
then you will need Kshs. 6,000,000. If
Kshs. 10,000, then the requirement
will be Kshs. 3,00,000
·
In a very casual calculation, if the cost of
equipment is Kshs. 100,000 and you are making Kshs. 3,000 per month, it will
take about 2.8 years to get a return
on your investment.
·
If the equipment cost is Kshs. 20,000 and you are
making Kshs. 3,000 monthly, it will take approximately 7 months to get a return on investment.
·
If the equipment cost is Kshs. 10,000, then you
will require about 4 months to get a
return on investment.
·
You can opt for lower-cost equipment, but balance
it with the quality of the experience.
·
A good return is possible within a year.
Lease (Renting out
equipment)
·
Assuming 3,000 car washes in Kenya, with 10% adoption within 1 year
(300 car washes).
·
Monthly Lease rate per car wash: Kshs.1000
·
Monthly revenue: 300 * Kshs.1000 = Kshs. 300,000
·
Maintenance cost will be on you.
·
Consider cost of acquiring the equipment.
Process
·
Identify the ideal product
(activity): Conduct market research
and user testing to choose the most appealing option.
·
Acquire the product: Could either involve acquiring a
ready - manufactured product or having one custom made.
·
Acquire necessary licenses.
·
Pilot partnership: Partner with a car wash for initial
testing and feedback.
·
Refine and optimize: Based on pilot results, refine the
product and operational model.
·
Regional launch: Rollout the solution to a specific
region. This will also depend on your capital.
·
National expansion: Scale up operations across the
country based on success.
·
Other: Think of an attractive display or
other to attract attention. You could
have activation activities for a week at every new partner car wash, this could
be aimed at creating awareness and offering any needed product guidance.
Challenges
·
Finding the right product/service with the desired
characteristics.
·
Finding an appropriately priced product (low) that offers a
great experience so that you can get a return on investment first.
·
Adapting to varying car wash layouts and customer demographics.
·
Overcoming potential resistance from car wash owners who might
not see the need for such a service.
·
Perception that activity could require car wash to acquire extra
licenses.
·
If product is arcade game, there could be perception of
gambling.
·
Low revenue at the start could turn off car wash owners.
·
Need to keep the service fresh so that consumers don’t get
bored. This could require changing products after a given duration.
Haters
·
Objection:
No one will pay for this if they have their phones.
Counter: Offer a unique
phone free experience. Experiences
or incentives that cannot be replicated on smartphones,
·
Objection:
There is no space in the car wash for an activity. Doubts about the feasibility
of integrating new activities into the limited space available at car wash
facilities.
Counter: Design a compact product or service that fits within the
available space. Solutions that can be easily
integrated into existing layouts without compromising operational efficiency or
customer comfort.
·
Objection: The
economy is doing poorly.
Counter: Offer an affordable
and attractive option, providing value even during economic downturns. Position
as an affordable indulgence, providing a welcome escape from daily stresses
without breaking the bank.
·
Objection: People will get bored.
Counter: You could offer
different kind of products to different car washes. These could be interchanged
after a while.
Validation
Similar models. For example, slot
machines and pool tables placed in bar on a revenue share model.
What do you think ? Please leave a comment below.
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