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-KA around us. SemechKA and others

-KA around us. SemechKA and others

They used to be, they are, and they will be. By these words we mean street sellers so familiar to all of us living in or ever been to Uzbekistan, babushki (“grannies”) and dedushki (grandpas), tyotushki (unties) and dyadyushki (uncles) as we call them.

SemechKA and others is another article from –KA around us series of articles. We’d like to remind you that -KA is the ending of names of business types in Russian language. The series includes such articles as PirojKA (patties production and sale), SemechKA and others (loose sale of sunflower seeds and sale of candies, nasvay (local tobacco product), cigarettes by the piece), BaklashKA (tare collection points) and others.

Here in Uzbekistan we are not surprised at their presence in town streets. It is quite common for us. We are used that it should be so.

However, taking into consideration that we live at the age of progress, of great technologies, the number of large shopping centers and new malls with various entertainment centers is constantly increasing, foreigners are surprised by something that became quite natural to us. In this case it is presence of street sellers.

Many of them wonder

  • how can they still compete with larger shops?
  • how can they get profit provided such a limited range of products?

The aim of the article is to describe the business which exists here successfully for many years already.

Street stands in our 21st century

bizplan_semechka_1.JPGWe got interested in the topic and decided to make a survey in order to find out the specificity of the business.The business which makes many of us think whether the time has stopped spinning around this people. After all, nowadays we are surrounded by huge number of supermarkets with various paying cards, security systems, checks and large range of products.

bizplan_semechka_2.JPGWhy is it so that grannies and grandpas familiar to us from childhood whose product range is quite limited to by the piece sale of sunflower seeds, cigarettes, chewing gums, and so on are still in great demand?

Having carried out market analysis we have found that this business does not exist just like that. Monthly profit is from 300,000 to 400,000 soums[1].

Lets discuss everything in its turn.

What is necessary to start sale?

bizplan_semechka_3.JPGIt is obvious that is order to set up small street sale point of sunflower seeds, cigarettes, chewing gums and so on you definitely wont need expensive equipment and furniture. Youll need only small chair or stool, probably camp chair, and small table, preferably not heavy one to be easily moved if necessary. Instead of the table a small baby carriage can be used as we can see at the streets of our town. That is why sometimes these stands are called mobile ones as if necessary they can be easily moved to another place.

bizplan_semechka_4.jpg

According to the data we collected, for purchase of goods at wholesale centers the amount of about 40,000 to 60,000 soums per each purchase will be enough.

Places of sale

bizplan_semechka_5.JPGOne of the basic aspects of business prosperity is choice of place of sale. This fact has the main influence on trade success and profit amount. Primarily, choice of place of sale depends on the population number of the area and its geographical location (downtown or uptown).

It is preferable that there are education institutions, bus stops, or medical care centers near the sale point. Generally, almost all stands are located along larger automobile roads or close to them.

Due to strong competition street stands for selling sunflower seeds and other goods are rarely situated near grocery shops and supermarkets.

Moreover, when choosing place of sale it is reasonable to take seasonality into consideration. It is logical that during school year sale points are arranged close to educational institutions and during holidays close to dwellings of sellers or close to bazaars and or smaller markets.

Sellers

The majority of sellers are females, about 80% against 20% of males. Mean age of sellers is 40 to 55 years. Younger people of about 25 years and less represent 1/10 of total number of sellers.

bizplan_semechka_6.JPGbizplan_semechka_7.JPG

Clients

Major clients of street stands are young people, students, children, and drivers. According to our survey drivers and students make the majority of clients.

Goods

bizplan_semechka_8.JPGMain part that is about 80% of the sellers buys goods at wholesale markets such as Kuylyuk and Chorsu. Usually they buy goods each 3-4 days. Main profit comes from sale of:

  • sunflower seeds
  • cigarettes
  • nasvay (local tobacco product)
  • kurt (local product from salty curd)
  • chewing gums
  • sweets

Sale

Sunflower seeds

bizplan_semechka_9.jpgDepending on sales volume average wholesale purchase is 3 to 5 kg each time.

We all know that sunflower seeds in street stands are sold in glasses of two types: large and small. We took the trouble to find out that small glass holds 30 to 40 g of sunflower seeds and large one 50 to 70 g.

Average price of small glass is 300 to 500 soums, of large one 600 to 800 soums. Hence, in this case, cost of 1 kg of sunflower seeds is 12,000 to 16,000 soums. However, in reality sellers buy seeds at wholesale places for 5,000 soums per 1 kg.

Thus its not difficult to calculate that profit from sale of 1 kg of sunflower seeds is more than 250%.

Table 1. Sunflower seeds sale cost and profit

Name

Volume

Purchase price, soums

Sale price, soums

Profit, soums

Profit, %

Wholesale purchase

3-5 kg

5,000

12,000 16,000

7,000 11,000

+50

Large glass

30-40 g

150 200

300 500

150 350

+50

Small glass

50-70 g

250 350

600 800

350 550

+50

Cigarettes

bizplan_semechka_10.jpgSale volume and range of cigarettes available on grannys table completely depends on preferences of the majority of clients. As sellers have told us the most popular brands of cigarettes are KENT, PALLMALL, and Winston.

bizplan_semechka_11.JPGAccording to statistical data an average smoker smokes 1 pack in 2 days while an excessive smoker 1 and more packs a day.

Taking into consideration that 1 pack containing 20 cigarettes costs 1,500 to 3,500 soums and more, a smoker spends 45,000 to 105,000 soums per month. Here the calculations relate to the purchase of the whole pack however, our grannies and grandpas sell cigarettes by the piece as well.


Table 2. Cigarettes sale cost and profit

Smokers

Number of packs per week

Number packs per month

Average price of 1 pack

Weekly costs, soums

Monthly costs, soums

Amateurs

1 2

4 8

2500 soums

2,500 5,000

10,000 - 20,000

Regular

3 4

12 16

7,500 10,000

30,000 40,000

Excessive

7 10

21 40

17,500 25,000

25,500 100,000

Nasvay

Street sellers buy nasvay at wholesale markets as well, however not in packs or blocks but at loose or in small packages of 40 g. In this case, 1 kg of nasvay costs 10,000 soums average and 1 package 400 soums.

Then sellers set their own prices taking into consideration their interest. Usually premium makes 50-75% from initial cost of the product.

bizplan_semechka_12.JPGbizplan_semechka_13.JPG

Kurt, chewing gums, candies

bizplan_semechka_14.JPGThese products are bought at wholesale bazaar as well yet in smaller quantity compared to cigarettes and sunflower seeds.

The reason for that is that they are not sold in large amount. Nevertheless these goods play a considerable role in total income.

One pack of chewing gum or candies usually contains 100 pieces. Street sellers sell them by piece. That is why sellers buy particular amount of them in packs and then set own price for each piece.

The same situation happens with kurt. At wholesale bazaars 1 kg of kurt costs average 7,000 to 10,000 soums. Vividly, it is profitable for sellers to buy it at wholesale markets and then sell by piece.

bizplan_semechka_15.jpgAll these goods are sold at retail with premium of 50% average. For instance, a chewing gum which originally costs 30 soums is sold by street sellers for 50 soums. The one which costs 50 soums for 100 soums.

Moreover, we are used that sellers give such small goods instead of change when we buy cigarettes or sunflower seeds. Regular customers find it much more comfortable than to carry pile of small coins.

Table 3. Kurt, chewing gums, candies sale cost and profit

Name

Quantity

Wholesale price

Sale price

Profit, soums

Profit, %

Kurt

100 p

50 soums per 1p

100 soums per 1p

50 soums

50

Chewing gum

100 p

50 soums per 1p

100 soums per 1p

50 soums

50

Candies

100 p

30 soums per 1p

50 soums per 1p

20 soums

55


Competence

The following question arises: if street sellers purchase cigarettes at wholesale markets and add up to 15-30% from initial price as well as larger supermarkets do, isnt it better to buy cigarettes in supermarkets?

bizplan_semechka_16.jpgbizplan_semechka_17.JPG

Just as the majority of smokers does.

Then there is a question where does the profit from cigarettes sale in street stands comes?

The answer is very simple: they count on by the piece sale of cigarettes. Depending on cost of 1 pack which they set themselves considering their interest, street sellers then divide it on the amount of cigarettes in one pack. Thats how they get price of 1 cigarette.

Usually, piece cigarettes are bought by the people who attempt to give up smoking or smoke not regularly and dont want to buy the whole pack. Large amount of such buyers bring the main part of the profit from cigarettes sale.

Despite that shops and supermarkets offer large range of sunflower seeds packed into packs of different capacity, their average price is 800 to 2,500 soums. Street sellers meet competition because single cost of 1 glass of sunflower seeds is less.

bizplan_semechka_18.jpgbizplan_semechka_19.jpgbizplan_semechka_20.jpgbizplan_semechka_21.jpg

Moreover, they are successful in this because they offer seed in variable quantity that is a client can decide him/herself how much seeds to buy, even if it is half of the half-glass.

bizplan_semechka_22.jpgbizplan_semechka_23.jpgbizplan_semechka_23.jpg

In conclusion wed like to point out that considering quite low labour costs, this business brings considerable profit.

Moreover, due to quite stable number of clients and due to the fact that we all got used to that sunflower seed, chewing gums, kurt, etc. can be always bought close at hand, we can conclude that this business will prosper for many and many years more.



[1] 1 USD = 2,100 soums as of autumn of 2013


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