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1) Overview of Hyperlocal Business
The term “hyperlocal” essentially means a focus on a smaller geographical area. So hyperlocal delivery itself refers to delivery services that can be provided locally quickly. This enables to complete these deliveries in less than a day, often within a few hours of the order being placed.
While we have seen cases of it when it comes to food delivery services, most businesses are working to provide this service in many major metro cities across India. In this article, we’ll be discussing why e-commerce businesses are turning towards this delivery model and the difficulties they face along the way.
2) What is Hyperlocal Delivery
Hyperlocal delivery is the latest favourite trend in delivery services for both customers and e-commerce businesses. Hyperlocal essentially means a focus on a small or specified geographical area. The hyperlocal delivery model works anywhere between an area of 15 km and 50 km depending on the respective companies' resources and delivery capacity.
Through hyperlocal delivery, e-commerce businesses make use of local stores and small business owners in that designated area to provide much faster same-day or hourly delivery.
3) What is the Role of Hyperlocal Delivery
Every e-commerce business needs to keep up with the latest trends in the eCommerce logistics industry. There is an absolute requirement to stay ahead of the curve when it comes to customer satisfaction and optimizing delivery experiences.
With the introduction of hyperlocal delivery a few years ago, both online and local merchants have been able to increase order fulfillment and attract more customers. Though it comes at a price, there are numerous challenges to be overcome along the way.
4) What are the Key Benefits of Hyperlocal Marketplace?
Hyperlocal delivery is a service that a few courier partners provide which allows eCommerce businesses to engage with their customers on a local level. These deliveries are much quicker than traditional delivery services because they make use of local retailers and suppliers in different areas. In addition to the speediness of the delivery services, hyperlocal delivery as an overall operational service provides a few other interesting upsides.
4.1) Improve Customer Experience
The need for hyperlocal delivery came about with the need for speed that most customers have. The competitive spirit brought forth by hyperlocal delivery services ensures that customers experience more and more efficient services over time.
This essentially means that where customers once used to wait 2-5 days for orders to arrive, they can now receive orders within just a few hours. The level of speedy service offered by hyperlocal delivery is the epitome of convenience to customers. They can receive their goods quickly and return them equally fast.
4.2) Support the Local Stores
Because hyperlocal deliveries are focused within a certain locality, they also give opportunities to traditional and offline retailers in that locality to join the e-commerce market, both independently or through existing eCommerce retailers. The exposure on both sides, i.e., offline and online retailers, increases as businesses gain visibility and increase their overall order fulfillment.
4.3) Reduce Efforts of Retailers
Every eCommerce business is looking to reduce costs and resources expended. With hyperlocal delivery, these businesses, especially larger online retailers, can make use of their own stores in different locations. This enables them to cut down on shipping, storage, and warehousing costs.
Management of orders and deliveries also becomes easier as there is an existing workforce on-ground in that locality that can be relied upon. For eCommerce businesses, the process is further simplified and extra benefits as they enjoy the convenience of usual pan-India delivery services in addition to hyperlocal delivery services via their selected courier partner or their own workforce.
4.4) Real-Time Tracking
After an order is placed, notifications are received as soon as a delivery agent is assigned, when the delivery agent reaches the store, and when an order has been packed and picked up.
Following this, the exact movement of the delivery agent can be tracked in real-time, so customers can keep track of their orders to the minute. Customers are empowered in this way to make informed decisions and prepare for the arrival of the goods.
5) What are the Major Challenges of Hyperlocal Delivery for Ecommerce and Local Businesses?
Hyperlocal delivery is undoubtedly beneficial to all types of businesses, but especially to customers. However, the brunt of the difficulties of hyperlocal business must be borne by eCommerce businesses looking to expand their operations to specific localities. For any online company looking to scale up with hyperlocal deliveries, these are the most common challenges faced.
5.1) Increasing Competition
The eCommerce industry typically thrives on competition, and the same is no different with the inclusion of hyperlocal delivery into the market. Where only a few years ago, hyperlocal delivery was a niche service, it is now becoming a highly demanded service. The number of courier partners providing this service is increasing, but not at a rate high enough to match the demand currently.
5.2) Additional Fees and Charges
There are two types of cost-related challenges faced by new businesses entering the hyperlocal business market. The first is the marketing cost of informing customers in specific localities that this new delivery service has been made available and why they should avail it. The second is the cost of listing added amounts of most products. This is necessary to ensure products can be purchased as well as returned easily by customers, while still being able to fulfill other ongoing orders.
5.3) Sporadic Operations
While hyperlocal delivery is a great way to bring in a larger customer base in a smaller region, orders are not placed at a consistent rate. In fact, most customers place their orders sporadically leading to numerous spikes in order volumes at certain times.
Being able to handle these sudden increases in orders and then quickly return to earlier order frequencies is a challenge for most hyperlocal courier services as they are working with the same resources throughout.
5.4) Slower Growth
Hyperlocal marketplaces can bring order volumes up in specific localities. However, this does not impact operations in places beyond the localized area. For smaller businesses looking to expand, or larger eCommerce businesses looking to grow across the country, hyperlocal delivery diverts resources and attention to small geographical areas. This can hamper overall business growth.
6) List of Top 6 Industries Using Hyperlocal Delivery
6.1) Food
India’s food hyperlocal market first rose with independent chains and franchises like Dominoes and Subway providing their own quick delivery services. They were followed shortly thereafter by other restaurants and outlets looking to keep up with the increasing competition.
With the introduction of food delivery aggregators like Swiggy and Zomato to the market in 2014, a wider variety of restaurants and food services were given access to hyperlocal delivery services in their respective areas as delivery resources were provided by the aggregators.
6.2) Grocery
Even prior to the COVID-19 pandemic, many Indian’s relied on hyperlocal grocery delivery apps for their daily or weekly household needs. Apps like Grofers, Big Basket, and Dunzo are the go-to options for most people living in cities & urban areas.
Big Basket, now owned by Aditya Birla group, was the first to start providing hyperlocal delivery services in 2011, followed quickly thereafter by Grofers who took over the market in 2015. Now other major grocery hyperlocal services are available in different areas like Go Zopping, Ninja Cart, and Pepper Tap.
6.3) Pharmaceuticals Hyperlocal Delivery Model
While the need for medicinal care and pharmaceutical deliveries has definitely experienced growth during the pandemic, the need for medical supplies was prevalent well before. The pharmaceutical industry placed reliance on doctors to sell medicines as their main marketing strategy leading to stagnation in the market.
The results have been many-fold, starting with a greater insight into consumer behavior for over-the-counter pharmaceuticals as well as for overall demand and supply of medications. Hyperlocal delivery has also enabled a wider range of hospitals, chemists, and pharmacists to enter the market. Today, companies like PM health, Life Care, and 1mg currently rule the pharmaceutical delivery sphere, utilizing hyperlocal delivery.
6.4) Electronics Delivery Model
Given the delicate nature of electronic items, it would make sense that losses could be cut down by shortening the time electronic products spend in transit, including return journeys.
Hyperlocal delivery offers the best opportunity to ensure product safety and satisfy customers quickly. Both Flipkart and Paytm Mall have expanded their services to offer hyperlocal delivery for electronic items. A leading player in this market is Zapper, the largest mobile marketplace that offers hyperlocal delivery services to 15000+ retailers.
6.5) Horizontal Hyperlocal Delivery Model
Hyperlocal delivery has expanded to the point where it covers much more than just retail goods. Best hyperlocal delivery companies like Dunzo and Urban Clap use technology to provide hyperlocal delivery for regular services like running errands, plumbing, electrical work, beautician services and other types of services people may need. This can even include sites that offer services for wedding planning, event organization and many other options.
6.6) Logistics Hyperlocal Business Model
Hyperlocal delivery services work on both a B2B and B2C scale. Some companies may use their own workforce or make use of an aggregation platform like Swiggy, 1mg or Urban Clap to provide hyperlocal delivery services.
The eCommerce logistics industry has also expanded accordingly to make room for this new speedy delivery service to enable e-commerce businesses to offer hyperlocal delivery to customers in specified areas. Logistics Companies like Shadowfax, Pidge, and Blowhorn have been taking the market by storm, offering eCommerce businesses opportunities to grow through outsourced hyperlocal delivery services.
7) What are the Key Features of Hyperlocal Delivery Model
The hyperlocal delivery model has often been compared to last-mile delivery, but this system has numerous unique attributes that make it very different. The way hyperlocal delivery works is through exceptional use of resources and strategic management of inventory and supply chain.
The ideal of hyperlocal delivery boils down to fast speeds, both for procurement and delivery, as well as convenience, in terms of accessibility and availability. When you’re trying to get your hyperlocal delivery business model off the ground, these are some of the must-have features that enable your business to be identified as one that engages in hyperlocal delivery.
7.1) Local Retail Stores
The procurement of products is the first part of any supply chain. In the case of hyperlocal delivery, suppliers also often double as storage facilities as well as distribution hubs. So in such situations, the suppliers handle the procurement of the products to the desired locality and then distribute them within a specific geographical range.
7.2) Geographical Range of the Hyperlocal Delivery Model
So the next thing we need to consider is what this geographical range of hyperlocal delivery actually is. Most of the time, these geographical ranges are limited by districts and lie within a 5 to 15 km radius. Some deliveries may be intra-city and done across multiple localities, in which case the delivery range may be extended to 20-30 km.
7.3) Delivery Speed
It offers faster delivery options and a greater variety of delivery options. Customers can select a specific time slot for delivery or request on-demand delivery. In most cases, the delivery time is within 2 and 3 hours. In some cases, the delivery time may extend to 6-8 hours. By and large, the norm with hyperlocal delivery is within working hours of the same day the order was placed.
7.4) Nature of Orders
Hyperlocal delivery is restricted to a specific range of products. Since deliveries are being carried out within short distances, delivery agents use a combination of two, three, and four-wheel modes of transportation. This usually places limitations on the weight and dimensions of the order. Most hyperlocal deliveries keep this weight limit at 10 to 12 kgs.
7.5) Industries
Given the limitations on weight as well as the faster delivery speeds, hyperlocal delivery is largely used for essential items, especially with pandemic restrictions in place. The main industries that use hyperlocal delivery are pharmaceuticals, groceries, and food deliveries. That being said, other industries like electronics and telecommunications, clothing, and sportswear also make use of hyperlocal delivery.
7.6) Delivery Force
For normal deliveries that require first mile, mid mile, and last-mile services, a massive network of transportation experts and delivery agents is required. Hyperlocal delivery also has similar requirements but enables greater use of ground forces. Sellers and vendors can use their own employee base as delivery agents as well as hire transportation agents employed by a third-party logistics company.
8) What is the Impact of Technology on Hyperlocal Marketplace Business Models
We’ve emphasized how speed and convenience come into play with the hyperlocal delivery business model. But what truly makes the hyperlocal system a successful business model, especially during the pandemic, has been the intelligent use of technology. The hyperlocal model in itself is not entirely reliant on technology for basic transportation.
However, customer expectations must be met, and that means providing more effective services, better means of communication, and operational efficiency. These are areas that can be significantly enhanced through the use of logistics technology. With the help of tech-enabled solutions, hyperlocal delivery becomes a more streamlined process with the help of the benefits listed below.
8.1) Scheduled Deliveries
Many hyperlocal businesses, especially those dealing with groceries and perishables, use technology to offer schedule-based deliveries. With this tech, delivery partners and vendor availability can be tracked so that customers get a clear idea of the delivery schedule.
After selecting their preferred delivery slot, customers know exactly when to expect their order. This enables your business to keep track of deliveries throughout the day and provide speedy delivery services during the designated time frames.
8.2) Real-Time Stock Updates
A corollary of the very same tech solutions that enable delivery scheduling enables inventory management on a minute-to-minute basis. This is absolutely vital for hyperlocal services as customers are selecting items that are an immediate need for them.
So slow stock updates can result in customers canceling orders due to the unavailability of certain items they had selected. When stock updates are provided in real-time, you can give customers exactly what they need exactly when they need it.
8.3) Easy Payment Options
It’s not just important to provide customers with multiple delivery options but also multiple payment options. While many customers may opt for cash on delivery, providing a greater number of online payment options may significantly reduce the number of postpaid orders you receive. Payment gateways and other similar portals enable customers to place and pay for their orders through a variety of mechanisms, like UPI, LazyPay, PhonePe, and other alternatives.
8.4) Auto Detect Customer Locations
Accuracy is at the center of any good delivery experience. And hyperlocal delivery gives us an opportunity to move products straight from the local retailers to the customer. But for this process to be carried out smoothly, there has to be accuracy in finding customer locations.
After all, customers ordering from within designated radiuses do not want to go through the process of inputting the entirety of their address, as is the case with normal couriers. Using the tech that enables automatic detection of customer locations helps ensure this accuracy with minimal room for divergence.
8.5) Enable Greater Customer Communication
There’s nothing more frustrating for a customer than not knowing where their order is. This goes doubly so for customers using hyperlocal delivery as they would likely be waiting on their order to be delivered. That’s why most hyperlocal businesses offer means for tracking the delivery partner.
In addition to that, it is also advisable to provide a mechanism whereby customers can contact delivery boys with specific instructions to find the location. This mechanism should ensure the privacy of both the parties and therefore needs more advanced tech to act as a medium for communication.
8.6) Collect Feedback
If you really want to keep your business constantly pushing ahead of the competition, then you need to constantly have your ear to the ground. That's why hyperlocal delivery companies and third-party logistics service providers use tech to automate the process of receiving feedback from customers.
With this automated system, customers can give their feedback as soon as a delivery is completed. This data can then be stored and analyzed to improve services and enhance customer experience.
Final Conclusion
The hyperlocal marketplace is one of the fastest-growing delivery services in India currently and is continuing to grow as Alice did in Wonderland. Though there are numerous challenges faced by all companies using hyperlocal business models, the impact that it has had on various industries is undeniable.
From groceries to pharmaceuticals to logistics, the hyperlocal marketplace has something to offer everyone when it comes to enhancing their customer base and increasing order fulfillment in a quick period of time.
What is absolutely essential to remember when it comes to the hyperlocal delivery model is that it provides much-needed delivery services within small geographical areas. For all the benefits it provides to brick and mortar stores, it is useful to larger e-commerce platforms when it comes to the distribution of goods.
Hyperlocal delivery ensures greater usage of stock as well as other resources in the supply chain. And with the help of technology, hyperlocal delivery solutions are becoming more convenient and therefore, the preferred choice of customers. We hope this article has given you all the insight you need on the hyperlocal delivery business model and everything about it.