The rise and rise of the Hyperlocal Delivery Model

Hyperlocal Systems are here to stay

They say adversity leads to opportunity. Although times have been harrowing, with the country inundated with the second wave of the pandemic, yet, amid the abyss, the Hyperlocal Delivery model has emerged as a winning recipe for bolstering the logistics and supply chain network of the country while preserving the clarion call for speed and safety. Our cover story walks you through the trends, challenges and the future of the Hyperlocal Delivery Model.

The future is hyperlocal.

At a time when social interactions are delimited, businesses are undergoing through an unprecedented transition and customer expectations have transcended boundaries, the emergence of hyperlocal services effectively captures the essence of the times and taps into the skyrocketing customer demand for safety, comfort and speed. From food, groceries, medicines to essentials, many companies in India have embraced hyperlocal deliveries with gusto.

Hyperlocal delivery refers to the process of delivering goods directly from a seller to the customer. It targets potential customers present in a specific and limited geographical area.

These delivery services have turned out to be a boon for local retailers while enabling them to gain maximum results with minimum efforts. The hyperlocal model provides seamless omni-channel experiences, be it in-person mode of interaction, or through an app or website, click-to-call for delivery at home, click-to-collect at store or any other mode of service.

Making a mark in the crowd

The hyperlocal space is replete with challenges and competition, especially in the present context.  In such an ambience, it may take more than caliber for a company to etch a mark in such an overly competitive space.

Manish Gupta, Head of Supply chain and Logistics, Paytm Mall, sheds more light on it.

 “Hyperlocal eCommerce market is in a real limelight, and therefore multiple players are entering into and making it more competitive with each passing day. Presence of multiple players and competition, increases the entry barrier for startups in terms of investment and technology. But Hyperlocal being a very local city level and highly growing market, opens up the door for new startups as well”. 

~Manish Gupta, Head of Supply chain and Logistics, Paytm Mall

How can startups carve a niche for themselves in such an overly competitive sphere?

  • Attractive Pricing

Pricing has always been a formidable factor in catapulting a company into recognition while luring in a sizeable customer base.

Meheriar Patel , Group Chief Information Officer,Digital Solutions, Jeena addresses how attractive pricing is directly proportional to the success of any company in the hyperlocal delivery space.

“Pricing and Negotiation will be directly linked to success of this model. Effectively,discounts are now the norm of this hour. The negotiation that we term as the right price for the right product after discounts, is what each player targets to have.”

~Meheriar Patel , Group Chief Information Officer,Digital Solutions, Jeena

Yatin Agarwal, Head, Hyperlocal & Special Initiatives, BlowHorn talks about two alternatives: Pricing as a stand-alone factor for a startup to make a mark in this space, or looking for another alternative.

“You can gain traction because of great pricing, but in case a company does not want to compromise on it, then that company has to come up with something that its competitor(s) has not been able to solve.”

“Any startup that is not solving an unsolved problem, cannot survive. The key is to be on the lookout for filling any gaps that has not been filled by the current market player and focusing on how the gap is to be treated.”

~Yatin Agarwal, Head, Hyperlocal & Special Initiatives, BlowHorn
  •          Ensuring Quality

Saahil Goel, CEO and Co-Founder, Shiprocket adds a host of chances that startups can take to make a mark in this domain, particularly improving quality and managing the last mile challenges.

“Critical to business challenges being faced in this segment, these are some of the chances to explore for startups –

  • Ensuring the last mile connectivity and maintaining the unit economics of logistics
  • Running Micro Warehouses Dark stores with high Inventory fluidity needing ML/AI’s to ensure real-time forecasting to maximise order fulfilment’s reducing stockouts & cancellations.
  • Building Temperature controlled Supply Chain – both in Warehousing & Procurement & Lastmile for Vegetables & other perishables products
  • Providing Time Defined/slotted Last-mile deliveries to reduce rejections
  • Ensuring a Wow level of Customer Delight for repeat purchases.”

“Any crisis is an opportunity and the Hyper-local eCommerce is a perfect example. The adaption of the hyper-local model in our daily lives and becoming a business reality is clearly evidenced in its demand in the grocery, food delivery space & medicines, always considered to be the toughest segment to penetrate within the online commerce bandwagon.”

~Saahil Goel, CEO and Co-Founder, Shiprocket
  •         Building a Reliable Workforce

For many reasons, 2020 has indeed marked the beginning of an era where customer expectations and demands have transcended boundaries. At a time when logistics has moved on to become an essential service, the demand for security, speed and efficiency as simultaneously surpassed every limit. Amid such cutthroat competition, it is crucial for businesses to build a reliable workforce, apart from filling the gaps in their operations.

Ratnesh Verma, Founder & Leader – Pidge, shares his two cents on this.

“One way in which logistics companies can step up is by building a reliable and trained workforce. Pidge has carved out its niche as a City Logistics Expert with its full-time delivery staff and omni-category logistics solutions.”

~Ratnesh Verma, Founder & Leader – Pidge
  • Key Partnerships:

Vaibhav Rai, Head- Operations, Life Care Logistic Pvt Ltd. talks about well-established hyperlocals and the ever-expanding e-Commerce, and how forging liaisons with local vendors will emerge as a long-term solution.

“Forming Tie-ups with local vendors would be much easier for them than a new startup. Reason, vendors would naturally like to associate themselves with a bigger and better brand to get a fair chance to increase their sales.”

~Vaibhav Rai, Managing Director, Life Care Logistic Pvt Ltd.

“These reasons aside, myriad hyperlocal startups commit gaffes that eventually uproot them. Their own blunders cause their downfall and we are deliberating a few akin cases here”, he underlines.

Challenges Ahead: The Hyperlocal Delivery

Although Hyperlocal delivery has risen to imminence and proliferated across the country, there are creases that need to be ironed out in the delivery ecosystem:

  • Pricing:
  • Fleet Management
  • Uncertainty in the operations

Streamlining an unstructured domain

Since the hyperlocal market in India is mostly unstructured, there are many micro markets among these hyperlocal ventures. How can one streamline the entire process for the delivery of goods?

“The very nature of the hyperlocal market is that it is very location specific. India being a diverse country added one more flavour to this problem, as the operational solution which worked in a city in south India can be slightly different from north india”, writes Mr Gupta.

He points out how solutions can vary based on the city, say the cost of a fleet. He opines for city-level excellence in execution.

“Region-specific replication of City (and Zones within cities) level excellence in execution, to other cities becomes the need of the hour, to streamline the entire process for hyperlocal deliveries. At the back-end the city level solutions can be slightly different with different costs, but the overall goal should be, to have an uniform experience at the front end for all customers.”

Mr Rai highlights a key partnership that has come out of the pandemic: Hyperlocal Delivery joining hands with Local Kirana stores.

“Hyperlocal delivery of groceries, fruits and vegetables has accelerated with the introduction of multiple online grocery stores, e-commerce platforms and other delivery-based start-ups who have forged partnerships with the local kirana or neighbourhood stores and supermarkets. It has also helped in a way that many of the kirana stores are now managed by a newer generation which is willing to embrace technology in their daily lives. The in-store experience has now transitioned to an in-hand shopping experience through intuitive mobile apps”, Mr Rai shares.

The issue of pricing: A major bane

Although hyperlocal delivery provides sellers with the required visibility to these stores, they have to shell out additional costs for getting their products listed on these marketplaces. As this can be quite a challenge for somebody who is just starting with the hyperlocal market and does not have the margins to do so, how can it be better addressed?

This is an abridged version of the original cover feature published in the Logistics Insider May edition. To read the complete article, click here.

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