The fear of the ongoing Covid-19 pandemic as well as the lockdown has largely paralysed the retail sector as most consumers are stuck in their homes.
To survive the crisis, the neighbourhood retailers or the kirana stores quickly adopted hyperlocal channels like Swiggy Stores and Zomato Market, to fulfil the demands of consumers for essential goods such as groceries and medicines.
The food-tech unicorn Swiggy, which last year had ventured into the delivery of groceries and other daily essentials with Swiggy Stores in Gurugram and Bengaluru, too moved fast. It expanded its hyperlocal service to over 125 cities during the lockdown, after its core food delivery business went down by 80-90% in the last two months.
Similarly, Swiggy’s competitor Zomato began grocery delivery services in over 80 cities in India during the lockdown, with the Zomato app featuring ‘Zomato Market’ that lists local grocery stores in an area.
Both the companies also began the home delivery of alcohol during the lockdown to promote social distancing and resolve the problem of overcrowding at liquor shops.
How Does Hyperlocal Business Model Work?
The hyperlocal on-demand business model connects the local offline business holders to customers through a digital platform. It enables a customer to immediately purchase products or request for services like food, medicine, and consumer goods.
In this delivery model, the logistics provider acquires the requested product from nearby shops and delivers it to the clients. Customers can monitor the entire delivery process in real-time.
In post-Covid Era
The hyperlocal delivery model has already been on a growth trajectory in the last few years, but ‘speed’ as a differentiator has assumed an even bigger role in the times of Covid.
Recently, Walmart-owned Flipkart announced that it is all set to launch a hyperlocal delivery service that will cater to 90-minute delivery of goods from local stores and its own small fulfilment centres.
The e-commerce firm will leverage the last-mile capabilities of logistics startup Shadowfax, in which it invested USD 60 million last year, in order to facilitate its entry into the segment.
According to Vaibhav Khandelwal, Co-founder and Chief Technology Officer, Shadowfax, the adoption of hyperlocal commerce will witness a further rise in the post-Covid era, owing to the change in consumer behaviour.
“We have seen a higher degree of localisation of supply chains resulting in the growth of the hyperlocal services after the pandemic broke out. Consumers who are used to buying things online will possibly continue doing so as a change in their buying behaviour. We have been able to manage fast, flexible, and consistent delivery services of both essential and non-essential goods across the country,” shared Vaibhav, with The Blue Circle.
Rahul Deorah, Urban Company’s (formerly Urban Clap) Vice President, Marketing shared similar views. Instead of things dumbing down in the post-pandemic age, he believes that hyperlocal channels that have won the trust of consumers will stay ahead of the curve.
The Ratan Tata-backed hyperlocal services startup, a pioneer in this space, has 25,000+ partners on its platform and all of them deliver at-home services to consumers within a specific radius.
An advocate of innovative and quality services, the company has pulled out all stops to ensure that all their partners are provided with PPE kits and daily temperature checks are being carried out. Besides, each person undergoes a rigorous 7-day online health and safety training, based on the WHO prescribed standards.
“In the near- to medium-term, the focus will be on safe and hygienic services. Whether it’s online shopping, at-home services or food delivery, consumers would want to rely on channels/companies that promise and deliver on these aspects. At Urban Company, apart from other measures, all our partners have free COVID-19 insurance from the company till July 2021. Besides, all our service partners sanitise their equipment in front of the customers, before and after each service.We are also offering cashless transactions,” shared Rahul with TBC.
More about Hyperlocal
Firms adopting the hyperlocal model can save up on costs, since they work on established local trade and service links, instead of building anything from scratch. This leads to reduced logistics costs, less delivery lead time and negligible inventory costs. The concentration on a specific area also allows firms to offer customisation that revolves around the demographics of their target market.
“Real-time checks, automated systems, data analytics, and route planning optimizations enable us to fulfil such changing demand patterns efficiently and swiftly while keeping the costs in check,” added Vaibhav.
Even major FMCG players such as Marico, Godrej and Britannia are utilising the existing infrastructure of food delivery and hyperlocal delivery apps such as Rapido, Ninjacart, Swiggy and Zomato, to get a tighter grip on consumers.
Vikas Bagaria, Founder of personal hygiene brand, Pee Safe shared with TBC that it is a blend of super fast service and convenience, among other advantages that will set hyperlocal service companies apart.
“Hyperlocal delivery platforms have a very limited geographic area to cover and that enables the delivery staff to familiarize themselves with the areas covered by them. They just need to pick up the ordered items from the local retailers and deliver them to the customers. This is beneficial for the retailers too as they don’t lose customers in the absence of their home delivery services. Hence, in the days ahead, we will see the demand and scope of hyperlocal delivery platforms surge to new heights consistently,” he added.
There are some brands in personal grooming, hygiene, and premium packaged foods, who are expanding their online reach beyond e-commerce leaders Amazon and BigBasket. These businesses are trying to feature on hyperlocal delivery channels like Swiggy, Zomato and Dunzo or using offline stores listed on these platforms to expand reach.
What Lies Ahead
One of the biggest obstacles to the hyperlocal model is the mindset of Indian consumers. The receptivity is relatively lower, since consumers are more comfortable with purchasing from the familiar unorganised sector.
Apart from winning consumer trust, there are certain factors that set hyperlocal companies apart.
It must have a reliable and efficient network of local partners, excellent delivery capability, and prompt services to consumers with minimal cost and lead time.
This pressure to fulfil consumer demand is likely to rise post-Covid, but companies aren’t complaining. The hyperlocal model has finally arrived, and it is going to see a further acceleration in the times to come.
“The present and immediate future do look like a fight or perish scenario. The traditional brick and mortar retail may look very different for a considerable period of time, which will further aid hyperlocal delivery adoption to reap the opportunities. Factors like the comfort of buying and selling at the click of the button, accessible warehouses and dark stores, quick transportation, and the easy availability of highly mobile delivery resources will accelerate the growth of the hyperlocal delivery model post-COVID in India. Furthermore, the support from the government too will play a significant role in the rise of such relevant delivery models,” said Vaibhav, signing off.
(Edited by Anu Choudary)