By Rakesh Raghuvanshi, Founder & CEO- Sekel Tech
In the era of doing things swiftly and efficiently, hyperlocal delivery services and start-ups in India have capitalized on the wave of COVID-19 to deliver at the click of a button. Hyper-local delivery has ensured that online stores now fulfill customer demands on an instant basis, making it no less than a blessing to the fast-paced e-commerce world. During the pandemic, the hyperlocal e-commerce space became the most sought-after as restrictions meant delays and logistical nightmares to the sellers. The agile and customized delivery options of the hyperlocal service market ensure that customers are provided with groceries, home care, personal care, apparel, accessories, and food all at their doorstep.
In 2020 the penetration rate of smartphones in India was at 42% and this is estimated to reach 51% in 2025. This year the number of smartphone users in India is estimated to reach over 760 million, while the number of smartphone users worldwide is forecast to exceed 3.8 billion users in 2022. Driven by this growth in smartphone penetration, growing urbanization, changing consumer preferences, and an improved lifestyle, the hyperlocal services market is only estimated to rise to a higher absorption rate in the time to come.
From a pre-pandemic market size value of $1,324.2 billion in 2019, the hyperlocal services market is estimated to reach $3,634.3 billion by 2027. It is expected to register a CAGR of 17.9% from 2021 to 2027. As customers get drawn to firms delivering things faster than their competitors, hyperlocal delivery models have opened up a slew of possibilities in the market. The future of the hyperlocal service market will be defined by some of the trends traced out below.
Unfolding Trends
- Disruption in the distribution channel: The distribution setup is the biggest strength of any brand. But the advent of the hyperlocal service market is set to turn this very distribution channel into their most significant weakness. A beginning towards this has been made by many brands who have tied up with intermediary platforms like JioMart which in turn uses a network of local Kirana stores to supply the products. A case in point is HUL, Colgate Palmolive, and all CPG distributors who are up in arms against the brands for helping JioMart get a better deal which is getting passed on to the retailers who have started switching to intermediary platforms after saying goodbye to the traditional distributors. This developing trend is eliminating an unproductive layer already much as it is set to hit the FMCG players and distributors who allege that the scales are being tilted in favour of the new-age players.
- Race for Data: There is a growing demand to own first-party data of customers. This data is a source of better marketing insights for the big techs who are launching new products. They encourage local retailers and digital agencies to update and upload merchant’s information on Google My Business Listings, Google shopping, Amazon merchant onboarding, Facebook shop, and Whatsapp Nearme store listings for free. In exchange, these big techs capture their customer’s data in real-time. This first-party data offers them possibilities for personalization and campaign optimization. Ultimately, whoever controls the freshness of the data will end up being the winner and milk the revenue in this age of digital engagement.
- Data Analytics: Privacy and Data protection will eventually push big tech companies to forge partnerships with telecom service providers in order to get access to customers’ data at the source. A detailed study or analysis of purchase history, service preferences, and customer preferences makes it possible for customized product offerings to target the right audience at the right time. This data offers a basis for creating personalized offers and advertising deals for customers. It helps the product maintain a competitive advantage, and improve conversion rates. The big tech companies see use in this data availed from the network carriers to push-lock screen ads notification through operating systems on the handheld devices directly reaching their desired destination. Post the COVID-19 impact, Google has also added more business and services to its local pack. The Near Me searches has actually recorded a 350X growth in 2021.
- Push Back: Big Brands will move towards strengthening their distribution channels by powering and providing their retail partners with fully functional and interactive digital assets. This will be a sign of their push back to start owning their customers and first-party data. This data can be used in new ways to pivot and adapt both in good times and bad. The interactive digital assets will help these brands achieve better digital engagement with their primary and secondary customers. A responsive data strategy will help the brands become more responsive and agile. Riding on the shoulders of big tech, big brands will maintain their digital domain while disrupting the disruptors.
- Delivery Delight: The service levels of deliveries from the local stores or the kiranas will offer customers the same experience as offered by Amazon or Flipkart. This is set to become a delight for customers and give rise to local delivery companies to ensure product fulfillment. The business of local courier companies will stand to benefit as they play a role in ensuring local deliveries directly from a seller to the customer. It involves the operation of a courier agent picking up products from a seller and then delivering them directly to the customer’s address. It won’t be long before they scale up and are bought out by funded companies looking to make a foothold.
- No freebies: Offering discounts on goods or services is a way to quickly draw in potential customers. We can expect to see discount offers and free delivery continue to increase before they are completely gone. This will happen once the markets mature as seen in the UK or US. Discounts not only help bring new business and attention as a marketing tool, they also can help improve your bottom line. But once that is achieved and the business is seen to have matured well, there will be no more freebies offered.
- Footfall in stores: The absence of discounts offered and deals to be availed will lead to increased footfalls to nearby stores over big retail outlets. Brands will see more benefits in opening smaller but modern stores in B and C class towns to capture online discovery and offer quick delivery. While many retail brands have already shored up plans to tap the growing potential in these Tier 2 and 3 markets, the post-COVID-reality has only accelerated to shift towards these markets for many brands as the demand potential is immense.
- Vernacular Voice Search: The biggest driver of growth in the handheld mobile device space is the ability of users to search and consume content in their own language. Vernacular voice search capabilities will turn out to be the next multiplier in hyperlocal discovery. It is set to give the delivery market a boost and will surpass the English search to sales ratio. Voice commands among Indians is already said to account for 25% of internet searches, and 38% of users who have responded in some way to voice ads say they find them less intrusive than other forms of advertising.
In conclusion, hyperlocal retail is seen to offer customers the best of both virtual and real worlds. The combined benefits and convenience of online shopping and the opportunity of personal interaction plus the comfort of local retail shops have given the concept of flight. The trends listed here make it clear that the hyperlocal service market is here to stay and grow. They indicate the future of hyperlocal delivery to be disruptive and re-engineering supply chain capabilities to a localised framework making it possible to quickly deliver products and services to the satisfaction of customers.