Choosing The Right Hyperlocal Delivery Business Model For Your Business
Choosing The Right Hyperlocal Delivery Business Model For Your Business
Last Updated on January 13, 2021
Imagine going to a cafe during the day and ordering a coffee and pasta. There are two ways to go about it, you could either go up to the ordering station and make the payment then wait for your order to arrive. There are also cafes where you don’t have to stand in line and collect your order yourself, you can just take a seat and a person will come up to you take your order and then deliver it to your seat. The result? You get your coffee delivered to your seat without having to stand in a line and wait for your order to be prepared. Doesn’t that feel amazing sometimes? This is exactly the idea that hyperlocal delivery businesses are trying to replicate nowadays. Everyone likes convenience, you want your products to be delivered to you while you spend your precious time doing other things. People love the idea of convenience, even if it means having to pay a few extra dollars. People today have understood that time is a more precious commodity than money.
People have realized that they are living in a fast-paced world, a world where time is more precious than money. People are busy juggling between multiple things during the, so if something can lower your burden it’s best to take that help and invest your energy in more important things. In between all this, tasks like purchasing things, ordering food, getting groceries are things where people are willing to take help. Companies like Postmates and UberEats work on the idea of delivering these necessities to people at their doorstep so they can use their time in an efficient way. These companies offer deliveries for almost anything and can be termed at hyperlocal delivery businesses.
Hyperlocal delivery businesses are businesses that work on the principle of on-demand but add more efficiency and credibility to it. The term hyperlocal refers to small proximity, and the term is used to identify companies that deliver items to consumers from retailers that are present in their vicinity. It connects local retailers and offline businesses to a customer base with the use of an application. The digital platform allows these offline retailers to reach a bigger crowd and promote themselves in ways that would not have been possible offline.
Hyperlocal Delivery Business
A hyperlocal delivery business allows customers to get products delivered at a quick speed of less than an hour. It has allowed consumers to purchase groceries, food, medicine, consumer goods, and personal care products online. The delivery business here acts as a mediator between the physical stores and the customers by collecting products from these stores and delivering them to the customers. The only thing a customer needs to do is select the products and pay for them along with a marginal commission fee and the delivery part will be handled by the mediator. It is the job of these hyperlocal delivery businesses to partner with a logistics company and get these products delivered. A great benefit of this is that the customer gets to monitor the delivery person in real-time, they can even contact them in case of any delays or problems.
As businesses like these don’t have any physical asset, their entire business depends on the customer satisfaction they provide. This customer satisfaction depends on speedy delivery, nature of the delivery person, ease of using the app and the number of options available on the platform. If any of these are not up to the best standards, your entire impression can go down.
Why Should You Be Interested In Hyperlocal Delivery Businesses?
A huge component of hyperlocal businesses is the location. These apps focus on providing your products that are procured from stores that are available in your vicinity. In that sense, they try to cater to the immediate needs of their customers. Another great thing going in favor of the model is that these companies tie-up with local retailers which makes it easy for customers to be assured of credibility. These local stores get an online presence because of the platform, but they also make sure people know the place they are buying stuff from and hence be assured of quality standards.
This business creates a win-win situation for all the parties involved; the aggregator receives money in the form of commissions, the retailers expand their customer base and the customer gets to choose from a wide variety. It also allows the delivery personnel to deliver products in the shortest amount of time and earn some extra cash at the same time.
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Services That Can Be Delivered Under The Hyperlocal Model
There are multiple products and services that can be availed with hyperlocal delivery, these include:
- Grocery delivery
- Food ordering services
- Handyman services
- Personal care services
- Offers from local stores
Elements Required For A Hyperlocal Business
There are a few elements that combine to make a hyperlocal ecosystem possible. These can also be external parties without whom a hyperlocal startup cannot function. These elements include:
- Physical retailers- The basic function of a company is to sell something, hence a product/service is a huge part of making a business work. In hyperlocal business, these physical stores provide the products that are required by these aggregators. It is also essential to partner with multiple of these stores.
- Logistics delivery- To deliver goods, you need to have a delivery system in place. For that, you can either hire your own delivery staff or you can partner with a logistics provider. These providers will help reduce the burden on you and they already know how this business works.
- Mobile app- Once you have partnerships in place, it is also necessary to have a mobile application. This mobile application is what people will know you by. It is also the place where customers will go if they want to buy products from you. Hence it is necessary to make sure that the app works flawlessly so that people don’t bounce off your app.
- Consumers- To sell your product, you need customers who are interested in you. These are the people who will bring actual money into the business. Without them, your business will not be able to function for long.
Different Hyperlocal Delivery Business Models
The Hyperlocal industry has a way of solving current problems in an advanced manner. This is the reason why the industry is gaining so much traction and becoming a great investment opportunity for entrepreneurs. But showing interest is not enough, owing to the fact that the industry is huge there are multiple ways in which you go about if you want to start a hyperlocal business. There are multiple services that can be fulfilled by hyperlocal and you need to narrow your niche before you go any further. This will depend on your expertise as well as the demands of the area in which you want to open this business. Another thing to think about is the business model you will have for your company. There are various models you can choose from. Additionally, these models are not black and white, you can also have some features from a particular model and pick others from a different business model. It all depends on your individual requirements.
Before we go any further, let’s understand these different models that occur under hyperlocal delivery to help you choose one.
1. Aggregator Model
An aggregator model is one of the most common hyperlocal delivery models because it is not capital intensive. In this model, the company acts as a mediator between offline retailers and consumers. The company itself has no assets or inventory, all it does is partners with other retailers and then sell their products using its own platform. Hence, in this way, the company offers an online audience to the physical store and helps them in promoting their store to the consumers that live near them. This model is most commonly seen under food delivery, grocery delivery, personal care services, and handyman delivery. For handyman delivery, you can receive services like plumbing, carpentry, electrician and gardening, etc. Almost all of the services can be offered using this model because it generally only requires tie-ups with other retailers. A few of the examples of companies that follow this model include Postmates, Instacart, Zomato, Housejoy, Urbanclap, GrubHub, TaskRabbit, etc.
2. Single Store Model
Single store model is generally implemented by retailers that have already set up their offline businesses and want to go online now. A Single store model generally sells products from only a particular retailer. It can be implemented when an offline retailer decides to build an app for their products or it can also be implemented by a company that has its app and now decides to hold its own inventory instead of selling the products of another retailer. This model can be used to sell products under food ordering or can also be used to sell services under personal care. Companies like Dominos, Pizza Hut, Popeyes and Chipotle have their own website that allows customers to purchase products and then get it delivered to their homes. These chains are a great example of a single store model. This model is also implemented by companies that deliver grocery items for a particular meal like HelloFresh and Blue Apron. They offer ingredients and recipes for meals and these ingredients are generally stored in their own warehouses.
3. Store Pick Model
Under the store pick model, consumers generally order stuff online but they pick up the items from the retailers themselves. This model is generally followed by companies that want their consumers to get the products they want at a time convenient for them. This means that your order will be prepared for you before you reach the retailer, all you have to do is go there. It also makes sure that customers don’t have to wait in lines to pay at the store. This model is generally followed by grocery businesses, for example, Tesco, Walmart, Target and Safeway.
4. Hybrid Model
The hybrid model is generally a model that implements more than one of these other models. For example, some stores allow you to order products online as well as offer store pick up offers. Examples include Instacart, DoorDash, Deliveroo, etc.
Offers From Local Retailers- There are also other hyperlocal apps that do not deliver any products to your doorstep but show you various offers and discounts you can receive from other retailers nearby. These apps are generally used to find discounts that you can avail in different stores and the same can be used either on websites or physical stores of these retailers.
With people becoming more and more open to the idea of online delivery, we think this is the right time to invest in a hyperlocal business. The idea behind these is very simple and can be implemented without huge amounts of capital. Once you sort the basic things, the only thing that is required is to stay on top of your customer service game.
People who start these companies are offering a great amount of exposure to offline stores as well as logistics partners. At the same time, they make sure that these retailers get maximum results without having to put in too much effort. It also helps customers as they get to try different stores out and test their quality and receive offers along with it. It also makes sure that these customers are getting products of the best standard because now retailers know that the customers have more options. All in all, the hyperlocal industry has given a great push to all the stakeholders and made them be on their best game in order to service the customers in the best way possible.
Looking for more? Know how on demand food industry works – Food delivery app business models