Hyperlocal Delivery Business Explained – The Dos And Don’ts

Last Updated on October 21, 2021

In a world that’s ever-changing, predicting what the consumer wants is impossible. The needs that these consumers have to keep changing. Even if you realize what they want and how they behave; by the time this happens, their behavior patterns might have already changed. If there’s one thing that we know for sure about consumers it’s that they appreciate fast and efficient service. Consumers have thousands of things that they need to do in a day, so if you can help solve some of their problems; that too in an efficient manner they will appreciate you for it. 

There are multiple things that a consumer needs daily in order to survive, most of these need to be procured. The mere step of procuring these can become a hassle for the consumers. This is where multiple companies step in, they try to help consumers solve their problems and in turn procure these necessities for them. As a result, consumers get what they want and companies earn by procuring these items for the consumers. These types of companies are now what we know as hyperlocal delivery businesses. 

The term hyperlocal which means ‘a small area’ refers to a model where companies (service providers) acquire goods locally and deliver them to the consumers living in a nearby geographical area in the fastest way possible. These types of businesses form a hyperlocal marketplace and cater to the basic needs of all the people living in a specified geographical area. The term geographical area is a big part of this marketplace because it makes sure that all products are delivered in the fastest way possible. Hence, consumers get products from a dealer they are either familiar with or have at least seen near their homes. The other great thing about these businesses is that they make offline retailers self-sufficient and help them fulfill all requirements of local residents.

The main element of a hyperlocal business is the aggregator that makes this ecosystem possible. These aggregators drive the ecosystem and make it possible to deliver products, in return for the same they charge a commission from their customers. This model can be replicated for a variety of industries, it is most commonly seen in grocery delivery, house-care, food delivery, personal care services, plumbing services, beautician services, etc. A few of the participants of this model are Postmates, UberEats, Instacart, etc. Any hyperlocal business knows that they are only as good as the service they offer. If you provide speedy service with proper goods, consumers will keep coming back to you but if you make even a single mistake the same consumers can be ruthless and completely abandon you. Hence, it becomes important to be on your A-game when it comes to providing services under this system.

A big promise that many hyper-local companies make is the promise of deliveries. Many of these companies deliver products within an hour. A reason why fast delivery is possible is because these companies source products from local retailers. A great example of this is Grubhub which is a Chicago based company that offers online food ordering from your nearby restaurants. The company has partnered with more than 80 thousand restaurants in more than a thousand cities in the US and London. These companies make deliveries possible by using your current location and showing you only the retailers that can deliver you what you need.

Here is a Quick Overview Of The Article:

• How a Hyperlocal Business Works
• Method to Scale a Hyperlocal Business
• Hyperlocal Business Model & Features
• Hyperlocal Business Dos
• Hyperlocal Business Don’ts

How Does The Hyper-local Delivery Business Work

The hyper-local delivery business generally follows an aggregation model that requires minimal assets and is a less capital intensive model in comparison to others. A model like this wouldn’t have been possible without the technological advancements that we have seen in the last decade or so. A model that is so easy to scale was born because of the amalgamation of technological advancements with the traditional buying behaviors. 

The basic business model behind this is to use the opportunities in a geographical area to the best of your advantage. That means tying up with retailers in the area where you are functioning, offering them new customers, and increased sales in exchange for cooperation. Tie-ups with multiple retailers within an area will help you get more customers and optimize results by fulfilling the promise of fast delivery. The area within which a business like this works can vary from a few meters to kilometers depending on the nature of the business. For example, for a food delivery business; you would want to offer more options to a customer and hence you may need to operate in a wider area whereas you can work with a smaller area when it comes to products that are available in multiple stores like grocery, personal care, etc.

Hyperlocal businesses can be great for offline retailers who don’t have the resources or the knowledge to take their service online. This will help retailers who are currently only servicing offline to reach a wider customer base. All this can happen with just an application. [/vc_column_text]

How To Scale a Hyperlocal Delivery Business

The thought of getting online delivery without actually having to move on bit is intriguing enough for people even if these products take a few days to reach you. What hyperlocal companies are doing is taking this idea to the next level by offering delivery in just a few hours. The speed is a great attraction for these businesses, an even bigger attraction is the idea of getting these products delivered from a trusted retailer nearby you.

As consumers are becoming more and more trusting of online ordering, these types of businesses seem to be growing in popularity. After all, who wouldn’t want their grocery to be delivered to them at their doorstep so they don’t have to wait in lines at the payment station? A great way to ensure the success and growth of your business is to partner with dependable retailers, make multiple partners, and guarantee adequate choice as well as quality to consumers. 

Hyperlocal Delivery Business Model and Its Features

While starting a hyperlocal delivery business the main thing you need is clarity and focus. If you start your business thinking you will fulfill all your customers’ needs, you will end up doing nothing. You need to be sure of what it is that you want to deliver. You pick a niche for yourself because if you take too much on your plate you may end up doing nothing. Once you select the product you want to deliver, you can go on and select the area where you will fulfill these needs. Being sure of your geographical area is important because this will help you make partnerships with sellers within your area. You use these retailers as well as your knowledge of the customer in the area to target them. You may do everything right, but if you do not target your customers the right way, you will end up with no sales. Many companies target college students or employees who do not stay with their families. This can be a great starting point.

Once your basic idea is set in place, an important factor to consider is your revenue model. Before forming any partnerships, you need to make sure you are certain about your revenue model and the commission that you are going to charge. Other important things you need is a delivery system and an application to make all this possible. 

After all is set and done, your customer can only reach you and purchase from you if you have an app. Hence you also need to know the important features that you need to add to your business:

• Proper delivery scheduling to ensure fast service
• Auto-detecting the location of your customers to show relevant retailers to them
• Filtering and removing products continuously on the basis of availability
• Adding an option to rate as well as add reviews for retailers
• Allowing customers to interact with or call the person delivering their product
• Different online payment modes for easy payment

This model allows retailers to sell more of their products without having to make any additional efforts. It offers efficiency and transparency to its customers in exchange for a small commission. It makes sure that everyone is being benefited from this model. 

Now that you know the basic business model behind hyperlocal companies, it is also necessary to know the do’s and don’ts if you want to enter this profitable industry.

Dos

• Offer Something Unique– If you decide to enter the hyperlocal industry, there are many players that are already present in the market. Hence, the only way you will be successful is if you offer some unique benefits or offering to the customers. If you enter with the same proposition as your competitors who are already present in the market, consumers will have no reason to leave these competitors and get the same service from you. A great example of this is Blue Apron. This app delivers groceries but with a twist, they allow consumers to select the dish they are cooking and deliver all the ingredients required for the same along with a recipe. They also meal prep for their consumers and offer ingredients for hundreds of dishes.
• Multiple Touchpoints– Your customer can be using any device to look for services, hence it is necessary for you to have multiple touchpoints. Because of the advancements today, it is possible to order products using aggregator apps, websites, social media apps as well as with the help of calls/texts. It is important for you to offer multiple of these touch-points to ensure comfortable ordering for your customers. 
• Saying No Is Important Sometimes– Although it may be tempting to say yes in order to keep your customer, it may be more harmful if you say yes and then end up not being able to live up to your promise. You should always believe in under-promising and over-delivering. It is impossible to please everybody and in doing so you allow for the same thing to happen again and again.
• Get As Many Partnerships As You Can– Having the right kind of partnerships is important. It is also necessary to have multiple tie-ups with retailers, this allows customers to have ample options. 
• Make Customer Experience Your Priority– When you are working in an aggregator model where you don’t own any assets, the kind of service you provide is what sets you apart. Make sure you are focussing on your service quality. Work towards improving individual customer experience as these people can go on and become advocates for you.
• Have A Clear Revenue Model– Make sure you are aware of the market and the competitors before you select your revenue model. If you are charging too much commission, your consumers can run away from you. 
• Train Your Employees– Your employees and delivery personnel will be your last touch-points, therefore it is necessary to make sure they are trained adequately. They may make or break your impression in front of the customers. These people represent your brand, make sure their behavior represents your brand and your company’s ideologies. 

Don’ts

• Don’t Be Stuck To Geography– Many companies get too stuck to the geography where they function and end up not being able to scale their business. Make sure you are focussing on your locality but still leaving some room for future growth prospects.
• Entering The Market Without Any Focus– Stepping into a hyperlocal business may seem easy because you don’t need a large capital. But if there’s one thing that can kill your business fast it’s entering the market without having knowledge and doing prior research. Each area is different and in order to function well in that area, you need to understand the people of the area and research their buying patterns as well as behavior. It is a cut-throat market with enough competition and you need to give consumers some reason to leave other competitors and avail services from you.
• Fewer Investments In Marketing– Investing money in a business and it’s product seems like the right thing to do but companies generally don’t believe in investing money towards marketing or human resource function. They don’t see a point in the same. But when your company is entirely online, it becomes important to invest in marketing your brand. Making the right investment in marketing will make sure that consumers are aware of your brand, it also reduces their apprehension about getting products delivered online. 
• Inefficient Last-Mile Delivery– We know that the function of delivery and the people who deliver your products can be the last touch-point for a consumer as well as the thing they remember you by, so if you have problems with your last-mile delivery your entire impression in front of your customer will go down. This industry is known for its quick delivery and impeccable service and customers are not willing to settle for anything less than that.
• Not Enough Tie-Ups– Your tie-ups and relations make your business strong. They improve your brand and show people that other companies and retailers trust you. Tie-ups can be in the form of retailers, advertisers as well as the delivery partners. They help you improve your service, attract more customers, and offer the best products. 

As people become more tech-savvy and accepting of technology, they also become more open to using services like hyperlocal deliveries. They are already using on-demand apps in other areas of their lives and now they are starting to use them for delivery of local products as well. Make sure you are ready for this wave of change.

The hyper-local industry is going to keep growing in the near future, so if there ever was a right time to enter the market it is now. You must enter the market before it reaches its pinnacle as there are still opportunities for new companies to come in and fulfill needs that have not yet been fulfilled. If you do decide to enter the market, make sure you are aware of the do’s and don’ts of the industry. Be mindful of the mistakes you can make and avoid them from happening. On top of that, make sure you have the right blend of partnerships, on-point targeting, app experience, and the right business model. If you have this set in place, there’s no stopping you or your business from reaching the success it deserves.