December 28, 2023

Growth of Hyperlocal Delivery: An Era of Quick Commerce

The hyperlocal delivery market is growing rapidly. The key factors driving the growth of this market are increasing demand for online shopping and changing consumer behavior towards goods and services. 

Furthermore, increased preference for quicker delivery of goods has led to the development of new technologies such as drones, autonomous vehicles, and robots. The popularity of e-commerce platforms such as Amazon Prime Now, Walmart Grocery, etc., has also made consumers more comfortable with the idea of paying for a service rather than owning their own cars. 

All these factors indicate that in the near future there will be an increase in demand for hyperlocal delivery services globally which can be easily met by existing providers operating in this market segment today.

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The Hyperlocal Delivery Market Size

  • The hyperlocal delivery industry was worth USD 1,324 billion in 2019 and is expected to grow to USD 3,634 billion by 2027, with a CAGR of 17.9% (source: allied market research) throughout that time.
  • The hyperlocal delivery apps market is valued at USD 952.7M in 2021 and is expected to reach USD 8,856.6M by 2032, growing at a CAGR of 22.6% over the forecast period (2022 – 2032).

Several factors have been driving the growth of the hyperlocal services market, including smartphones, urbanization, changing consumer preferences, and improved lifestyles. This is mainly due to the growth of e-commerce business funding and business digitalization trends. Moreover, many e-commerce giants are adopting and acquiring hyperlocal businesses to reduce transportation costs and minimize significant delivery times.

As a result of the proliferation of e-commerce platforms, online marketplaces, and delivery-based enterprises, consumer expectations are increasing. Companies that deliver faster than their competitors tend to attract more customers, so the hyperlocal delivery model opens up a slew of opportunities for entrepreneurs.

Increasingly well-funded start-ups, curated products and services, and on-demand delivery have contributed to hyperlocal e-commerce's popularity. Their success has led to interest and participation by some of the large business houses and online giants. Google shows that the bulk of information people need is from within one kilometer or a few more.

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What is Hyperlocal Delivery?

Hyperlocal delivery is a business model that allows customers to order products and services from local stores, restaurants and other businesses. Customers can place orders online or through an app, and the delivery person will bring the products to their doorsteps.

Hyperlocal delivery uses innovative technology for two-way communication between retailers and customers. It's a convenient way for consumers to shop at local stores without leaving their homes or even getting out of bed!

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Hyperlocal Delivery Model

Hyperlocal delivery is a type of local delivery. It's the subset of same-day, next-day, and scheduled deliveries that are made to the customer's doorstep. The other types of local deliveries include:

  • Same-Day: Which means that the goods are delivered within 24 hours from the time they are ordered by the customer
  • Next-Day: When goods are delivered within 48 hours from time order was placed with merchant
  • Scheduled: When goods are delivered at specified times agreed upon by merchant and customer

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Industry Use Case For Hyperlocal Delivery

Following are the key quick commerce categories

- Grocery Stores

- Pharmacy

- Courier Companies

- Gifts & Flowers Brands

- Food Items

Quick Commerce Categories

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Why choose hyperlocal delivery?

As a new business model, hyperlocal has been adopted rapidly because it offers great advantages that common e-commerce platforms cannot. Customers can get goods delivered quickly to their homes. It has more credibility since products are delivered from local shops to local customers.

It is also important to note that hyperlocal businesses have a physical location prior to setting up an online presence, so customers can visit them, which makes hyperlocal markets trustworthy.

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Benefits of Hyperlocal Delivery

Competitive Unique Selling Proposition: 

Businesses specializing in Quick Commerce get new value propositions because customers who need immediate delivery are willing to try new brands and order from new stores. Additionally, Q-Commerce businesses can compete with global marketplaces and brick-and-mortar businesses.

Increased margins: 

Most online shoppers spent extra money to get convenient delivery of the products they needed during the pandemic. These customers also paid extra for on-demand fulfillment. 

Quick Commerce businesses can drive sales for their most profitable product lines since Quick Commerce has a relatively small product assortment. Because wealthier demographics require convenience, there is a potential for higher margins. Professionals who are time-pressed prefer convenience over discounts, for instance. 

The customer experience is paramount: 

Quick commerce allows retailers to meet customer expectations and exceed them, fostering brand loyalty. Customer pain points such as running out of food before a party or buying a birthday gift for a friend can be addressed with quick commerce. It can help people who can’t make it to the shop or stock up essential items.

hyperlocal delivery all under 60 minutes

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Challenges of hyperlocal delivery

In the era of hyperlocal delivery, there are a few challenges that still need to be addressed and overcome.

Delivery costs: The cost of delivering goods to customers can be reduced if companies use technologies like drones or robots. However, these solutions are not feasible in some cases because they are too expensive and require extensive infrastructure. In addition, the security risks posed by such solutions must be addressed before they can be widely adopted by companies.

Delivery time: The time it takes for an order to arrive at a customer’s doorstep is also an important factor for retailers as it has been shown that people prefer faster deliveries over cheaper ones (even though there is no correlation between the two).

Efficiency: The efficiency of an order fulfillment system depends on several factors including its ability to handle high volumes without any downtime or delays resulting from insufficient capacity.

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Future of Hyperlocal Retail

The following is the future growth expected in Hyperlocal Retail:

Hyperlocal delivery of non-essential products

Some retail outlets will expand their hyperlocal deliveries to clothing, cosmetics, and other categories post COVID-19 pandemic.

Hyperlocal deliveries will shift to rural areas

As hyperlocal ecommerce evolves, under-tapped two-tier and three-tier cities and rural areas will benefit with expansion of hyperlocal deliveries.

Retail outlets will expand their storage capacity

To satisfy omnichannel customer needs, retail stores will expand their storage space near their physical location or near other areas to which these retailers want to expand to.

An increase in the use of Artificial Intelligence

AI adoption by local retail businesses is expected to increase.

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How to enables Hyperlocal Retail

XStak’s product Headless frontend provides complete functionality to enable retailers to start hyperlocal delivery operations. Best use case of Headless platform is, software use in these retail industries like grocery chains, pharmacy, supermarkets and hypermarkets.

Headless platfrom provides a consumer web and mobile app to retailers on which retailers can make their catalog visible to a geo-restricted customer base. A customer can view all nearby stores of retailers and the inventory present in those stores in the consumer app. He / She can visit any store on the app and add items to his cart. 

Then there is a packer app for the packer role. When a consumer places an order in the store, all packers of this store receive notifications on whether they want to pack this order. Once a packer accepts an order, he can see the items requested by the customer. He packs the order based on this list and then marks it done. After the packer has packed this order, the order is sent to the next step for further processing.

Next is the delivery app for the delivery role. When a packer packs an order, all delivery guys of that store receive a notification whether they want to deliver this order. Once a delivery guy accepts an order, the best route to the customer's address gets opened on the map and he can deliver the order. Once he delivers the order, he can mark it as done. 

All these activities are updated in real-time on a master admin dashboard which can be the store manager or supply chain manager. In addition, Headless platfrom provides extensive business intelligence into metrics like average basket value, no of customers, repeating customers, conversion rate, sell-through rate, retention by cohort, total GMV, not-packed GMV, total orders, completed orders, lead time, average packaging time, average transit time, number of orders packed/delivered per employee in a day, top 5 categories sold and many others.

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You can use this information to your advantage. The way we shop and get our goods will change in the coming years. If you want to be prepared for the future of commerce, hyperlocal delivery is an important part of that preparation. Look for ways to incorporate hyperlocal delivery into your business model before it becomes too late.

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