The rise of hyperlocal deliveries and its benefits for e-commerce

January 21, 2022

The market share of hyperlocal delivery services worldwide is estimated to reach 3634.3 billion USD by 2027. That’s a 17.9% CAGR from 2021 to 2027. Quite literally then, hyperlocal delivery is taking the world by storm. Naturally, more and more eCommerce businesses and 3PLs are rushing to include hyperlocal delivery in their service repertoire. But the first industry to jump on the hyperlocal delivery bandwagon were food delivery businesses. And with good reason, writes Lokesh Kumar of ClickPost.

What is hyperlocal delivery & how did food delivery dominate the hyperlocal market
Hyperlocal delivery’s unique feature is that it can provide lightning-fast deliveries within a limited geographical area, say 5-15 km, by sourcing products directly from the local vendors. This feature immediately fell in line with food delivery businesses because customers tend to order food when they are starting to get hungry. And the best way to keep those customers happy is by delivering steaming hot food as soon as possible. But this was only the beginning.

In 2014, with the entry of major restaurant aggregators like Zomato, Dunzo and Swiggy, the hyperlocal delivery market exploded. Hyperlocal became the go-to service for food delivery businesses all over the world. In fact, the number of online food orders increased by 56% from 2019 to 2020. This was before the pandemic began and changed the face of online delivery forever.

Changing Consumer Behaviour
For the past 30 years since it has been operational, eCommerce has never changed as much as it did in the past 2 years since the pandemic began.

As countries went into lockdowns and shops closed down, customers resorted to online shopping to meet their daily needs. In fact, compared with May 2019, eCommerce sales more than doubled in the year, seeing a 110.8% increase. Even tier II and tier III cities that were previously outside the ambit of online commerce have contributed heavily to its popularity during the pandemic. A lot of that was possible because of food, pharmaceutical and grocery companies offering quick hyperlocal deliveries to customers.

Call it the Amazon effect or the success of hyperlocal deliveries, the pandemic completely changed consumer behaviour. Today’s customers are not happy with long estimated dates of delivery. In fact, shipping costs and longer EDDs are two of the biggest reasons for cart abandonment. As a result, eCommerce businesses and logistics partners have had to figure out ways to meet rising customer expectations.

Hyperlocal delivery is an attractive and truly potent way of delivering orders to customers at the earliest. Most hyperlocal deliveries will take anywhere between 45 minutes to a few hours for order delivery depending on the geographical area and the proximity of local stores.

How Hyperlocal Delivery Companies Have Changed Over the Years
Some noteworthy hyperlocal delivery companies that have brought on a revolution in the eCommerce order delivery space are Zomato, Swiggy, Dunzo, Blowhorn, Wefast, Grab, Pidge, Grofers, etc. Barring a few, most of these hyperlocal delivery companies have diversified to provide delivery of items outside food, pharmaceuticals and groceries.

Hyperlocal delivery companies, such as the ones listed above, integrate with ecommerce companies to deliver goods of several different kinds. Not only does it enhance customer experience, but it also saves e-commerce stores a lot of time and money by getting rid of the entire warehousing and transportation process. The only limitation for hyperlocal delivery is the size of the order being delivered. Order sizes in hyperlocal delivery don’t usually go above 10-12 kgs.

Biggest Challenges to Hyperlocal Delivery
It took some time but the eCommerce industry is finally starting to appreciate the benefits of hyperlocal delivery even outside of essential goods. After all, no customer will be unhappy to receive their orders within a few hours!

The question to ask then is, how viable is hyperlocal delivery for my eCommerce business. And yes, being a highly specialised service, hyperlocal delivery does face some challenges.

• Inefficient Management of Delivery Operations - In hyperlocal delivery, orders are usually delivered by the local vendor’s staff or a delivery partner hired by the eCommerce business. In the former case, delivery operations can be hindered if the shops have too many visitors or fewer staff to take care of deliveries.

• Poor Route Management - Being able to track down your customers and find the shortest possible route to their destination is the only way to fastest delivery. However, a lack of advanced technology with proper tracking mechanisms can mess up delivery times.

• Separate Integrations with Multiple Vendors or Delivery Partners - For eCommerce businesses wanting to go hyperlocal, integrating with 3PLs and local vendors separately can be a chore. Intelligent SaaS platforms can help in scenarios by integrating with several hyperlocal delivery companies in one go. This will save your business both time and money.

Is Hyperlocal Delivery the Way Forward?
With the advancement in blockchain, AI, ML and big data, services like hyperlocal delivery will surely increase because it has the capability of providing superfast deliveries within a small geographical area. It also has the potential of offering customers a mix of both the traditional shopping experience from physical stores as well the new age model of online shopping. Thereby imbuing the shopping experience with warmth, options and fast availability. Whether hyperlocal delivery will become the norm of future e-commerce remains to be seen. But one thing we all can be certain of is the immense benefits it provides to e-commerce shippers and local shops, and the way it has revolutionized the world of online commerce.

What is absolutely essential to remember when it comes to hyperlocal delivery is that it provides much needed delivery services within small geographical areas. For all the benefit it provides to local vendors, it is also extremely useful to larger ecommerce enterprises when it comes to the distribution of goods. Hyperlocal delivery ensures greater usage of stock as well as other resources in the supply chain. And with the help of technology, hyperlocal delivery solutions are becoming more convenient and therefore, the preferred choice of customers.

Lokesh Kumar is the head of sales at ClickPost

The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Indian Transport & Logistics News