Hyper Local: A Term Loved by Customers and Investors Alike

Hyper local service providers are delivering comfort, convenience and quality to the customers, the three things that rank high on their wish list.
Hyper Local: A Term Loved by Customers and Investors Alike

‘Stop Wishing, Start Ordering’ is the mantra for hyper local industry. Hyper local service providers, not known to many until the beginning of 2015, were the underdogs in virtual businesses. Now, imagine delivery of your preferred products (be it food, grocery, laundry, medicines, CDIT etc) at your beck and call, and also services of local plumbers, carpenters, yoga instructors and gardeners etc, available at a cost, at the tap of a button on your phone. That’s convenience delivered, quickly!

While it cannot be said yet that a hyper local player in India – a country that presents a good opportunity in terms of revolutionising the e-commerce space with its diversified demography, large consumer base and mobile-first adoption – is outsmarting and giving large horizontal players a run for their money; the time, they say, is ripe.

Opportunities in the ‘disruptive’ space

The hyper local commerce boom has resulted from overcoming the many challenges that large virtual commerce players face-of quicker deliveries, faster returns, trust of the neighbourhood shopkeeper and safety of perishable items. Although eCommerce has captured the imagination of the people of India, ‘Trust’ plays a big role in deciding their loyalty even towards the largest of horizontal players, and that vulnerability is what the hyper local players have succeeded in identifying and acting upon. It is borne from the scope of opportunity that the hyper local firm–merchant collaboration offers.

The customers can benefit from the hyper local model in terms of comfort, convenience and relevance. “Customers can select from a wide assortment of groceries, fruits and vegetables, cosmetics, electronics, bakery items, flowers and much more. Users can order through the easy-to-use mobile application and get everything delivered to their doorstep, rather quickly. With increasing inclination towards shopping on-the-go, the ability to provide a large and viable business solution becomes high for us. Customers increasingly want things on-demand and many start-ups are providing such solutions,” said Albinder Dhindsa, Co-founder at Grofers.

Grofers is an on-demand delivery service that connects consumers with local merchants in the neighbourhood. The firm brings merchants online and helps them grow their customer base.

 The ‘comfort’ of choosing from a wide range of services and products, the ‘convenience’ of getting them at the said time by way of tapping buttons on their mobiles and the ‘relevance’ of the product/ service delivered, as the hyper local player will customise their product offerings based on customer’s location, which plays a big part in offering the right kind of product/ service. The merchants, on the other hand, can get benefitted from a wider audience they are able to reach without spending on advertising, marketing, logistics and storage. 

Investor traction surpassing expectation

Since the start of 2015, Sequoia Capital has invested in as many as three hyper local players: Grofers, PepperTap and TinyOwl. The growing interest in the space can be gauged from the fact that firms like SpoonJoy, Zopper, LocalOye, UrbanClap, and Swiggy have gone through a rapid evolution as they have all secured a decent funding.

In April, Sequoia Capital and Tiger Global invested $35 million in Grofers; Zopper secured the second-highest funding-$20 million was invested by Tiger Global and Nirvana Ventures in its Series B funding, and earlier this year, Swiggy secured $16.5 million from SAIF Partners, Norwest Venture Partners and Accel Partners, India. “Zopper raised $20 million through its Series B funding, with Tiger Global and Nirvana Ventures Advisors again backing the investment. We are looking to undertake our rapid expansion strategy with the latest release and are also looking forward to bring top talent onboard our leadership team through strategic hiring,” said Zopper’s Co-founder Neeraj Jain.

Zopper  empowers retailers with a merchant app to actively populate and push their best product prices, whilst at the same time, also increasing user convenience by displaying the best local prices and cutting down on shop-hopping.

“The same eCommerce battles that were fought in 2012-13 are going to be fought in the services done in the hyper local sector in 2015-16,” admitted Aditya Rao, LocalOye’s sole founder. You will definitely see a lot of action, and of course, a lot of growth. “I think in 2016 there will be a lot of M&A’s happening between some of the biggest players in the space. The space is surely heating up,” Rao added, who claims that LocalOye is a Flipkart of services. Competing with other on-demand hyper local platforms such as UrbanClap, Housejoy, Timesaverz, TaskBob etc, this is how LocalOye’s model works: A customer logs onto the app to look out for a personal trainer and with the help of the recommendation engine finds a suitable profile. He finalises the trainer he thinks is best for him and connects with him.

Why is hyper local a hit among the masses?

While hyper local space is not well organised as many small vendors and service providers are not online, today’s consumer, on the other side, is tech savvy and using online shopping for convenience and to save time. “The customer still prefers the trust factor offered by a brick-and-mortar shop in their neighbourhood. Hyper local shopping solves the problems and provides a convenience of online shopping and later touch and feel before paying to merchants,” says Bhartesh Chhibbar, Founder, HeyBiz, an engaging mobile application for users and businesses. Users can connect, follow, chat and buy services or product from nearby businesses.

Mobile could be another reason behind the spurt of hyper local activity in the country. According to a recent report published by Internet and Mobile Association of India (IAMAI), the number of Internet users has reached 354 million in June 2015, out of which, 60 per cent access the Internet via their mobiles.

“We are currently driving 2,500 requests on a daily basis, which in the next two months; we will easily take to 5,000 requests per day. I feel the tide is going to be in favour of mCommerce, we can see that happening with food and wellness veering towards the mCommerce direction,” said Varun Khaitan, Co-founder, UrbanClap, a horizontal services player.

Challenges in the hyper local segment

“Regulated MRP (maximum retail price) which limits our margins, and technophobic delivery staff were among the other challenges we faced when we started out with our operations,” pointed out Navneet Singh, CEO and Co-founder, PepperTap. The first challenge hyper local companies have to tackle is maintaining a consistency in terms of profitability, followed by choosing the right kinds of partners and delivery staff.

Another challenge would be the parallel rise of e-commerce giants, who are modelling the express-delivery verticals in the hyper local segment. While Amazon has started delivering from kiranas, Ola is expanding to grocery deliveries. Also, soon entering the space are Flipkart, Paytm  and Snapdeal, experts say.

Bright future lies in seamless delivery

Although a lot of action and competition is expected in the coming year, the major focus of players such as UrbanClap, TaskBob and LocalOye, firms which majorly deal in services, would be category expansion and providing service professionals from as many segments as possible, and LocalBanya, PepperTap, Grofers and BigBasket, firms that are connecting consumers with neighbourhood grocery stores would be expanding to new locations.

Challenges aside, the firms which are able to attract the right partners and provide a seamless delivery experience to the customers are going to connect with their customers better.

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