Overview of Hyperlocal Delivery Business Model and Its Working
It would seem with a term like hyperlocal delivery, the meaning is quite obvious: very fast delivery on a local scale. But the hyperlocal delivery market and business in any given locality create its very own ecosystem, made up of a connection of resources, that is constantly growing and changing to survive. The term “hyperlocal” means concentrated within a specified geographical area, typically a small one. The range for hyperlocal delivery services can be anywhere between 15kms and 50 km, depending on the needs of the company, resources available, customer requirements and many other factors.
The hyperlocal delivery business model shot to prominence in 2014 with the advent of Swiggy. Though it was not the first food aggregator business model, it provided services with a speed, efficiency and transparency previously unseen. Since then, hyperlocal delivery has made its way into most major industries, including groceries, pharmaceuticals, electronics and other services. The eCommerce logistics industry is also expanding to accommodate hyperlocal delivery services, especially for use by eCommerce businesses. eCommerce businesses can also operate, maintain and offer their own hyperlocal delivery services if they are equipped to do the same.
In this article, we’ll be taking a look at the list of different factors that need to be considered when an eCommerce business takes the leap into the hyperlocal delivery space. From resources to workflows, we’ll give you the go-down on what you’ll need to get started developing your hyperlocal delivery business model.
How does the Hyperlocal Delivery Business Model Work?
For medium to large eCommerce businesses that have been in the game for a good many years, the hyperlocal delivery business model is yet another step in the direction of success. Smaller eCommerce businesses will need to place reliance on shipping partners and third-party logistics companies (3PLs) like Shadowfax, Bikxie, Blowhorn, XpressBees and a few others that offer hyperlocal delivery services. Larger retail businesses typically have the scale of resources needed to manage and operate their own hyperlocal delivery services within certain localities. For those companies, these are the major elements that need to be determined when setting up and operating a hyperlocal delivery business model.
1. Serviceable Locations
The first thing an eCommerce business needs to do is determine the area and locations that are serviceable by them. This includes determining how many of their stores are located in a given area, what the on-ground workforce is for each store (i.e., how many employees and how many employees can be dedicated to the delivery of orders) and what their delivery range is. Some stores may only have a short delivery range of under 10 kms, while others may be able to handle large scale deliveries over distances of 15km and higher. The delivery range can also be limited by state regulations, for example, in cities located on the borders of two states. Hyperlocal delivery ranges can vary between 5 to 50kms depending on the consumer requirements and reach of delivery agents.
2. Selection of Store Based on Inventory
Once an order has been placed, the next thing that needs to be done is to determine from which store that order will be fulfilled. This is typically dependent on the inventory and stock available in the store, in addition to the location of the store. For example, if a selected locality for hyperlocal delivery has 2 stores located within it, the first store may be out of stock of the ordered item, making the second store the obvious choice. If the store’s own workforce will be used to deliver the order, then that could also influence the choice of store.
3. Maintain a Management Portal
Hyperlocal delivery is a great way to expand your customer base and business growth. This is because it offers greater opportunities for faster deliveries which means more orders being placed on a daily basis. This is why order management becomes such an important part of the process. Maintaining a fully-functional management system or online portal streamlines the process of tracking orders immensely. You can monitor your workflow better as well as that of delivery agents to determine newer and better ways to optimise fulfillment and increase efficiency. These portals are especially useful in managing your on-ground workforce.
4. Determining Mode of Delivery
There are 2 possible ways to enable hyperlocal delivery for any eCommerce business operating out of their stores in different localities. The first option is to make use of a shipping partner enabled to carry out hyperlocal deliveries. Courier services provider companies like Shadowfax, XpressBees, Pidge, Blowhorn and Dunzo are big favorites in this sector of delivery. The alternative is to use the existing workforce at each store, which cuts down the cost of using external delivery agents.
In most cases, you can make use of both options. This means that, after an order is placed, you can determine which store based on inventory and which delivery option to use, i.e., a logistics partner or your own workforce, based on the number of employees available for delivery at the store. For example, if a particular store receives 15 orders a day, but has only 1 delivery agent available on-ground, 5 orders can be assigned to the on-ground delivery agent and the remaining 10 can be handled by the respective 3PL.
Hyperlocal delivery first began its rocket ride to popularity in 2014 and has now become a much sought-after delivery service for numerous e-commerce businesses. It is especially viable for large eCommerce shipping companies that have outlet stores spread out across the country. Using a combination of on-ground resources and eCommerce logistics companies, businesses can provide speedy and efficient delivery to customers across short distances. But first, it is important to designate these areas clearly, keep careful track of inventory in each store, and manage on-ground workforces via a management portal. With so much still being understood about how to optimize hyperlocal deliveries, these steps are an absolute must.