What do you mean by Hyperlocal Delivery?
The meaning of hyperlocal is something (Community, organization, service etc) that is confined to a certain geographical area .The basic principle on which hyperlocal works is geography and time. Hyperlocal now is been used in several industries as a means to deliver commodities in a faster way by focusing on that particular geographic area. Hyperlocal food delivery is the concept in which there’s an aggregator/platform which lists all the restaurants in that particular area and provides them with the option of delivering food to the consumers in that area by providing them with delivery personnel.
When Dominoes and PizzaHut started food delivery, the industry went crazy with the idea of getting your food delivered to your doorstep with just a call. By 2014, a new era of food delivery service started with the launch of startups like Swiggy, Zomato and UberEats. The idea was pretty simple to get all the restaurants in the particular area to list their restaurants on the platform and people could place orders for different restaurants on just one single platform and they will get in delivered in under 30mins. It was a blessing in disguise for the consumers. Think about it, right. To get the option of ordering from your favorite restaurants or on the basis of your mood by just going on a single platform and selecting the food items and placing your order. You don’t have to go through the hassle of calling up different restaurants, asking them for menu, if they have delivery option available or not or what if you’re very busy with some chore and you forget to cook food and you are really tired, all you have to do is to open the app select the food items and within 30 minutes you get it. Solves so many problems eh?
The Rise & Fall of Startups in this Space
PepperTap, Opinio, TinyOwl, Foodpanda India—well-funded hyperlocal delivery startups closing operations in India are legion. Several ran out of gas and got picked off by bigger players—Runnr by Zomato, Scootsy by Swiggy, Grab by Reliance and Pickingo by Shadowfax, for example.
Yet investors thirst doesn’t seem to get satisfied.
With $533 Millions being invested so far this year , following $286 Million last year and a whopping $1.7 Billion in 2018, according to Tracxn Data.
And the majority share of this funding has gone too Swiggy and Zomato the first Startups getting the status of Unicorns , followed by significant funding for concierge app Dunzo, which raised a $28 million series E round recently after its $45 million series D last year, Google being one of them. Despite a lot of startups failing in this space and new local players coming up day everyday , investors still seem optimistic about this space.
Growing Demand
Despite these challenges, the hyperlocal delivery space has seen vigorous action in the year of the pandemic, when the demand for home deliveries went up. Swiggy has expanded into grocery with Swiggy Stores and has a hyperlocal delivery service Swiggy Genie as a counterpoint to Dunzo. A thumbs-up for this space came from a recent Goldman Sachs report that forecast Ebitda (earnings before interst, tax, depreciation and amortization) profitability in FY2022 for the leading players, as they “turn incrementally more constructive".
It’s a constant balancing act between going after scale and expansion, to keep up with rivals or ward off new competitors, while learning to become profitable. Dunzo, for example, claims to have turned profitable in its main city of Bengaluru this year, but has at the same time expanded to seven other cities where the road to profitability remains foggy.
Future Ahead
At a time when the world is looking for new ways of Contactless Delivery, delivery by Drones might prove to be a game-changer. Reports say that if Hyperlocal service providers start the delivery by using drones the industry average delivery time which is 28 mins will reduce to just 15mins.
With Beta testing already taking place as we read, it's just a race in time as to which service provider will start with it first and gain a competitive advantage over others. It’s just about increasing the convenience level for consumers and getting them used to shorter delivery times and increase the stickiness level of consumers.
Both Swiggy and Zomato are heavily investing in Cloud kitchens and are coming up with new offerings like Swiggy Go, an instant package pick up and drop service.
Amazon is now gearing to enter the market in India and is planning to pilot in some urban areas in Bangalore, according to recent reports. In order to cut through the bar that Swiggy and Zomato have already set in the food delivery space, Amazon will have to step up its delivery processes, offer interactive dashboards and features like real-time order tracking. Fine logistics will be the true differentiator in the food delivery game and it will be interesting to see how Amazon’s food delivery service unfolds.
References :
2. https://yourstory.com/mystory/challenges-and-opportunities-of-hyperlocal-ecommer-d8cgujlmig
3. https://locus.sh/resources/bulletin/amazon-plans-to-enter-indian-food-hyperlocal-delivery-market/