Since the outbreak of COVID-19 pandemic, retailers are looking for new ways to ensure continued access of essential products to customers. The self-quarantine and social distancing norms have opened new doors for the rise of hyperlocal delivery platforms.
The toughest segment to penetrate within online commerce is hyperlocal. But, due to various reasons—rise of technology, COVID-19 pandemic, experimentative customers, etc— the hyperlocal model is now a business reality.
What is a hyperlocal delivery?
Hyperlocal delivery is a delivery service that is confined to a certain geographical area that connects local retailers and merchants with customers. Its basic principle works on catering to the needs of customers in a specific geographical limit. The upsurge in technology has caused the hyperlocal deliveries to cover many possible streams like:
- Food delivery
- Grocery Delivery
- Vegetable and Fruit Delivery
- Home services like cleaning, repair, salon services, pest control, maintenance
- Pharmacy, etc.
The major USP of hyperlocal delivery is the geographical boundary and the delivery timeline.
An e-commerce model functions nationally and internationally. It cannot fulfill immediate needs and burning demands of customers. It operates on a larger scale for fulfilling customer needs that are not too urgent.
For instance, if a customer wants a sanitizer on an urgent basis, they cannot get it from a regular e-commerce vendor. But a local vendor can accept this order, and deliver the product to the customer within a minimum timeframe like an hour or two, or same-day delivery or next-day delivery.
Why have hyperlocal deliveries become crucial during COVID-19 pandemic?
Hyperlocal business model has greatly reduced the friction by offering last-mile delivery expertise to local stores. The local retail outlets involved in hyperlocal delivery helped in keeping the supply chain intact with minimal disruptions during these chaotic times.
Here are some reasons hyperlocal deliveries have become crucial during the coronavirus pandemic.
Urgent need for essential items
Local shops are the storehouses for essential products like groceries, medicines, medical equipment, hygiene products, etc. With lockdowns prohibiting customers from visiting shops for weekly grocery purchases, hyperlocal delivery has turned out to be a game-changer.
Hyperlocal delivery ensures that essential goods are available to customers at their doorstep without any hassles. It has become the most convenient option to access high-priority products quickly, thereby enabling businesses to stay afloat in the market during COVID-19 times.
Retailer-friendly delivery business model
As time gets saved on short distances traveled, hyperlocal delivery has resulted in the usage of fewer delivery resources. It has enabled the sellers to optimize cost, time and resources, thereby catering to more customers.
Enabling quicker deliveries at less cost
Hyperlocal delivery has made many retail outlets transform their shops into micro-fulfillment centers. These ‘mini warehouses’ have the best shot at fulfilling customer demands quickly and cost effectively.
‘Near me’ Google search gaining more search volume
Gone are the days where an individual asked friendly neighbors the direction to the closest shop, hotel, etc. in cities and towns.
Most people in towns and metro cities are searching for the ‘near me’ option on Google search to get their needs fulfilled. Today’s consumers look for a convenient blend of physical reassurance and online comfort. This ‘phygital’ business model where neighbourhood retail stores adopt online presence is paying rich dividends for many retail outlets.
The rising consumer demand with curated products, well-funded startups and on-demand delivery services has led to an increased interest in hyperlocal e-commerce. These factors have opened up an increased participation of large business houses and online giants in the hyperlocal businesses.
What is the future of hyperlocal delivery post-COVID-19?
Postthe COVID-19 pandemic, retail businesses adopting hyperlocal delivery models will become more accurate in audience targeting. They will gain increased traction in demographics and psychographics segmentation of their customers.
Many e-commerce and retail giants are moving towards the hyperlocal delivery model because of the customer loyalty these small locality stores enjoy. Hyperlocal delivery offers them an opportunity to deepen their customer engagement and expand their customer base. The future of hyperlocal delivery is looking much brighter post the COVID-19 era.
E-commerce giants will redefine last-mile delivery
After the COVID-19 pandemic, e-commerce giants will be re-exploring new opportunities in the last-mile delivery. They will build a combination of locally owned warehouses that are integrated with local stores for a robust supply chain framework.
The future of hyperlocal services will witness the entry of large e-commerce players building an ecosystem with an app-based hyperlocal delivery service. They will build a collaborative and giant hyperlocal delivery environment to penetrate into smaller localities. They may even acquire retail stores in different cities and build hyperlocal delivery chains.
Hyperlocal deliveries will be explored in non-essential goods
When we enter the post-COVID-19 period, some retail outlets will extend the hyperlocal deliveries to categories like apparel, cosmetics, liquor, etc. Instead of being exposed to large crowds in places like malls, fashion stores or supermarkets, businesses could think of executing a hyperlocal delivery strategy.
Hyperlocal deliveries will help non-essential retail businesses expand their online presence and broaden their customer base. It will offer a unique opportunity for businesses to utilize new technologies and increase their customer reach.
Hyperlocal deliveries will move towards rural areas
The next evolution of hyperlocal e-commerce models will be in under-tapped rural areas. Rural e-commerce will be a billion-earning industry for hyperlocal deliveries in the years to come.
Retail outlets will expand storage spaces
In order to keep product flows perennial, retail outlets will consider expanding their storage facilities. The coronavirus pandemic has led many retail outlets to function as dark stores and fulfill only the online customer segment. This scenario will change once the global population moves into the post-coronavirus phase.
We may see retail stores creating separate storage spaces near their physical stores for hyperlocal delivery and omnichannel options like BOPIS (Buy Online and Pick Up In Store).
Increase in the adoption of AI-based technologies
The hyperlocal delivery business model will see an increased adoption of Artificial Intelligence (AI) technologies. The profitability of businesses involved in hyperlocal delivery depends on two factors. They are:
- Route Density: The amount of packages delivered on a given delivery run
- Drop size: The amount of parcels or items delivered at each stop.
Real-time dynamic routing software is an application of AI that can majorly benefit the hyperlocal delivery industry. It enables businesses to execute on-time and cost-effective deliveries leading to a quick turnaround time. It factors various constraints like pickup windows, delivery window preferences, no-entry time, waiting costs, tonnage, driver-route mapping, etc. before designing optimal route plans.
This dynamic routing software enables businesses to assign hyperlocal orders based on driver proximity, service time constraints and capacity. By proactively assigning highly efficient routes, it helps them reduce empty miles driven, optimize the productivity of delivery professionals and eliminate idling time of vehicles.
AI helps hyperlocal businesses with improved network planning, capacity planning and demand forecasting. Its insights help them rightsize the total number of vehicles needed for transport in a particular route and direct them to delivery locations where demand is expected. It cuts down operational costs and reduces complexity in the hyperlocal supply chain.
Delivery Robots and Autonomous Vehicles
As hyperlocal markets get specialized and more diversified, logistics businesses will leverage delivery robots. They aim to provide delightful customer experiences with faster and convenient deliveries. Food delivery startups like Postmates, Doordash and Just Eat have already started to adopt this technology.
Logistics companies are working on introducing upgraded delivery bots for hyperlocal delivery services. They are teaming up with research and development companies in the tech industry to help retailers address their customers’ rising expectations.
It is a breakthrough innovation that enables companies to simplify last-mile delivery complexities.
Air Delivery Drones
After the COVID-19 pandemic, hyperlocal logistics companies might team up with aviation companies to build delivery drones. The department of transportation in North Carolina held a virtual public meeting to use cargo drones in response to the pandemic.
Last year, Consumer Value Store (CVS) tied-up with United Parcel Service (UPS) to deliver prescription medicines to the Florida retirement community that was under lockdown due to the COVID-19. This Florida retirement community is the US’s largest retirement community with over 135,000 people.
Drones are the best tech tool that enable faster delivery options to medicines that are time-sensitive while supporting social distancing. Many retail giants like Dominos and Walmart, etc. are partnering with tech delivery startups to launch drone deliveries in the US.
In the future, microhub warehouses and retail outlets will have drones facilities that can serve a particular geographical area. Drone delivery devices and applications will see more applications in the pharmaceutical hyperlocal industry.
Businesses want a secure and confidential information sharing that reduces fraud with minimal intermediary control. Blockchain technology can create a significant impact in hyperlocal delivery processes where a centralized control is necessary.
Hyperlocal businesses are slowly moving towards a distributed application platform like blockchain for smooth, secure and control-free delivery processes. It paves way for secure transactions that business stakeholders can monitor and verify without any manual intervention.
Blockchain creates a communication layer that enables businesses to communicate, track and run logistics operations smoothly and effectively. It makes tedious supply chain processes simpler. It is beneficial in areas of pricing, asset utilization, fleet optimization, fleet maintenance and load matching.
Blockchain technology optimizes the delivery process and minimizes complexity by removing intermediary-driven hassles from hyperlocal logistics. It supports an automated, streamlined and an error-free process for last-mile logistics. With comprehensive vehicle performance tracking, it helps to increase the efficiency of the entire fleet.
Hyperlocal delivery: Giant leaps not expected, but steady progress will be made
Beyond many retail giants, small scale retailers are also slowly adopting logistics technology into their hyperlocal delivery operations. Though the future is uncertain and unpredictable, a lot more advancements are going to make the hyperlocal delivery logistics space more convenient and eco-friendly.
The future will see a slow and steady adoption of new technologies by retailers as there are many barriers to be overcome such as high cost, complexity of implementation, scalability and resistance towards new technologies.
Logistics technology suppliers should focus on providing robustness, scalability and reliability of their products and services.
Locus’s logistics software enables hyperlocal businesses to effectively manage their logistics operations. It assists in swift decision-making in logistics operations through notifications and alerts of on-ground conditions. Its dynamic route recommendations enable hyperlocal businesses to improve their on-time deliveries and minimize last-mile logistics costs.
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