Do you know Postmates and UberEATS target the same set of audience? Postmates has just widened their reach by offering to deliver anything, not just food, opening the doors for an on-demand service called ‘hyperlocal’.
But why hyperlocal is the future of the on-demand economy? In this blog, we will try to give a detailed answer on how to build a profitable hyperlocal on-demand delivery app.
A major disrupter in the on-demand economy
In general terms, ‘hyperlocal’ refers to a very specific area, area in proximity of your home or your business or your current location. The term ‘hyper-local commerce’ arrives with the addition of payments and, marketing options available in your vicinity.
A good use case is cataloguing all local grocery and mom-and-pop stores products in a mobile app and choosing channelized workforce to deliver products in the shortest possible time.
New age commerce called ‘hyperlocal’
On-demand services require instant provisioning of goods and services ordered via mobile app If I order something and receive it 3 days after, that’s not on-demand provisioning of services and goods; that is e-commerce, something Amazon and eBay already do. Amazon and eBay are not closely of what I call on-demand.
So to deliver goods on time (for services we already have the ‘Uber’ model), the on-demand economy has taken turn to the ‘hyperlocal’ model of delivery.
As the name suggests, to meet demand, on-demand aggregators build a channelized workforce to deliver products in the shortest time possible. The demanded goods are sourced, locally, from merchants operating out of brick & mortar stores.
The hyperlocal platform forms an instance of sharing economy where the aggregator receives funds in the form of commissions from both the parties involved in the transaction: the buyer and the seller to keep their business rolling, turn out a profit or at least keep up with their operating costs.
To understand the concept, let us bring the typical instance of how grocery is delivered in an on-demand economy with the help of a retail mobility solution.
The ‘hyperlocal’ grocery
‘Little Joe’ survives on pizzas, burgers, and video games. He hasn’t visited a departmental store in months. Since his mother will pay him a visit tomorrow, he has no other option but to visit a nearby grocery store to buy at least basic kitchen necessities.
After a few considerations, he downloaded an app, registered on it, and started ordering grocery online. He picks what items of grocery he needed, makes the payment in the app itself and waits for the order to arrive.
In the meanwhile, the facilitator passes the list of grocery to the delivery partner, who assigns one of his delivery boys to buy the items from a nearby store and deliver it to Little Joe.
While this sound seems too simple to implement, it is easier said than done. But developing a profitable hyperlocal on-demand business idea has its own set of challenges.
Popular hyperlocal delivery business models
Hyperlocal businesses help people to satisfy their daily needs in an advanced way. And that is why it became popular among the global delivery markets. That is why many new entrepreneurs are interested in entering these markets.
But showing interest is not enough, you should be clear about the niche that you want to serve as there are multiple ways to start a hyperlocal delivery business.
Apart from this, you need to think about the business model that you are going to choose for your business. There are multiple business models from which you can select the best depending on your requirements. Let us help you to choose the most appropriate model for your business by discussing them in detail:
Aggregator model
The aggregator model is the first choice of a majority of entrepreneurs as it doesn’t require much capital. In the aggregator model, the delivery startup works as a mediator between the retailer and the customer.
Here the on-demand delivery startup doesn’t have any stock or assets. All it does to offer online customers to the brick and mortar stores and helps these stores to promote their businesses in nearby places.
Mostly, on-demand businesses such as food, grocery, parcel, personal care services, home services, etc. use the aggregator business model.
Single store model
The single store model is generally used by retailers who want to take their well-established business online. In this type of business model, the retailer builds an on-demand delivery app to sell the products he had held with him. Mostly, the food delivery businesses use a single store model.
Dominos, Pizza Hut, HelloFresh, Chipotle, Popeyes, etc. are some popular companies that are using a single store model.
Store pick model
In the store pick model, consumers first place their order online via an on-demand app or the company website. After placing the online order, customers will go to the store to pick their order. The major benefit of this model is that the customers can get deliveries at their own time.
Hybrid model
The hybrid model is a combination of one or more business models. In this model, the store allows you to order products online as well as offer store pick up offers.
What do you need for a hyperlocal marketplace?
On-demand apps have become the centre point of hyperlocal marketplaces. Also, these on-demand apps will soon become the best communication way for both businesses and customers. Moreover, hyperlocal marketplaces use multiple elements and infrastructures. Let us discuss them in detail:
Navigation System
Hyperlocal businesses can utilize the power of real-time tracking and GPS features to grow their profits. These built-in GPS features enable the hyperlocal businesses to provide various information to their customers such as store location, nearby retailers, estimated time, driver location, etc. Due to this, the delivery of products becomes easier for hyperlocal stores.
Integration of multiple payments
Payments are an integral part of any business and the same applies to hyperlocal businesses also. A hyperlocal store owner can integrate multiple payments into its on-demand app to provide a better payment experience to the customers. These payment methods consist of a credit card, debit card, mobile wallet, QR codes etc.
E-commerce platform
To support the sale of the product and services online, hyperlocal retailers need to build a seamless and secure e-commerce platform. An e-commerce platform is software that allows the seller, customer and supplier to communicate effortlessly. There are three types of e-commerce platforms: SaaS (software as a service), PaaS (platform as a service) and on-premise.
However, choosing an e-commerce platform is not an easy task, the hyperlocal business should ensure that their chosen platform contains all the necessary features that allow them to fulfil customer needs.
CRM tools
CRM or customer relationship management is one of the main components of a hyperlocal system that creates a better understanding among the customer, the business and the on-demand delivery service provider. Also, CRM is a medium for communication and grievance resolution.
Apart from this, hyperlocal businesses can leverage CRM tools to segment their customers as per the location. With this, they can create targeted offers for every customer. Also, hyperlocal businesses can use CRM software to record the feedback of their customers.
Logistics
Peak hours are the biggest challenge for hyperlocal delivery businesses. To manage peak hour deliveries, hyperlocal businesses hire more delivery staff to manage the sudden spike. Also, they need to manage the volume of orders efficiently.
However, technology can help hyperlocal businesses to manage logistics during peak delivery times. Logistics optimization and automation software help you manage multiple drops and complex delivery schedules. Also, it makes your logistics process more convenient and cost-efficient.
Read more: Why smart grocery businesses are moving to an app
Building a hyperlocal delivery network
Choose what you want to deliver
You can deliver locally sourced daily items: bread, butter, milk, and eggs. You can deliver items for people with dietary restrictions like Vegans, vegetarians and Gluten intolerants. Or perhaps, you can deliver prepared foods just like Epic apps do. You can deliver only packed food that has price stick to it.
Choose a target audience
With a hyperlocal app, you can target busy professionals who seek gourmet food or hungry high schoolers who tend to order late at night.
At the end of the day, you can target tech-savvy millennials, who are already on Uber and Airbnb. You can target oldies who can’t walk to a nearby grocery store or baby-boomers who are stuck in a 9to5 job.
Build partnership
Once you have defined the above parameters, it’s time to move to build partnership. You need to strike a partnership with two sets of parties: home delivery partner/ agency and local merchants.
You can build your businesses without a direct partnership with either of them or merely act as an aggregator of local grocery stores.
You can ask the local merchants to send their boys to deliver grocery home. That’s a partnership hard to strike and can jeopardize your brand if any of the merchants couldn’t deliver.
You can rather strike a partnership with a mere delivery agency but that’ll take a toll on your commission.
Define associations
Payroll or contract? You can contact an agency to do home deliveries for you, or you can payroll a force of delivery boys.
If you receive a lot of delivery orders, the latter is more profitable as delivery partners fare you per delivery and then there is a minimum delivery cap.
Collaborating with local stores, in addition to earning a commission, will speed up dispatch of on-demand delivery method. That’s a prudent merchant-partner will keep the deliveries ready and the delivery boy wouldn’t have to buy before rushing to the delivery spot.
Create a revenue model
You can partner with local stores that will pay you a commission every time you pick their stuff. This may require you to restrict to particular merchants in a particular locality and, eventually, contain your operations.
Besides, you can charge customers a convenience fee over the delivery charges. If the order is too large, customers expect you to give up the delivery charge but the convenience fee will still earn you some dollars.
Develop a hyperlocal mobile app
You have to develop separate apps (for iOS and Android) for each actor: drivers, merchants, and customers in this case.
I looked around the internet and found these templates with essential features for customer app, merchant app and delivery boy app.
Recommendations and tips
- Build services around your target audience, not the other way around.
- Provide options for vegetarian, gluten-free, organic food or halal foods
- Maintain a good relationship with local farmers and grocery stores.
- Consider other on-demand delivery business models such as on-demand courier delivery application, on-demand appointment app for patients and doctors, on-demand app for home services, etc.
Benefits
Reviving local retailers
The rise of eCommerce and Corporate retailers caused the downfall of local retailers. Hyperlocal On-Demand Delivery provides local retailers with a platform to increase their visibility and optimize sales with the help of digitalized economic technology.
Minimum effort maximum results
Hyperlocal on-demand delivery services is a boon for local retailers as they can gain maximum results with minimum efforts; they don’t need to develop an app of their own. They can enlist their name on the platform, and they are good to go.
Enhances transparency & business standards
It offers a great deal of transparency for customers as they can evaluate, compare, and choose from the best prices offered. It also enforces the local retailers to follow high business standards with an efficient delivery system.
Competition benefits customers
It motivates every retailer to up their game in all aspects as there are no global behemoths to compete with and all the competition is among the local retailers. This healthy competition benefits customers as they get better products and services at economical rates.
Run all your errands on your smartphone
Hyperlocal On-Demand Services help you to run all your errands on a smartphone. Buy a wide range of products such as grocery or dairy, avail services for electrical appliances or plumbing. Just a few taps on your phone will complete all these tasks.
Conclusion
It is going to take time and effort, but picking the right target audience, building solid partnerships with restaurants and delivery agency, and concentrating on the most fundamental part of the app will give your business the much-needed edge.
So, if you want to build a successful on-demand business, then you have to make a feature-rich on-demand app first. For this, you can hire remote developers or you can extend development team.
