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?
A major disrupter in 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.
A 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 in order to deliver goods on time (for services we already have the ‘Uber’ model), 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 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. It has its own set of challenges.
Building a hyperlocal delivery network
1. 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 restriction 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.
2. Choose target audience
You can target busy professionals who seek gourmet food or hungry high schoolers who tend to order late 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.
3. Build partnership
Once you have defined the above parameter, it’s time to move to build partnership. You need to strike partnership with two set of parties: home delivery partner/ agency and local merchants.
You can build your businesses without a direct partnership with either of them, both 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 mere delivery agency but that’ll take a toll on your commission.
4. Define associations
Payroll or contract? You can contract 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 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
5. Create a revenue model
You can partner local stores who will pay you a commission every time you pick their stuffs. This may require you to restrict to particular merchants in a particular locality and, eventually, contain your operations.
In addition, you can charge customers a convenience fee over the delivery charges. If the order is too large, customers expect you to give up delivery charge but convenience fee will still earn you some dollars.
6. 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 with local farmers and grocery stores.
- Building partnerships with restaurants is also marketing
It is going to take time and effort, but picking 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.
A complete guide to on-demand mobile app development
Switch from a traditional business model to an on-demand one and start valuing your customers’ time and efforts.
- Systematic process to enter the new economy
- Interesting statistics on on-demand economy
- Limitation, bottlenecks and potential threats
- Tips and recommendation for SMEs and startups