4 Costly Pitfalls Every Hyperlocal Business Must Avoid 

Meeting the skyrocketing delivery demands, planning a super-connected dark store network, balancing cost and customer experience, and staying sustainable while maintaining profits – the business agenda of hyperlocal delivery brands are complex.

Covid-19 propelled the growth of hyperlocal deliveries, and brands with deep pockets managed to minimize the impacts of resource drain by a great margin to deliver delightful customer experiences. While others struggled to scale, the rest had to witness their customers shift loyalty. With the demand for hyperlocal deliveries not slowing anytime soon, businesses need to rethink the scalability, sustainability, and orchestration of their delivery operations in 2023 and beyond. 

Here are the four pitfalls every hyperlocal business must avoid while planning for the year ahead. 

Building a Smart Hyperlocal Strategy for the Future: 4 Pitfalls to Avoid

#1 Stretching Profit Margins Thin to Sustain Amid Growing Demands

Customer demands are stretching hyperlocal delivery providers’ margins thin. Fulfilling fast delivery expectations results in hiring more resources to execute deliveries. E-commerce giants make it difficult for others to sign up drivers, especially when the US and European markets are experiencing chronic driver shortages. 

For instance, Amazon promises a $3000 sign-on bonus for drivers. More resources imply greater fuel consumption and fleet management investments, increasing the TCO (total cost of ownership) per delivery. Brands need to focus on leveraging the best of the physical and digital world when chalking out cost-efficient and customer-centric, hyperlocal delivery strategies.

Investing in smart hyperlocal delivery management solutions that offer automated workflows, optimization for maximizing resource utilization, and in-built AI routines for automation can help sustain operations and cater to growing demands without violating the bottom lines. 

#2 Imbalanced Costs and Customer Experience

Stats suggest that 62% of customers opt for online purchases because of convenience and 42% do that for time savings. With giants such as Amazon and Walmart entering the hyperlocal delivery market, customer acquisition and loyalty stakes get higher. Price is no longer the battleground. Hence, hyperlocal delivery providers need to focus on two key areas.

One, crafting delightful and highly customized delivery operations at scale. Two, creating an omnichannel purchasing experience. Forbes highlighted that as much as 84% of businesses that improve customer experience report significant revenue boosts. Another Adobe survey revealed that omnichannel customer engagement strategies drive a 10% YoY growth and a 10% increase in average order value.

However, for SMEs and startups, the cost of delightful CX is way higher than established market giants, which implies that they need to be creative and smart while building their CX strategy. Leveraging automation solutions that offer end-to-end optimization, real-time tracking capabilities, and automated validation and authentication checks for end customers is one such way.

#3 Burgeoning Dark Store Costs

To reduce delivery turnaround times, a significant number of hyperlocal providers are leveraging dark stores. Dark stores are strategically located within short distances from customers, and it significantly reduces dependency on local retailers and grocery stores when it comes to inventory availability.

Also, a dark store’s capacity to fulfill orders is much higher than the capacity of multiple retail stores put together. But, dark stores increase operating and overhead costs considerably and have physical limitations when driving deliveries beyond a certain radius. To sustain investment in dark stores, hyperlocal delivery providers need sizable order value. However, digitizing core dark store logistics processes can offer numerous other opportunities to reduce delivery costs.

AI/ML-powered hyperlocal delivery management solutions offer predictive analytics for forecasting inventory, and customer demands, which further reduces the investment.

#4 Failure to Optimize Collaboration

The entire hyperlocal delivery ecosystem has multiple points of collaboration where two or more entities interact or work together to complete a task. For instance, at the time of delivery customer and rider are interacting with each other, and the delivery task is using the rider, rider app, and vehicle for the completion. Such collaborative functions are the sources of redundancies and inefficiencies, owing to the lack of optimization routines in delivery management systems. Non-standardized procedures for returns and delivery failures, wrong delivery management, delivery failure authentication, and validation – all of them lead to higher operational costs, poor management, and business risks.

Smart hyperlocal delivery management solutions offer extremely granular control over all the processes, people, operations, and stakeholders. Hence, businesses are able to find pockets for optimization, refine the overlapping functions and unlock high levels of efficiency for smart scaling. 

As the global hyperlocal market grows at a CAGR of 14.9% to reach the projected size of USD 5188.60 bn by 2030, leveraging smart automation for strategizing and business planning is going to be the right way forward.