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Fueled by the pandemic, the hyperlocal delivery system has grabbed the attention of both investors as well as consumers. By the end of 2020, the global hyperlocal service market has seen investments worth $533 million and is estimated to reach $5,188.60 billion by 2030. Due to proximity and increased visibility, brick-and-mortar stores are slowly challenging eCommerce giants with the advent of a hyperlocal delivery model.
However, increased consumer demand coupled with increasing costs begs the question- How to sustain and profit from hyperlocal delivery? Is automation the right answer? What are the potential hurdles?
In this blog, we explore the answers to these questions and many more.
A hyperlocal delivery system refers to the process of delivering products directly from the seller to the consumer within a limited geographical area. Generally, this happens with locations having the same pin codes. The delivery executive picks up the product from a particular seller and delivers the package directly to the customer’s doorstep.
Hyperlocal deliveries belong to the quick-commerce sector because the entire delivery happens within minutes (10 to 45 minutes). However, depending on the location, sometimes it may also take a couple of hours.
The system is also referred to as an “On-demand” business model because the customers themselves initiate the orders.
What started as an immediate delivery service for food, groceries, and other daily necessities has assumed a mammoth stance over the past two years.
The hyperlocal delivery market currently caters to the delivery of a wide range of goods and services, such as food, drugs, furniture, electronic items, and daily essentials.
Take a look at the following image that shows the numbers from 2020-2024 for a better understanding of the growth of the hyperlocal market.
As market players look to achieve efficient and tighter delivery timelines, they must factor in the increasing operational costs.
This is where automation and process optimization enter the picture. Manual operations are prone to errors and inefficient in carrying out immediate deliveries, especially if the store handles hundreds of orders daily.
After a brief overview, we now explore the notable challenges in executing a hyperlocal delivery system.
Customer preferences change over time, and the need for faster deliveries is on the rise. According to the report by McKinsey:
This is generally seen across various consumer groups. The millennials, especially, are willing to pay for quicker delivery. But the willingness decreases as the cost imposed on consumers is increased.
This unwillingness forces the companies to factor in the increasing cost per transaction so as to retain the customers.
Routing is one of the major problems in the logistics industry. Few persisting problems, especially in the hyperlocal delivery ecosystem, are:
Here, intelligent routing of the driver via optimal routing allows for benefits such as:
In a fast-paced world, traditional software severely hampers the operation of your businesses. This can lead to problems such as:
A state-of-the-art software platform is necessary to keep up with ever-increasing demands and to attain a real-time view of your end-to-end logistics operations.
The primary reasons behind rising trip volumes are:
Also, multiple trips made to deliver products in a nearby area lead to the misuse of vital manpower and a waste of fuel.
Intelligent route planning coupled with appropriate road planning allows for maximum utilization of resources, saving money and time.
Onboarding and maintaining a seamless line of communication between the in-house and third-party logistics providers can be a hassle. Some major hurdles while integrating 3PL providers into the system are:
An intelligent hyperlocal delivery system allows for greater transparency in communication between the in-house and third-party logistics providers. The smart solution also ensures proper load distribution onto the vehicle fleet.
While businesses might receive a somewhat consistent level of orders throughout the year, the holidays or festivals are altogether a different issue. A sudden rise in demand leads to strained logistics resources, resulting in:
According to McKinsey, 34% of shoppers cite longer delivery times as a reason to shop in stores instead of online.
A hyperlocal delivery solution is adaptable to change. The software accommodates the integration of new delivery agents and ensures proper distribution of deliveries across locations.
Consumers are increasingly expecting deliveries within a window of their choosing. But, traditional software does not provide live updates to the ETA status. Moreover, on-road disturbances also add up to a delay in deliveries.
When on-time delivery (OTD) is a necessary feature of your business, smart delivery management is the need of the hour. Hyperlocal delivery systems enable smart route planning, load allocation, vehicle selection, and real-time monitoring for timely and cost-effective deliveries.
The Cash-on-Delivery (CoD) feature is one of the biggest drivers of growth in the eCommerce business.
In the absence of a unified reconciliation system, there can be confusion over the status of bills. This increases the scope for errors and leakages. For example, the error may arise due to a miscalculation while accounting for cash payments made on delivery.
Having a smart platform with end-to-end integration allows seamless cash reconciliation by allowing:
Delivering to the wrong address severely impacts your business bottom line. Customers’ details are now collected with the automated detail entry feature in hyperlocal delivery management systems to prevent inaccuracies in the information.
It is clear that a robust and reliable automation system is the key to a successful hyperlocal delivery model.
For a smooth on-demand delivery process, elements such as automation, dynamic routing, intelligent order management, etc., are indispensable. In addition, data analytics and actionable insights are necessary for inventory optimization. This, along with real-time order tracking, ensures excellent customer experience, enhancing transparency and maximizing productivity.
Though automation sounds promising, there is a catch. It is challenging to find a true product fit between client needs and system capabilities. A customized platform would ideally cover the client’s needs by ensuring various service offerings within a single suite.
Read more about the hyperlocal delivery management system: Click Here.
This is where Shipsy enters the fray for building an efficient and scalable hyperlocal delivery system.
Shipsy’s AI and automation-powered hyperlocal delivery management system is enabling grocery delivery providers, restaurant chains, and healthcare providers to automate core logistics operations and drastically scale deliveries.
The system automatically plans the most efficient pickup and delivery routes based on multiple external and internal factors like ETAs, customer and store proximity, rider availability, traffic congestions, type of order, and more. It automates order allocation and scheduling to ensure high levels of delivery productivity, reduced manual intervention, lesser operational costs, and more.
Shipsy is enabling hyperlocal delivery providers to:
To know how we can help you achieve these efficiencies and more, sign up for a quick demo here.
Hyperlocal delivery helps local retailers and vendors to connect with their customers and facilitate fast delivery of medicines, grocery, and other items.
The hyperlocal delivery model has gained immense popularity over the past few years. The model is suitable for the businesses that want to deliver goods directly to their cust...
