We live in a world where we get to hear a new word every day. These days in the startup world, the hyperlocal marketplace is creating a buzz in every market. The hyperlocal marketplace is nothing but your local market stores for buying and selling of products online with a home delivery option. Even the customers are stuck to hyperlocal marketplaces like BigBasket for food and grocery delivery. Hyperlocal marketplaces are gaining tractions and customers aren’t ready to come back to traditional local marketplace working on Brick and Mortar structures. Customers find the better alternative to price and a wide selection of products on the hyperlocal marketplace.
Hyperlocal marketplace in the US, UK, and developed countries have greater efficiency as opposed to developing countries like India. This is due to better internet connectivity and accurate postal address for timely delivery. Usually hyperlocal marketplace work in partnership with third-party logistics business. The pool of workforce due to partnership creates an opportunity to deliver products within an hour. The number of hyperlocal marketplace enterprises has witnessed huge growth but few of them have shut down their business due to lack of investment from VC’s. Investment isn’t the primary reason for shut down, in fact, business strategies and marketing strategies have more impact on the success of the business.
Hyperlocal Marketplace is Physical with digitalization
When we talk about the marketplace, Brick and Mortar is the foundation. Physical stores still appeal to customers but the convenience of hyperlocal marketplaces attracts the customer. Traditional stores provide an experience to the customer to touch and feel the product physically. Physical feel and inputs from the sales executive can influence the customer. In all honesty, hyperlocal marketplace can’t be successful without the presence of physical stores due to following facts:
65-70% of customers visit the traditional stores before or after making the purchase online.
The inventory for the hyperlocal marketplace is fulfilled by local stores.
To put it another way, traditional stores and hyperlocal marketplace are dependent and create value added for each other. Traditional stores are getting more sales from the hyperlocal marketplace and hyperlocal marketplace are managing inventory from traditional market stores.
Is Hyperlocal marketplace sustainable?
Hyperlocal marketplace enterprises are burning huge cash to acquire customers by giving discounts and offers. The main issue is to earn the profit on each delivery. The order ticket size is not too big that raises the issue of earning a huge profit margin. The margin per order for the hyperlocal marketplace is 5-10% of order ticket size. Adding more, customer acquisition cost, delivery cost and overheads make it really difficult for the hyperlocal marketplace to earn the profit. The best way to grow hyperlocal marketplace is to enhance customer retention rate and increase in order ticket size.
Minimum order size and offer financing on high valued products are common strategies adopted by hyperlocal marketplaces to increase the order ticket size. In addition pairing of high selling product along with low selling products also enhance the sale of low selling products. Benefits of increasing customer retention rate are:
Loyal customers generate more revenue
Retained customers are best marketing asset – Word of mouth
Engaged customers will provide valuable feedback
Retaining customer is cheaper than acquisition
Loyal customer respond seven times more to brand promotion offers
Rising Significance of logistics services in every sector gave rise to the hyperlocal marketplace. Increase in demand for premium products and premium brands with the convenience of delivery of product at doorstep attracts more customers. In both developed and emerging markets, online enterprises are partnering with logistic service providers to expand the business into new markets and providing the delivery of products at customer doorstep. All this is quite difficult to manage without any online platform. This also gives rise to multiple challenges such as:
Difficult to change consumer behavior
Attracting consumers to the online hyperlocal marketplace by offering something more over traditional stores
Bringing local retailers to the hyperlocal marketplace
Hyperlocal marketplace platform suitable for all
Challenges can be converted into opportunities and strengths with the appropriate business model. Analyse the market trends and figure out the possibilities of going wrong. Overcome the weakness and threats and create your online hyperlocal marketplace like BigBasket with Yelo today and turn your dream into the reality.
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