Hyperlocal grocery delivery: why do retailers need to embrace it?
By FarEye | October 18, 2022
The global hyperlocal services market size was valued at $1,324.2 billion in 2019, and is estimated to reach $3,634.3 billion by 2027, registering a CAGR of 17.9% from 2021 to 2027.
Hyperlocal delivery is quickly emerging as a major delivery channel across the world, especially in geographies like America, Europe and Australia. Before we discuss why retailers should embrace hyperlocal grocery delivery, let us glance through the definition of hyperlocal delivery.
What is hyperlocal delivery? How hyperlocal delivery works?
Hyperlocal delivery can be defined as the type of delivery that is done or executed within a small geographical area or locality defined by a radius capped by specific miles or even pin codes. This type of delivery is usually done by picking orders that customers place online, from local offline stores based on proximity from a customer's location. Hyperlocal delivery model is best suited for deliveries that include grocery, food, medicine and everyday household items. People ordering groceries from a neighboring store via a mobile application or through a website is a good hyperlocal delivery example.
6 Reasons Why Retailers Need To Drive Hyperlocal Grocery Delivery Strategy
Hyperlocal deliveries have enormous business potential across the globe, the technology needed is easily available, it makes the hyperlocal grocery delivery service efficient by driving one hour deliveries, helps businesses boost customer trust and also has a social undertone. Let us delve deeper into these reasons.
1. Global business potential
According to a TechCrunch report, a hyperlocal delivery provider in the U.S. sold around $700 million worth of groceries during the first two weeks of April, up 450% over its December 2019 sales, the report said. In the U.K., there has been a 39% increase in hyperlocal food deliveries over the last three years. In Australia there are 320+ online grocery delivery startups and the hyperlocal grocery delivery market's revenue in this part of the world rose at an annualized 29.7% by the end of 2020. All these numbers, in many different senses, echo the potential of the hyperlocal delivery industry on a global scale.
2. Technology availability
To execute hyperlocal deliveries businesses need to leverage advanced technology. Thanks to rapid evolution in digital logistics tools, technology is not a roadblock.
Routing platforms can empower retailers and grocery delivery providers to generate highly-efficient routes that optimize delivery turnaround time from a store to customer’s address. It mitigates chances of delays and diversions and generates accurate ETAs. Such platforms also help businesses drive multi-drop deliveries, a key aspect of hyperlocal operations that makes every delivery profitable. Geolocation and geo-tagging tools make it easier to locate customers’ addresses that are situated in clustered, congested or highly populated areas. It’s especially helpful to pin-point addresses that are not 100% accurate.
Technologies like machine learning and advanced analytics drastically improve route planning, order consolidation, ability to understand demand patterns, decision making and much more. Another key technology that can empower brands to execute seamless hyperlocal deliveries is automation. Modern delivery platforms automate task allocation and delivery scheduling making delivery operations faster, less error-prone and cost optimized. In fact, a research by Capgemini highlighted that 97% of organizations say that they will not be able to manage free shipping without reducing the delivery costs through automation. Then there are technologies like IoT that constantly feed real-time data into these modern hyperlocal delivery logistics platforms for improving a business’ analytics capabilities.
With the pandemic, it was imperative for businesses to provide contactless deliveries--another aspect than an advanced last mile logistics platform helps with.
3. Ensuring one-hour delivery
When it comes to delivery of groceries, food and medicines, customers do not like waiting. They want these to be delivered fast and by fast we mean ‘one-hour’ fast! Hyperlocal deliveries make it possible to fulfill this expectation. Since such deliveries are fulfilled through stores and grocery outlets that are at close proximity to customers, it significantly cuts down delivery turnaround time.
The whole process of visiting a warehouse or picking up orders from a hub is significantly avoided in case of hyperlocal deliveries. This too positively impacts delivery durations. Then then are technologies like real-time dynamic route optimization, automation, data analytics, machine learning, IoT, predictive intelligence, crowdsourcing among many others that contribute to reducing the time required to execute a delivery.
4. Greater customer trust
When it comes to customer transparency, hyperlocal deliveries have an upper hand over other delivery formats. Hyper local delivery providers inform customers from where their delivery executive is going to pick up the said orders and mostly it’s a place that's perhaps a few blocks away. Chances are the customer who placed the order herself has been to that store several times. Actually, it’ll not be surprising to learn that some customers even know the staff that works at the store from where her order is being picked up. These factors immediately establish a sense of satisfaction and trust.
Unlike other delivery formats, where customers barely have any idea from where their orders are being sourced, hyperlocal deliveries surely make it a tad bit easier to win over customers. The ability to have a quick chat with a delivery executive and pass on information to about product preferences and remove or add items from the cart while the pickup has already started are some other ways hyper local deliveries boost customer experience.
5. Low investments
One of the most lucrative reasons to embrace hyperlocal delivery is low cost of investment. In this type of delivery model there is no real need to have warehousing facilities, hire expensive long-distance 3PL providers, set up hub facilities for distribution, worry about LTL shipping and invest in a large pool of delivery executives. This dramatically reduces the initial investment required to kick-start hyperlocal delivery.