We live in an era when we get to hear new buzzwords every day. I always feel it’s important to understand their meaning exactly in the way they are used, else we may have a different take on the statements itself. One of the hottest buzzwords in the start-up domain these days is Hyperlocal. With deep war chests and strong funding from VCs, names like Grofers, BigBasket, TinyOwl have emerged as strong contenders on the start-up landscape. Hyperlocal, is however, not a new concept to mankind.
At its broadest level, as the term suggests, it refers to a very specific area or community, centering around where you live.
A committee of citizens formed in a specific locality to police the local streets, or keep them clean, is a hyperlocal concept. In Mumbai, ALM or Advance Local Management is a manifestation of hyperlocal, so are the Mohalla Committees, Panchayats are an example of hyperlocal governance in villages, with fairly wide reaching powers. And when it comes to business, Hyperlocal refers to all businesses in your vicinity, the nearby General merchant, Restaurant, Market, Mall and other products and service providers.
Come to think of it, most B2C businesses are hyperlocal and it has been the case since time immemorial – retail in particular, has always been largely a Hyperlocal activity. In Indian villages there were a few shops covering a cluster of houses and managing to provide all the goods needed for sustenance, as the big markets and towns were far off with limited mode of transport. In fact, this is still the case in most of rural India. And in the urban pockets when the cities expand and people settle, after housing gets developed, all businesses for sustenance of daily needs and lifestyle emerge, and this cycle continues.
Where there’s human settlement there’s Hyperlocal business.
Let’s say when you want to enjoy street food, do you like to have it from your trusted vendor near your home, or would you wait to travel to a far off area or even a distant town to have it, howsoever popular that would be ? Do you buy vegetables grown in your area as opposed to imported ones?
Do you patronise a grocer in your locality? A fruit/vegetable seller? A restaurant? Do you call them and avail home delivery? These are examples of consumption in a hyperlocal market.
Coming back to old times, hyperlocal was home delivered, a saree seller would bring his bunch of sarees door to door and the ladies of the house could shop at leisure without stepping out. (Remember DDLJ?)
Mobile start-ups have capitalised on this age old human behaviour and used it to create businesses which didn’t exist before, even when Hyperlocal has been the way of life.
The lure of this idea is simple – in a country like India, with large population base, hyperlocal markets are not only large but HUGE in size. And in its comparison the online shopping remains a minnow. Every day, hundreds of millions of people shop locally, compared to few lacs who shop on e-commerce sites.
As a business, the start-up offers you an app, and a delivery mechanism that facilitate ordering. They do not need to change your behaviour, which for a business is a time consuming, costly and difficult process. They simply ride on your existing behaviour, and in the process earn money. Sounds like easy, smart logic, doesn’t it?
There are several additional benefits of hyperlocal Start-ups , for both end consumers and communities:
- They keep local businesses healthy and flourishing. Earlier there was a fear that kirana stores would be over-run by big retail, now kirana stores need not lag behind in the technology race!
- They reduce the cost and effort for small businesses to come online. A local business need not undertake to build an app, or re-engineer their processes to suit the e-commerce business. They simply need to enlist with one of more of the many hyperlocal businesses.
- They encourage local entrepreneurship and creativity as discovery by potential customers becomes easier and competition does not come from not daunting international/ national brands and chains, but other similarly sized local businesses.
- For service oriented businesses like repair and plumbing, it forces high quality standards and greater transparency in pricing as consumers can compare, evaluate and select the best.
While the allure and benefits of the hyperlocal business are large, the pifalls are equally huge. Just last month, express delivery service Grofers, bought out Bangalore based start-up Townrush, having previously acquired another food tech company, SpoonJoy. A well hyped and decently funded grocery delivery startup, Localbanya is nearly shut, all these companies failed to get fresh funding to continue their operations, unlike Grofers itself. Another food technology startup, TinyOwl, has been in the news for slashing jobs to sustain its business. While, there a lot of companies in the hyperlocal startup space, the economics of running a business in this space is equally tough