• PLI
    Production Linked Incentives Schemes in India
    KNOW MORE

Inside India's hyper hyperlocal market

market

 

Hyperlocal is something that is confined to a certain geographical area. The basic principles upon which the concept of hyperlocal work are geography and time. The term was coined in 1991 and has gone through many changes in exact meaning, of which the most recent is with reference to GPS-based services and mobile apps. With the upsurge of technology, hyperlocalism has covered almost all possible streams of the retail industry in India.

For example, food delivery services began with players such as Domino’s and Pizza Hut and to keep pace, other food-chains began their own. Then in 2014 new kinds of delivery services appeared; Zomato, Swiggy, Foodpanda and others, and a more interconnected network developed whereby restaurants tied in with delivery services and streamlined their process, delegating tasks across the board. Swiggy has even described as ‘India’s Fastest Unicorn’ in newspaper reports.

And this is just in food delivery.

UrbanClap took its business model of hyperlocal e-commerce several steps further by delivering almost all kinds of home services like maintenance, cleaning, repair, pest control, beauty services, and much more. For urban Indian, this kind of digital efficiency is tempting.

So how does one push the concept of hyperlocal services even further?

The answer is you take one of the biggest e-commerce retailers on the planet and put them together with an intricate large scale distribution network that is already established within a massive market. I’m talking about Amazon acquiring a 49 per cent stake in Future Coupons, an Indian brick and mortar retail business covering 24 million square feet of space in over 400 cities and towns. Millions of people interact with the Future Groups brands and businesses, some of which include Tasty Treat, Mother Earth, Golden Harvest, Lee Cooper and Big Bazaar.

With this Amazon gets access to one of India's largest physical retailers’ database and Future Retail partners with India’s leading e-commerce player - one that employs cutting edge technology and analytics, not to mention its own brand name as the world's largest company. Amazon is looking to scale up its foods and grocery business within the retail industry in India. This acquisition certainly solidifies their aims.

This deal also ups the intensity of market competition, creating another competitor for similar-sized Walmart-Flipkart and Reliance Retail. Reliance Industries has already stated that it would be connecting as many as 30 million neighbourhood stores through an offline to an online initiative in an attempt to build their own platform.

While it seems counter-intuitive for e-commerce giants to invest in hyperlocal business models, it makes sense. E-commerce growth in Tier 1 and metros cities has been stagnating and it’s hard for such retailers to scatter their services across all geographies because of logistical challenges. This move also seeks to increase trust between the supplier and consumer. One of the largest challenges to e-commerce players is the negative perception of fraud.

The offline-online disconnect is crucial to surmount in order to expand business opportunities for e-commerce players and the hyperlocal market presents the necessary conditions for their strategic evolution. Therefore, in what seems like a step backwards, but is actually an ingenious solution to their largely self-created impasse, e-commerce has begun targeting the hyperlocal market for revenue generation in the future. To learn more about Retail & E-Commerce scenario in India, please click here

This blog has been authored by Kartikeya Saigal.