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Startups

Why are so Many Hyper-local Startups Failing to Make a Mark in the Industry

A major roadblock has been the segmentation of the market by the entry of bigger corporates with brick and mortar setups
Why are so Many Hyper-local Startups Failing to Make a Mark in the Industry
Image credit: Shutterstock
3 min read

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

In a developing nation, people work for 45-50 hours a week and get less time for leisure, family and even to do household chores.

Imagine yourself returning home after a tiring day at work to find out your kitchen tap is not working or your driver hasn't shown up for duty? Such scenarios cannot be predicted and we often find ourselves faced with a lack of handymen during late evenings, or even at night.

However, with the advent of hyper-local service apps, these needs are being taken care of in a jiffy, at any time.

Nowadays one can book a plumber, a driver or any other service at just the click of a button. Hyperlocal startups are a boon since they provide convenience to customers, which is of prime importance to them. Digitization has also played a major part in the growth of this segment as people have begun to resort to hassle-free cashless transactions.

Making a Mark is Tough

Urban India has seen a considerable increase in the disposable income and decrease in the amount of leisure time among working professionals. As a result, convenience is the top priority for consumers. This is an opportunity which many entrepreneurs have recognized and launched various on-demand startups for delivery of food, home, cab, cleaning and even niche services like party planning, nannies, etc.

Most of these are founded by younger generations, who although have lesser market experience but bring innovation to the table. These new age entrepreneurs are also not afraid to break the conventional barriers of business.

Many of these startups began as bootstrapped and eventually the successful ones find investors based on their market performance. However, not all have been successful in making a mark in the industry.

A major roadblock has been the segmentation of the market by the entry of bigger corporates with brick and mortar setups.

However, the ray of hope for startups is to create a habit of convenience among their loyal customers. A successful startup always continues to bring more and more innovations to the mix. 'Know Your Customer' is a very important factor which contributes to the brand.

In this scenario, when new competitors enter the market with deeper pockets, the existing ones will be able to hold their ground and not give in to publicity stunts like deep discounting. This is the long-term future planning of a secure business.

Cue from Industry Leaders

Apart from loyal customers, there can be various other reasons for startups to find themselves catch 22 situations such as aggressive competition, poor operations, lack of funding or poor marketing.

Although it is easy for startups to raise huge amounts of funding from angel investors or seed funding; the heart of the problem lies in the strategic use of this money.

Researching and understanding your market and the projected requirements of your customers can lead to strong strategies for the financials of the brand. For example, we can say the panda ate the owl- with the entry of Food Panda in the market, hyper-local food startup Tiny Owl lost its ground.

Similarly, Swiggy and Zomato entered the market and emerged as the market leaders in this segment. The same has been the case of many other hyperlocal segments as well.

Biggies like Flipkart, Swiggy, Zomato, Ola etc.are long-standing examples of these hyperlocal startups in India who are successfully treading the path of becoming industry leaders due to their changing scenario accommodating the market scenario and customer requirements.

I feel other startups should take a cue from them and follow the same path to garner success.

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