How Hyperlocal Delivery Startups Evolved During The Pandemic
Apart from food, groceries and household essentials startups which saw spike in form of consumers order, the other startups in the domain revamped their strategy in order to enhance growth.
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In an era of changing technology, several hyperlocal delivery startups and firms are bracing their services more in order to meet the people's expectations who want everything instant and at their doorstep.
In the last couple of years, the hyperlocal delivery services have gained an immense popularity and the main domains in which the demand has grown includes food, groceries, household essentials and medicines. In fact, in 2017-18, the hyperlocal delivery market in India saw an investment of $2 billion while it clocked $1 billion towards the end of 2019.
Startups in the hyperlocal delivery space such as Zomato, Swiggy, UrbanClap, BigBakset, and 1mg, among all have become household names.
Interestingly, as the world has been gripped by the coronnavirus outbreak since last year which fractured many economies, the hyperlocal delivery sector has been witnessing a steady growth after initially facing some hurdles posed by the COVID-19.
The major growth contributor could be attributed to the consumer's behaviour which has seen a shift due to the coronavirus scare, and now they rather prefer to have everything at ease and within neighbourhood without venturing out much.
Not only is that but the investor appetite for this segment is also far from replete, with $533 million invested till November 2020. While in 2018, the sector saw $1.7 billion in investment, according to Tracxn data.
Interruption due to pandemic
Initially, the growing business of hyperlocal delivery startups was interrupted due to the outbreak of the coronavirus pandemic which restricted the movements. Many startups in the space witnessed roadblocks in terms of their business revenue and operations.
Rhitiman Majumder, co-founder at Pickrr Technologies Pvt. Ltd, said in the initial stages like all the other industries, logistics also took a hit. With the restrictions imposed on movement of vehicles, Pickrr's volumes went down to zero during lockdown. Even with partial lift of lockdown, there were a lot of confusions across the country both on what can be shipped and to which locations the products could be shipped.
He said even if the products were shipped the timelines took a hit resulting in high RTO percentages. COD order volumes almost went to zero, both to tackle the high RTO ratios and to make contactless deliveries more effective. "On the seller side, since the business came to a standstill, credit cycles increased to an extent and we increased our flexibility to accommodate the longer credit cycles," Majumder added.
Another contributor in creating a roadblock for the hyperlocal delivery startups in the pandemic has been the dependency on the public infrastructure and transport. Due to the COVID-19, the public transport was suspended even after relaxing some travelling rules. This came as a blow to many startups which would deliver order by using public transportation.
As Jash Shah, co-founder at Get-A-Whey, said the pandemic was definitely an eye-opener for many in the business who rely on public infrastructure for deliveries. The lockdown resulted in trains and other public transport which the firms would normally use for faster and more efficient deliveries to come to a halt. With the promises of typical deliveries, the startup would do within 24-48 hours; it became tougher for the company to manage these logistics with the lack of proper infrastructure.
Likewise, Deepak Ravindran, who founded one of India's first concierge apps, Lookup (which was acquired by NowFloats in 2016), said the quality of people who can deliver essentials from one destination to another is still a big challenge.
Changing strategies for better business
Apart from food, groceries and household essentials startups which saw spike in form of consumer order, the other startups in the domain revamped their strategy in order to enhance growth. For instance, electric mobility startup Oye! Rickshaw got their driver partners to start deliveries during the pandemic.
Mohit Sharma, cofounder at Oye! Rickshaw, said, "the biggest challenge we faced during the lockdown was that rides on our platform had halted completely. We now had to figure out how to keep our partner drivers to ply their e-rickshaws. All around us we saw the migrant population heading out of Delhi. We realized that the main reason for them to go back is the sudden erosion of their income. As most of them survive paycheck to paycheck, the ability to earn during these tough times could be a major incentive to stay back in Delhi."
This led the firm, as he said, to build the startup's delivery business. We always knew that e-rickshaw has an appropriate form factor for hyperlocal delivery and wanted to get into the delivery business after establishing our ride business even further, but with the ride business coming to a halt during COVID-19 we went ahead with launching our delivery business.
"We acted quickly after understanding the requirements of our delivery clients, thus training our driver-partners to be professional delivery partners, and making the right modifications to our e-rickshaws to ensure that they can be used for both ride and delivery business," Sharma said, adding that the firm does delivery for most of the leading e-commerce players including BB daily, Grofers, Zomato, and Udaan.
Another strategy which many hyperlocal delivery startups adopted during the pandemic was to restructure the way they go out about deliveries. Dhruvil Sanghvi, CEO at LogiNext, said during the lockdown, a lot of our hyperlocal clients, including the likes of McDonalds had to restructure how they manage deliveries, and brought in automation to their processes in a big way.
"We provide logistics automation solutions to hyperlocal delivery and e-commerce companies in addition to Courier Express and Parcel (CEP), Transportation and Healthcare providers. When companies moved towards automation in operations, our solution- LogiNext Mile was used in a big way by hyperlocal delivery companies for route optimisation, maintaining delivery associate compliance, demand forecasting, order planning and basically automating the logistics operations. We brought in a lot of changes to bring in elements of safety and security for delivery associates and end customers to enable a better experience in the new normal," Sanghvi said.
Not only that but many companies which cater to logistics also changed their strategies to serve the businesses better. For instance, an ecommerce platform Dash101 revealed that one of the biggest challenges as of now the company has been facing is to ship products to Tier II and Tier III cities. This is because in most cases, the addresses provided are either tricky or not mapped correctly. Generally, their addresses consist of landmarks or specific locations that don't usually show on the map.
More customers belonging to different cities that fall into these Tiers, have resorted to online shopping especially during the pandemic. "As a result, we provided an option on our platform that supports correct address input systems. We have also managed to build a machine learning algorithm that helps us identify incorrect addresses and provides the customer with an input to punch in the right and complete address," said Kalpak Chhajed, cofounder at Dash101.
Road ahead for hyperlocal delivery sector
Hyperlocal became one of the most substantial businesses to rise in the pandemic especially for movement of essential goods. Being a capital-intensive business, already set up players in the market consolidated on the increase in demand. With the likes of Zomato and Swiggy entering the industry and moving swiftly, the growth of the industry has been substantial and a case study on how brands in India are adopting.
With e-commerce booming in the country, a lot of items need to be delivered immediately within a particular radius of a region. This can be implemented very eas. ily with a hyperlocal delivery startup. India definitely has the infrastructure for these considering how shipping giants have infiltrated into the country easily. In terms of growth, it has taken a pandemic to realise how important these startups are and there has been an exponential growth for them thanks to the demand created in this duration.Going ahead, the hyperlocal delivery space will continue thrive especially at a time when the COVID-19 scare is prevalent and many consumers have now got used to get essentials at a click away.