Indian Hyperlocal Start-ups VS Global Giants: When Will the Battle End? Indian consumers are more influenced by word-of-mouth, than the features and range of services being offered
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
In the Indian business landscape, start-ups are mushrooming at a rapid pace, attracting investors from all across the globe. The hyperlocal segment has soared unimaginably in the recent past, with increasing internet users, geolocation devices, need for on-demand services and craze for instant delivery.
In the early 2000s, global giants such as Uber and Amazon were the rage. However, by 2010 Indian companies like Ola and Zomato had realized the need for on-demand services, especially in the unorganized sector and were tapping the market. Today, there are multiple hyperlocal start-ups across different cities in India that are driving away the global giants; the reason being that the needs of an Indian consumer are, in reality, quite different from the average consumer trend in the UK or US.
Think Global, Act Local
The Indian consumers are more influenced by word-of-mouth, than the features and range of services being offered. Furthermore, they believe in negotiating the prices before booking a service. If you have observed, in an Indian household, there is always that one plumber, electrician, painter, and driver that has been sincerely serving the family for years. Bearing this in mind, it's always a good idea for an app to allow the consumer to mark a professional service (or pro) as their favorite, so that the pro can be their trusted service executive for many years to come.
While hyperlocals rank high on convenience and new-age India is warming up to apps and online stores, the Indian habit of physically examining things is quite deep-rooted. Hence where globally people are quick to shop online, hire house help or avail other such services by browsing apps and websites, Indians are apprehensive to jump the bandwagon due to the fear of the unknown.
To this effect, when downloading a service app, they always look for reviews and price negotiations. In the minds of the Indian consumer, word of mouth publicity and reviews from friends are signs of validation for the service. Incorporating reviews while offering a service is always a smart option to increase footfall on your app or website.
On-demand Services Most Popular Among App Users
The hyper-local aggregator app market is growing by leaps and bounds and there looks to be no end to this growth. On-demand services are the most popular among app users, homemakers and the likes who expect reliability and professionalism. Making the most of the popularity of such services and the competition in the market, aggregator app developers offer discounts and other promotions to bring in business.
With mobile networks developing and the widespread acceptance of aggregator apps, it is just a matter of time before the industry becomes saturated and comes to a standstill.
Today, if 500 start-ups begin their journeys in the hyperlocal sector, over a 100 of them shut down due to multiple reasons. One of the most prominent ones is these businesses' focus on giving huge discounts to the end-user to gain the market share; whereas, in reality, we need to earn the consumer mind share or trust share by proving the efficiency and providing quality services consistently. Rather than wasting the investor's money in discounts, it is best to streamline it towards improving the quality of deliverables and bridge the gap between demand and supply. Thinking global in terms of quality services and acting local, with regards to customizing the brand experience for Indian consumers, holds the key to success for hyperlocals.
The Magic Mantras
The battle between hyperlocal start-ups and global giants is getting lesser cluttered by the day. It is clear that increasing numbers of Indian consumers are using hyperlocal start-up services to book cabs, order groceries and get their laundry done. However, the remaining bumps can be smoothened by using the following magic mantras.
- Sustainability: The focus needs to be on fundamental sustainability. For sustainable development, we need to clearly chart dynamics of unit economics and ensure minimal cash burn rate.
- Infrastructure: It's very easy to make an app, but delivering quality services with competent backend resources is difficult. The focus, therefore, needs to be on investing in managing operations, infrastructure and providing backend support.
- Steady Growth: Our focus needs to be on investing in scalable growth milestones, one step at a time. Begin operations in a single city, grasp the market and build a reputation on which you can expand to other cities and then expand overseas.
With these magic mantras by our side, I am confident that global giants will not be the dominant players, in fact, Indian start-ups shall conquer and sustain market share, and also lead the game with trust, quality, and diligence.