Hyperlocal and Digitization During COVID-19: It Takes Two to Tango
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Halfway through the year of pandemic, we are living in a completely different world. The novel coronavirus has not just endangered human lives but it has also hit the world economy hard and impacted several industries around the globe. It has turned markets around, giving rise to trends and disruptions we could not have imagined.
Retail is clearly one of the most severely impacted industries by the pandemic. In the past six months, retailers and consumer goods manufacturers across India have dealt with fast-changing consumer buying patterns and numerous setbacks in ensuring smooth business operations.
The pandemic has changed the way millions of Indians live, the way they work, the way they shop and even the things they shop. As people hibernated indoors, online stockpiling of essentials skyrocketed and the demand for fast and safe home deliveries increased tremendously. At the same time, to avoid crowded supermarkets, people are going for contactless shopping alternatives such as Zomato, Swiggy, Grofers, BigBasket and Dunzo.
Hyperlocal delivery is emerging as a growing trend in the Indian market, as more and more storekeepers are now adopting multichannel strategies to cater to customer demands. This webinar by Entrepreneur India, features key players in retail and logistics who examines the impact this public health emergency has had on the practice-related aspects and how they can prepare for the future by remodeling new business models now.
Convenience over cost
Hyperlocal groups come in a huge variety of sizes, leadership styles, and goal-orientations, but they all share one crucial trait: they exist to create value and return value back to their local communities. They collaborate to access resources together, such as group purchases of groceries to limit individual exposure to health risks.
To respond to the current crisis and meet future ones, food retailers need to use technology in new and different ways to scale up their e-commerce establishments and their capacity for home delivery. They can do so by expanding shifts in existing warehouses and converting a few retail locations into convenient stores. They can also use technology to enable their business and support consumers, not only by increasing their self-checkouts but also by looking end to end and considering how technology can make things safer for customers. Both e-commerce improvements and tech enablement will require new capabilities and talent possibly from other industries or an investment in retraining current employees.
Paytm Mall has launched several initiatives to help stressed businesses including its merchant partners, small shop owners, SMEs as the COVID-19 pandemic has brought their businesses to a standstill. The company will help shops and stores, which have either witnessed a sharp decline in footfall or had to abruptly halt operations due to the lockdown, digitally enabling them through Paytm Mall and giving them all the necessary logistics support. "Paytm Mall has always advocated a 100 per cent marketplace model of operation against an inventory led one as pursued by other major players. Our objective is to connect neighborhood offline stores to interested customers far and wide through our e-commerce platform," says Srinivas Mothey, senior vice-president, Paytm Mall. “A lot of interesting integrations are happening right now so it is a very collaborative space at this time rather than looking at purely competition and taking away market share is not advisable,” he adds.
As coronavirus has spread around the world, even as most physical grocery stores remain open, many consumers, fearing for the health and safety of themselves and their loved ones, have sought to eliminate all but the most essential visits to stores from their daily or weekly routines.
As a result, many grocery retailers have seen their online sales increase at an astounding rate. Perhaps no companies operating within the online grocery sector have seen the shift in demand caused by the COVID-19 pandemic as much as hyperlocal delivery services that focus primarily on the grocery space, as consumers in many markets have turned to these companies to have groceries delivered from their favorite local supermarkets. “Retailers will have to survive, adapt to the new digitization and eventually have to come around if they want to sustain in the market,” says co-founder of Ninjacart, Vasudevan Chinnathambi.
With demand for grocery delivery at an all-time high, legacy grocers that do not operate their own delivery services—and may have been reluctant to hand over a slice of their sales to third-party service partners in the past—are now scrambling to work with hyperlocal players. As a result, hyperlocal grocery delivery sales have exploded.
Although most grocery retailers around the world have been rightly classified as “essential” businesses during the pandemic and remained open, consumers’ needs have rapidly changed during this unusual time. As a result, companies operating in the food retail and delivery space need to rapidly adapt new technology to meet the needs of consumers looking to reduce the time they spend in stores, substitute in-person interactions with digital touch points, and smooth out the checkout, payment and logistics experiences. Most companies will not be able to complete transformation of an entire channel overnight, but all can think about small steps to meet the new needs of shoppers.
One such relatively quick, low-cost solution has been seen in the form of partnerships between hyperlocal delivery services and grocery retailers. However, although in the short-run these on-demand delivery services will prove essential for many shoppers and retailers alike, the expected global recession in 2020 will have a negative impact on any possible permanent consumer behavior shifts given that delivery costs of such services remain high and may prove prohibitive as a long-term grocery delivery solution.
“We are seeing an opportunity of a lifetime as we are learning about crisis that while there was a crisis and there will still continue to be a crisis for some time to come as we are seeing this excellent opportunity to rethink and rewrite business models to improve our economics that can allows us to deliver our services at better year of economics. We are already seeing improvement in business economics across the board, it is also helping us recognize some short-term and permanent changes in consumer behavior which we have never predicted before,” says Prashant Mehta, partner at Lightbox. “Consumers are seeing that the ability of transparency they are getting in terms of quality of products, the fact that they are certain that these are no-contact deliveries, they are getting information for temperatures of people that are delivering their goods. They are clearly getting a better sense of security and in turn it has helped us retool a significant part of our businesses,” mentions Mehta.
The hyperlocal business model is here to stay, even after the pandemic drifts away. It offers tremendous scope for growth in a number of sectors beyond groceries and essentials, such as food and beverages, medicines, home services, cabs, and hyperlocal logistics, to name a few. It is time for retailers to keep up with the trend and make the most of the hyperlocal delivery model to stay ahead of the competition in post-COVID-19 times.