Hyperlocal Services Market Estimated to Experience a Hike in Growth by 2026

Hyperlocal services are availed by consumers located within a well-defined geographic locations (within the presence of service providers). Hyperlocal services include online delivery of cooked food from restaurants, hotels and other food outlets, online delivery of grocery, online logistics services, and online home services such as plumbing, carpentry, laundry, electronic repairing, and requests for tutors.

The global hyperlocal service industry is currently in a state of transition. Emerging economies are witnessing rapid growth, while the developed economies are showing signs of value acceleration. The growth in the penetration of Internet connections and increasing adoption of smartphones across the emerging regions, in conjunction with better search options application support and improved payment gateways is driving the market for the hyperlocal services in these regions. Additionally, players who started earlier are holding up well against the new smaller and local entrants in the market. This has led to intense competitions among local and global players, resulting in heavy discount coupons for consumers on their first purchase which is in turn is driving the hyperlocal services market globally. Significant private venture capital investments to the early start-ups in this business has led to increased expenditure on marketing and promotional activities with an aim of acquiring customers, which would facilitate customer’s loyalty and in turn customer retention.

Market Overview:

In recent times, internet based hyperlocal service business such as GrubHub, Just-Eat and Delivery Hero, have outperformed other firms in attracting investment from venture capital and private equity investments firms for integrating convenience goods and services such as grocery, tailoring or fitness services and other on-demand services. The market has witnessed increased interest of investors in the hyperlocal e-commerce segment primarily due to proposed value propositions of online business model which have been able to improve User experience (UX) and User interface (UI) and reduce consumer pain points caused from traditional business models in this sector.

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Growing interest of industry giants such as Amazon Inc. and Google Inc. in the online hyperlocal and home services market is expected to further intensify the competition which in turn would propel the possibility of market consolidation in the near future.

Market Dynamics:

With demographic diversity, vast consumer base, and growing digitization, emerging economies are showing promising growth opportunities for e-commerce players. Amongst the various industry verticals that are pushing for the supreme position in the growing e-commerce segment, online hyperlocal services providers have emerged as one of the strongest contenders for success.

Major factors driving the hyperlocal services market is the shopping nuances of the consumers. While market witnesses growth in the number of online consumers, majority of the consumers in the emerging regions are mainly driven by ‘touch and feel factor’ (in case of grocery) and trust offered by products/services from their neighborhood shop. Hyperlocal service providers are offering both the benefits to consumers by providing convenience of online shopping and, trust and faith of local retail shops. Additionally, due to better customer reach and potential opportunity in untapped market, online hyperlocal service providers are ramping up their operations in order increase its customer base and create more employment opportunities for the local workforce.

Product and service delivery assurance is a vital component of the hyperlocal services business model. Delivery networks, due to their dedicated focus on high quality services, are critical to the success of a hyperlocal services market. Thus, it has promoted the importance of logistics services and in turn provided potential growth opportunities to a number of startups to bridge the market gap in transportation and logistics assignment.

The growth of the hyperlocal services market is primarily restrained due to the challenges associated with the expansion of these service in the micro interior regions. Building trust among the customers with respect to grocery delivery segment is one of the major challenge for the players active in the market. Additionally, regulated MRP (maximum retail price) which limits margins, poor quality of systems and data in the target retail stores, and technophobic delivery staff are few other challenges faced by the industry. In addition to this, customer retention is one of the major problems faced by leading players in this industry. The company strategizing their business model centering cost efficient logistics service is expected to obtain competitive edge against its competitors.

Market Segmentation:

Hyperlocal Services market is mainly classified on the basis of components, types, and geography.

On the basis of components, hyperlocal services market can be segmented into food ordering, grocery ordering, home utility services marketplaces, and logistics service providers.

Grocery and food delivery start-ups such as Foodpanda (Foodpanda Group), Instacart, Olo, Delivery Hero, HelloFresh (HelloFresh Group), Grofers (Locodel Solutions Pvt. Ltd), Swiggy (Bundl Technologies Pvt. Ltd), TinyOwl (TinyOwl Technology Pvt. Ltd) and PepperTap (Nuvo Logistics Pvt. Ltd) connect customers with restaurants and supermarkets through mobile apps and deliver products on-demand, either through their own logistic network or through restaurants’ logistic network.

Home utility services start-ups such as Porch, Housekeep, Zimmber (Rejuvenate Solutions Pvt. Ltd), near.in (One97 Communications Ltd), Taskbob (Crenovative Ideas Pvt. Ltd), LocalOye (Imma Web Pvt. Ltd), Urbanclap (Urbanclap Technologies Pvt Ltd.) and Doormint (Blackcotton Solutions Pvt. Ltd) provide routine home services such as electricians, paintersand plumbers, wedding photographers, fitness instructors and tutors on-demand.

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Logistics start-ups such as BOXC, Shipster, Swapbox Inc., Roadrunnr (Carthero Technologies Private Limited), Grab (Grab a Grub Services Pvt. Ltd), Shadowfax (Shadowfax Technologies Pvt. Ltd), and Delhivery (SSN Logistics Pvt. Ltd) provide a delivery fleet for e-commerce firms, restaurants, and other companies.

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