The e-commerce industry has been expanding its reach year on year, trying to carve out a bigger chunk of the pie of global retail sales. According to Statista, in the year 2019, e-commerce sales account for 14% of the total global retail sales. Total e-commerce revenues reached around $3.5 Trillion USD which is an 18% increase from the previous year. The growth is seen to continue on until year 2023. While not too robust a growth, it is seen as consistent.
Amazon has to be credited for the growth of the e-commerce industry. And, for the first time, the e-commerce revenues has now taken over the general merchandise sales. As part of its plan for growth, the e-commerce giant is taking strides overseas. The recent announcement that Jeff Bezos made was the planned $1 billion USD investment in India.
E-commerce is Taking Over
While the intention was to help small businesses in India get online, the announcement did not sit well with the local business industry players. India business owners protest massive Amazon investment and even branded Amazon as an economic terrorist. The protestors reasoned that this investment deal can hurt their hyperlocal businesses.
What is a Hyperlocal Business?
To fully understand where the business owners in India stand in terms of business and economy, you have to know first what hyperlocal means. Hyperlocal may have been defined in many different ways by various dictionaries. But the keywords that you have to remember to understand simply what it means is “local community”.
Hyperlocal businesses are those that operate within your vicinity such as the nearest shopping center, grocery, restaurants, malls, bookstore, pharmacy and other suppliers or service providers. These businesses’ target market are the local customers. The market area is therefore more defined and specific.
The Hyperlocal Business
To qualify your business as hyperlocal, you have to have two important elements present in your operations:
- Your business is operating locally.
- You deliver your products or services to your customers in a short period of time.
Both hyperlocal and e-commerce can compete based on the 5 P’s of marketing (Product, People, Price, Promotion, Place). But there’s another P that you can add to the marketing mix which can be a crucial point for buyers to consider – Proximity.
Proximity of your business to your customers gives you that home court advantage of capturing them. Whether they pick up the products at your physical store or you have their orders delivered to their doorstep, proximity defines how soon they can get their products.
Hyperlocal vs. E-commerce
Hyperlocal and e-commerce are closely related as both are dealing with marketing products and services. But there are major differences between the both of them that may influence entrepreneurs in choosing which direction to take.
As defined earlier, the market coverage of a hyperlocal business is within the vicinity of its physical shop. It is more confined to a specific area or community.
In e-commerce, the scope is wider. We are talking about the potential of going national and even global or international. Your marketplace can be in another country.
Type of Transaction
Hyperlocal transactions happen off-line, in physical stores or merchant calls. The products or services are acquired by going to the stores, or calling to order then pick-up or have the merchant deliver the products you ordered to you.
E-commerce, on the other hand, completes transactions online via individual shops’ websites or e-commerce platforms and marketplaces. Think, Amazon, Shopify, eBay, Alibaba, Lazada, etc.
The lead time to deliver the products you ordered via e-commerce platforms can take days. If your merchant is a business overseas, delivery can take weeks or months, even.
The delivery period is an advantage hyperlocal businesses have over e-commerce. Orders can be delivered in a very short amount of time – an hour or even down to only several minutes depending on your order and location.
It is easier for customers to contact the suppliers under the hyperlocal business ecosystem. A call or a quick visit to the physical store may address your concerns and questions regarding the products.
Blending Hyperlocal marketing and E-commerce
Looking at the business ecosystem of both hyperlocal marketing and e-commerce you will see that each has loopholes that the other can plug. The driving force of blending both approaches is the on-demand provision that customers wanted of merchants or suppliers.
Placing your hyperlocal businesses in the e-commerce space can be a good direction to take to scale your business. It is like bridging the gap between being offline and going online. It is an entirely different business ecosystem but one that many entrepreneurs are willing to thrive in. In fact hyperlocal marketing is found to be one of the E-commerce Trends for Year 2020.
So, how would the marriage of hyperlocal marketing and e-commerce work?
The Hyperlocal E-commerce Delivery Model
Let us go back to the force behind this – on-demand provision. But what are the usual products that customers want on-demand? These are usually food, groceries, handyman services.
In a traditional hyperlocal business, a customer goes to the local store nearby to purchase products thus, getting them on-demand. Or, phone in to order and have them delivered to you in a matter of minutes to an hour. If not available, you go through each number in the directory to call until you can reach one that is available.
Placing it in the e-commerce space, your products will be made available online or via mobile. You can develop an app where your customers can order and with the use of geo-tagging or geo-mapping, your customers will know where you are located and you will also know where your customers are located.
Or, you can also get on the platform of e-commerce aggregators.
Hyperlocal E-commerce Aggregators
In the case of food delivery, the known aggregators are Foodpanda, Uber Eats, Swiggy, Eatigo, Deliveroo, Zomato and many others. The way the aggregators work is that they elevate the traditional way of food delivery by opening to the customers the access to multiple local restaurants or cafes through a single online portal.
To illustrate, in Foodpanda customers can browse through the list of partner restaurants or merchants and their menu in their portal or the Foodpanda app. Then like in an e-commerce platform, they can add to their cart and checkout, indicating where the food is to be delivered. The orders are then directed to the partner restaurant for preparation.
Customers are updated at every step: when the restaurant has accepted the order and prepared the food; when the rider or delivery already picked up your order from the restaurant; and when the rider is just around the corner of where you want your order delivered.
A cool thing about some of these apps is that you are advised on the delivery lead time.
A Boost or a Threat?
If we look at the situation in India and Amazon, you can sense that hyperlocal marketing is more of a threat on E-commerce especially when these E-commerce giants are trying to get into the local business scene and they are not received well.
India already has a defined hyperlocal e-commerce ecosystem comprised of local aggregators and delivery networks. You would understand then, in a way, why they want to protect that ecosystem.
But, we can conclude that the conventional approach in growing a business can be further scaled by incorporating the digital element. Neither is a threat to each other.