Hyperlocal road to success: Why online-to-offline services are gaining traction in tier-2 cities

By Neeraj Jain Thanks to e-commerce, the Indian consumers – particularly those belonging to the metropolitan and tier-1 cities – have seen a massive disruption in the way businesses operate over the past few years. Extensive catalogues can be browsed through digital devices on-the-go in a matter of minutes, immense savings can be realized through better pricing, and products & services can now be delivered at the consumer’s doorsteps at a time that is convenient to them. All this adds great value to the overall end-user experience by enabling larger service selection, greater efficiency and better cost-effectiveness. The scenario in the semi-urban geographies, however, is completely different. Several tier-2 cities even today do not have major e-commerce players present and operating within their borders, despite witnessing a tangible growth in the number of digital device owners and a growing adoption of online channels of product/service delivery. The costs of setting up infrastructure and establishing supply chains from scratch is often a major deterrent that keeps the service penetration of online players low in tier-2 markets. As a result, the aspiring consumer bases in these areas often have to rely on unorganized retail and offline shopping options to meet their purchasing requirements. This is what makes the hyperlocal approach such a great fit for the consumer base in tier-2 areas. By integrating the online approach with offline channels such as neighborhood outlets and retail stores, hyperlocal marketplaces have been revolutionizing the concept of digital commerce for the increasingly online-first Indian consumer base. Imagine being able to order your groceries from a nearby vendor while you’re sitting in the office and having them delivered to your home at a time of your choosing at the touch of a button, or the mental peace of knowing that your purchasing grievances can be addressed swiftly by simply placing a complaint with a shop owner who you know and trust. From food delivery and apparel shopping to household services such as plumbing and electrical repairs, hyperlocal marketplaces are enabling consumers to integrate the convenience and cost-effectiveness of online commerce with the trust of neighborhood stores and have been gaining great traction within the tier-2 consumer base. Another main cause that has been driving the rapid growth of hyperlocal marketplaces in the tier-2 markets is the speed of service delivery. Consumers have traditionally often had to wait for up to a week after placing a particular order to receive their purchases owing to the complexity involved in procuring, stocking and transporting the item in question over any distance. Since tier-2 cities often had their supply chains redirected through the regional e-commerce centers, the order fulfillment for consumers from these regions could often even take as long as a month. The hyperlocal model streamlines and optimizes the order fulfillment process by presenting users with shopping options available in their neighborhood stores. Not only does it allow consumers to choose the vendor and grant them greater control over their shopping experience, but also leads to prompt order fulfillment. This is particularly handy in case the item in question is a perishable or fragile commodity, as it minimizes the risk of potential damage. Given the benefits that they offer, it is little wonder that hyperlocal services have filled the market gap in tier-2 cities and have gained such impressive response from consumers belonging to these regions. Many e-commerce players are now actively planning to venture into the segment and augmenting their offerings by including hyperlocal services into their operations, while even the urban consumers are adopting hyperlocal services into their purchase behavior owing to its convenience. All these developments indicate that hyperlocal services are poised for a long innings. The author is CEO and Co-founder, Zopper.