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As hyperlocal takes the centre stage, what do retailers need to keep in mind with regard to logistics
The global e-commerce sector has entered a golden age. Although online retail has long been on an upward trajectory, the impact of the epidemic has only accelerated its rise.
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Since the start of the COVID-19 outbreak, the global e-commerce sector has entered a golden age. Although online retail has long been on an upward trajectory, the impact of the epidemic has only accelerated its rise. With many nations imposing strict lockdowns, and individuals anxious at the thought of stepping out of their homes, online retail channels have seen a surge of shoppers thronging their platforms. In fact, data from IBM’s U.S. retail index indicates that the pandemic has accelerated the shift to e-commerce by 5 years, with online shopping recording a growth rate of nearly 20 per cent this year alone.
But even as e-commerce portals log record sales and revenues, traditional brick-and-mortar businesses have been left to bear the brunt of this sudden shift in the retail landscape.
The immediate impact of India’s own lockdown was devastating, with only stores selling essential goods allowed to remain open. Every other retailer, no matter what they sold, was compelled to down shutters. According to a survey conducted by the Retailers Association of India (RAI), this resulted in non-grocery and food retailers reporting an 80 to 100 per cent reduction in sales.
Although the lockdown has since been lifted, many of these retailers are still in a dire state. The lockdown saw the establishment of a new normal, one in which individuals from every background and segment of society were forced, by necessity, to shift their retail activities online. As a result, many are now reluctant to return to the status quo, either due to a lingering wariness at the prospect of physically visiting a store or because of a newly developed preference for online shopping.
Hyperlocal Logistics - Offering a Way Forward
But although these obstacles may seem insurmountable, hyperlocal delivery offers a potential solution. In its simplest terms, hyperlocal is a business model in which local offline businesses are connected to customers through an online platform. This empowers them to offer rapid home delivery service within a limited geographical area.
This model has proved to be vital to the survival of neighbourhood stores and businesses, the vast majority of whom do not have the infrastructure, manpower, or experience to directly connect with their customers and sustain an effective home delivery facility. Perhaps the best example of this model’s potential comes to us the courtesy delivery platform Swiggy. Through the hyperlocal model, they serve as a bridge between the public and an enormous array of restaurants, empowering thousands of small food businesses to deliver their products to the doorsteps of consumers.
Facilitating this interaction between retailers and delivery partners are hyperlocal logistics companies. By tying up with a hyperlocal logistics partner, retailers now have all the pieces they need to complete their transformation into digital platforms and resume operations at full capacity.
Shops that have been stuck with unsold inventory since the lockdown began can now function as mini-warehouses, leading to the faster delivery of products, fulfilling inventory requirements, and decreasing the overall cost of logistical operations.
This model is especially appealing to the apparel category, due to the massive build-up of unsold stock that many clothes shops have experienced.
However, retailers need to consider several factors before deciding on a hyperlocal partner.
Key Factors to Consider When Choosing a Hyperlocal Logistics Partner
One of the primary considerations when choosing a hyperlocal partner is the costs involved with the association. The majority of businesses seeking these tie-ups fall under the MSME category – small retail operations that are generally family-run and do not have a large financial safety net to fall back on when times turn tough. Given this situation, finding the middle the ground between a partner that is highly efficient yet expensive and one that is unreliable but cheap is vital to the survival of a store.
The hyperlocal model is built on the promise of serviceability. Therefore, a small retailer looking to establish an online presence must make it a priority to choose a logistics partner that guarantees delivery to a wide coverage area within a tight timeframe. This balance is specially tricky to maintain since the viability of a hyperlocal delivery is determined by both the pin code and the customer’s distance from the warehouse/point of origin.
A service-level agreement (SLA) is a contract between a logistics service provider and a customer which provides measurable specifics on the services that are to be provided. Although a specific set of deliverables by which to measure a partner’s progress is undoubtedly a good thing, retailers new to the hyperlocal ecosystem often find the tangle of figures and statistics difficult to decipher, and ultimately end up saddled with an unfavourable contract. The insights provided by a hyperlocal logistics partner can prove invaluable in navigating this issue and ensuring that the agreement is beneficial to both parties.
Although the distances involved in hyperlocal delivery are small, this does nothing to diminish the importance of delivery tracking. If anything, it only serves to heighten them, as one of the core tenets of hyperlocal delivery is the short delivery timeframe. This application of real-time location tracking is something many consumers have begun to expect when placing hyperlocal orders, primarily due to the influence of food delivery companies and the step-by-step updates they provide. If a retailer hopes to match this experience, they should either be able to offer this service themselves, or integrate with a logistics aggregator that enables them to offer white-labelled order tracking.
A small business that hopes to survive and thrive in today’s retail landscape faces a tough journey. But by adopting the hyperlocal model, finding the right logistics partner, and committing themselves to this new normal, they stand a good chance of emerging from this challenge stronger than ever.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.