Hyperlocal e-commerce shoppers will increase by 52% to reach 214 million by 2022-end: WATInsights

The number of niche brands in the hyperlocal space across categories like home décor/services, groceries, essentials and pharmaceutical sectors, has seen a rise, says a WATConsult report. Traditional brands have shifted their focus towards hyperlocal and direct-to-consumer business models. This transition has been accelerated further due to increased Internet usage and evolved consumer behaviour.

Titled ‘Digital Commerce in India - Hyperlocal Commerce’, the report is by WATConsult’s research division, Recogn. It shares insights on the demand for hyperlocal delivery, the effects of the COVID pandemic on hyperlocal usage, and captures the benefits and challenges of the model.

According to the report, this format of e-commerce has seen a huge customer surge in both metro cities and beyond. Currently, there are around 141 million hyperlocal commerce shoppers in India, which is 48 per cent of all e-commerce users. This number of hyperlocal commerce shoppers will increase by 52 per cent to reach 214 million by the end of 2022.

The reason for this growth, Sahil Shah, managing partner, WATConsult, points out is because of the whole proliferation and access to people across the country, and not just in metro.

Shah adds that as a result of the pandemic, many consumers became used to ordering through these hyperlocal apps. Food delivery apps like Swiggy and Zomato added a vast user base during COVID-induced lockdown months.

“Post-COVID, we thought that this would normalise, but it is still seeing an upward growth. The entire e-commerce segment will witness growth and within it, the hyperlocal e-commerce industry will also see an uptick due to its lower base,” he mentions.

However, Shah adds that in terms of the sales value, hyperlocal may see less contribution to revenue, due to the nature of products sold through this channel. Regardless of this, its user base will be on a rise.

The report also reveals that while Zomato tops the list of the most used hyperlocal apps, SwiggyGo, Amazon Fresh and BigBasket are some of the popular choices among consumers. This is followed by 1mg, Grofers and Uber Connect.

Food, groceries, medicines and household items are a few categories that have seen immense potential through hyperlocal channels of growth. “There is still scope for a lot more growth so that these platforms can compete with Reliance Fresh, D-Mart and the likes. Hyperlocal e-commerce platforms enjoy the advantage of having lower fixed costs, when compared to big modern trade chains,” mentions Shah.

It is important to note that the hyperlocal approach enables brands to reach out to their target customers directly, removing the middlemen and retail stores, as a part of the traditional business model. This provides customers with a better shopping experience, as it offers convenience and quick delivery, especially in the areas of logistics, food, pharmaceutical and groceries. Some examples of hyperlocal commerce include Dunzo, 1mg, UrbanCompany, BigBasket, to name a few.

The consumer lifestyle has undergone an unprecedented transformation due to the pandemic, with demand patterns shifting to online shopping. During the initial pandemic stages, brands faced challenges such as maintaining inventory levels for essentials, shortage of personnel, urgent dependencies on intermediaries and delayed delivery cycles.

The situation pushed multiple brands and sellers to come together and build partnerships, thereby creating a strong ecosystem for hyperlocal services. These hyperlocal apps offered contactless and cashless delivery, thereby providing convenience and safety, while leveraging evolving consumer behaviour brought on by the pandemic.

Shah says that even today, most of the growth for hyperlocal e-commerce channels, is happening in the metros. There is a huge untapped potential in small cities and towns that will witness hyperlocal e-commerce growth very soon.