The Rise Of Hyper-Local Delivery And Last-Mile Delivery Startups

In India, the cultural shift to quick delivery prompted the growth of hyperlocal and last mile delivery startups. These companies are benefiting from the surge of people looking to have items delivered to their doorstep at the click of a button. There is a new category known as Quick commerce under E-commerce that is rapidly entering an era where same-day and instant delivery is the new norm, and it has become indispensable. E-commerce activity in categories other than fashion and electronics has increased significantly over the last 2 years. Food, pharmaceuticals, groceries, and staples are the most ordered and delivered products. The last-mile delivery ecosystem is witnessing huge traction due to a surge in hyperlocal startups and the major funding happening in that sector. So, a hyperlocal startup is one that is in the business of supporting other businesses in the last-mile delivery of products through platforms such as Dunzo, Zepto, or other startups operating in this space.

Delivery Startups

From food delivery startups like Zomato, Swiggy, etc. to hyperlocal on-demand delivery startups like Grofers, Licious, etc. and large E-commerce players entering hyperlocal delivery segments like Amazon Fresh, Flipkart supermarket, BigBazaar, Dmart, JioMart, and more this segment is gaining surging popularity and adoption among the public. In addition, improved logistics startups such as BigBasket and Grofers have been able to deliver within a matter of hours from local stores. Medicine delivery startups such as 1mg, Medlife, pharmeasy, and others are solving the problem of access to medicines and other healthcare supplements and the biggest reason for the success of these startups is the lightning-quick speed at which they can facilitate a consumer’s request due to the improvements in the logistics infrastructure in India.

Delivery Ecosystem

The delivery ecosystem in India has been dominated by the trucking which was responsible for delivering large shipments and transporting heavy goods to far-flung regions, this has been the case for the past few decades until recently Quick Commerce (Q-Commerce) took over the ecosystem; now small trucks, minivans and bike-guided delivery systems have replaced that. Customers expect faster and more tailored service which is reflected in their buying behavior and directly affects how businesses operate. The result of this for E-commerce players has been a dramatic reduction in delivery times. People are now trying to avoid direct contact as much as possible and this is also reflected in consumer behavior which tends to have home deliveries from hyperlocal and E-commerce providers or local stores equipped with delivery options. This sudden thrust in the E-commerce and hyperlocal ecosystem has triggered a growing demand for last-mile deliveries.
Hyperlocal services have a high innovation quotient, and they add new features on a regular basis to keep users coming back. Consumers have also become habitual to buying products online and receiving them immediately, which means there is always a chance for services to streamline by hyperlocal delivery and gain the edge. All of this has increased their growing user base. Hyperlocal startups are still in their initial stages as more stores go online. This will reduce human inefficiency in delivery and low customer churn. All of this increased the chances of these hyperlocal and last-mile delivery startups winning the race.
While last-mile deliveries have been a challenge for many E-commerce and hyperlocal businesses; efficient and accessible solutions have been discovered using technology such as artificial intelligence (AI) and machine learning (ML) tools which have improved the efficiency of routing, batching, demand prediction and rider allocation. The added logistical benefit of strategically located distribution centers and scalable warehousing brings products closer to the end customer and makes hyperlocal more sustainable than ever before.

Demand For Warehouses

Due to the increase in the number of hyperlocal and last-mile delivery startups, Urban warehouses have now become crucial for ensuring on-time logistics service in all urban hubs. These facilities include logistics centers or warehouses to be set up in major areas in the city in order to be close to customers and deliver products as quickly as possible. Limited storage space and rising logistics real estate prices in urban regions are driving enterprises to acquire more space to expand and utilize their facility's space. Warehouses function as storage buffers, receiving items from the distribution centers and delivering them directly to end customers. The Grade-A warehouses emerged as the major solution, meeting all of the necessary requirements and their demand increased significantly during the pandemic. Its necessity will only grow hereafter.
Warehousing in Bengaluru gained traction as many e-commerce businesses established offices while existing players planned to expand and upgrade warehousing in response to the pandemic's increased online shopping. Because of the high demand for Grade A compliant warehouses, many regional players have increased their efforts to build new and modern facilities. Expecting rapid growth developers are acquiring land in prominent locations and also on the outskirts of Bengaluru to develop warehouse spaces.
Below are locations that have increased demands in Bengaluru and saw the majority of acquisition of land and warehouses:
  • Bommasandra
  • Yelahanka
  • Nelamangala
  • Tumkur Road

Conclusion

Many early startups failed to take off due to a lack of market readiness. Since the market now is more mature and consolidated, both surviving startups and new entrants gained a better understanding of consumer behavior and improved their business models. Adding to safety during the pandemic, contactless home delivery is the important factor that hyperlocal deliveries can offer their consumers and drastically reduce the risk of exposure to the Coronavirus in crowded marketplaces. Hyperlocal delivery startups are becoming more convenient and therefore, it is the preferred choice of customers. These are simultaneously contributing to the rapid growth in acquisitions of logistics and urban warehouses in the prime locations of the cities.

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