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Shinmin \n Bali, Financial Express\n <\/i><\/p>\n
Shinmin \n Bali, Financial Express
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Mumbai, \n 21 February 2016<\/i><\/p>\n
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Having \n created quite a stir at the time of their launch, hyperlocal companies \n are now witnessing a dampened mood. While several have folded \n up operations in some cities, others have downsized staff, tweaked \n the services they offer and even made alterations to their business \n models. A recent example is Grofers shutting down operations in \n Bhopal, Bhubaneswar, Coimbatore, Kochi, Ludhiana, Mysuru, Nashik, \n Rajkot and Visakhapatnam. <\/p>\n
TinyOwl last year was in the news for a poorly-handled downsizing \n operation in Pune, with a dramatic hostage situation involving \n its co-founder Gaurav Choudhary. PepperTap also recently shut \n down operations in six cities.
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Ironically, giants like Amazon have not only aggressively entered \n the hyperlocal space, they are building on it. Amazon is currently \n offering the service in Bengaluru, Amazon Now, after running a \n pilot project, Kirana Now, in 2015.
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The investor sentiment in India is also on a decline, as was \n reported earlier this year. Investments by venture capitalists \n have dropped from $2.12 billion (October-December 2014) to $1.15 \n billion (October-December 2015), according to a report by CB Insights \n and KPMG International. This leaves an even shorter window of \n opportunity for players to retain investor interest.
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Albinder Dhindsa, co-founder, Grofers, states that differing \n levels of technology literacy among the majority of merchants \n and consumer adaptation to the online platform are concern areas \n for the company. In 2016, the company is looking to bring over \n one lakh merchants aboard and ensure that turnaround time stays \n under an hour. Grofers delivers more than 35,000 orders per day \n on average. In Q4 2015, the firm acquired teams of SpoonJoy and \n Townrush to bring dynamic learning to the table.
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For Swiggy’s co-founder Nandan Reddy, the focus is currently \n to grow the market, while catering to a wide demographic of consumers. \n He admits that in the early stages, the brand had trouble educating \n even its partners. Furthermore, operating a delivery fleet in \n an on-demand service offering sub-40 minute deliveries is a challenging \n task, given that there are at least 15 points of failure in an \n average order. Swiggy currently owns a delivery fleet of 3,800 \n delivery executives. The brand’s repeat consumers contribute \n to over 80% of orders.
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Debadutta Upadhyaya, co-founder, Timesaverz, says some of the \n major challenges in a hyperlocal market are optimum resource utilisation \n and matching locations, price points, and other specific requirements \n to customer needs. Timesaverz currently has a service range spread \n across 40 categories, aided by a network of over 2,500 service \n partners across five metros. Its revenue model is commission based, \n where 80% of earnings from consumers are shared with service partners.
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Vinod Murali, MD, Innoven Capital, points out that as the hyperlocal \n industry is in its nascent stages, it needs a fair amount of time \n to grow. “One aspect to keep in mind is that a large sized \n equity cheque does not imply that a company has achieved operational \n maturity or robust business metrics, especially in this segment,” \n he notes.
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Given the recent consolidation in this category, the survivors \n have the opportunity and time to focus on improving unit economics \n and demonstrate that their businesses are viable and valuable.
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Devangshu Dutta, CEO, Third Eyesight, is of the opinion that \n hyperlocals make the mistake of borrowing business models and \n terminologies from Silicon Valley, without adequately understanding \n the real context of the Indian market. “Is there an existing \n or even potential demand for the service claimed to be provided? \n Or are you just going to introduce an intermediary and an additional \n link in the chain, with additional costs and unnecessary administration \n involved?” he asks.
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