Are ‘Hyperlocal’ Shopping Apps Truly Hyperlocal?
For thousands of years, the marketplace has been the cornerstone of human civilization, each one unique in its culture and richness. From Magadh to Constantinople to every street market in the world today, marketplaces have thrived on listening to the needs and preferences of local buyers, the diversity of goods sold and an environment of healthy competition between retailers on equal ground.
Even today, every local community – in any village, town or city in the world - has a self-sustaining economy. There is an ecosystem of retailers in place and the customers that they cater to.
Interestingly, the price parameter that seems to take precedence over everything else when a consumer buys online, doesn’t have the same effect when that same consumer shops locally (more on the price factor later). Instead, the quality of human interaction – the trust, familiarity and quality of service a retailer provides determines his customers’ loyalty. The comforting physicality of a brick and mortar store reassures customers that the retailer will be there tomorrow should an issue arise. And the customer’s proximity to the store and the likelihood of him coming back, motivates retailers to deliver the best possible customer experience.
The Discount Fixation
Before the world of e-commerce, the consumer was pretty much in the dark about the price he was paying for a product at the store counter. With no way to check prices except to physically visit every store himself, he had to take the retailer on his word.
In the past two decades, there has been a paradigm shift. While in the past, there was not enough information, now the consumer has too much information. On any online marketplace today, a consumer will find the same product being sold by a hundred different merchants, all differentiated marginally by star ratings and reviews, but most prominently by price.
This trend has moved over to hyperlocal marketplaces as well. Instead of focusing on using technology to enable more efficient discovery of stores and products, and create a communication channel that celebrates the uniqueness of local retailers and the customers they serve, a price-focused approach is giving customers the same cardboard cut-out online shopping experience at the local level.
And when consumers become habituated to rewarding retailers on a price parameter, treating service quality and reliability as afterthoughts and not the mainstay of what they define as a good retailer, the entire retail economy begins to get destabilized. Every merchant must now ignore the customer experience and focus on number-crunching to arrive at the lowest possible price point he can offer to stay relevant, effectively making him just a seller instead of a retailer.
And why does all this matter to the customer? Simply because when artificial discounting causes profit margins to shrink, the incentive to give good service and maintain standards of product quality also shrink. There are thousands of retailers with physical stores who sell their products at discounted prices on online marketplaces, but only because the cost of investing time and attention in an online customer is zero. But it’s a cost the customer has to bear when he has to wait days or even weeks for a delivery, when he receives a product that doesn’t meet his expectations or receives damaged/substandard goods that need to be returned.
When that same customer shops on a hyperlocal app that designs his/her user experience the same way and rewards retailers once again on the lowest price factor, it can’t be a surprise that the same problems follow, once again created by a lack of personal investment and accountability on the part of the retailer towards faceless customers he’ll never meet or talk to directly.
What Does Hyperlocal Actually Mean?
In reality and by definition, a hyperlocal online / mobile marketplace is one that can electronically facilitate a smoother movement of information within a local ecosystem where demand fulfilment is already taking place.
Instead, hyperlocal apps are using the tried & tested e-commerce model to once again create an alternate universe where they’re in control of order fulfilment and last-mile interface with the customer.
Usually, there are two rather weak arguments made for such a highly controlled market environment. One, a tech marketplace is a ‘brand’ that customers can trust and therefore buy confidently on that platform. That is strange because every good local store is more of a brand in itself, a brand that’s been built over decades of serving its customers.
We relinquish the rich product knowledge and personalized service offered by experienced local retailers when we blindly trust a platform that most likely has no actual background or experience in dealing with the complexities of retail and one who – if recent events in the e-commerce world are anything to go by – may most likely not be there the next morning.
Second, the gross, impersonal standardization of customer experience is upheld to be a virtue by such platforms. Neat little packages delivered by uniformed delivery men completely obliterates the rich experience of shopping locally and leaves the consumer – and retailer – unchanged after every purchase. There’s no human contact, no exchange of crucial information over a casual conversation, no feedback mechanism that can help retailers better understand the people they are selling to and therefore serve them better. Retailers remain vendors and customers remain buyers. Can’t we find a way to standardize the essential (data, order fulfillment, delivery process etc.) without abandoning the pull of the personal?
Moreover, the unusual fixation of hyperlocal shopping apps on delivery time feels like déjà vu circa the late ’90s and early 2000s when e-commerce companies began to differentiate themselves from physical marketplaces by emphasizing the price factor. Today, the promise of ‘cheapest’ by online marketplaces is being appropriated by their hyperlocal counterparts with the addition of a new buzzword – ‘fastest’. But everything else has remained exactly the same.
Simply put, a traditional e-commerce model executed within a smaller geographical area is still the same model. It’s not hyperlocal. And that’s where the problem lies.
The Road Ahead?
A greater respect for local businesses, acknowledging the richness of direct retailer-customer interaction, an omnichannel approach and a loosening of centralized control to allow the uniqueness of every retailer shine through is vital to the birth of a more integrated, truly hyperlocal marketplace.