What Is The Hyperlocal Business Model? The Hyperlocal Business Model In A Nutshell

The hyperlocal business model is one where the delivery of products is confined to a specific geographical area. The hyperlocal business model focuses on the needs of consumers who reside in the same geographical area. The most defining characteristic of the model is the speed with which products can be delivered to consumers. For best results, the location where the order is packed for distribution should have the same area code as the customer’s address.

Understanding the hyperlocal business model

This makes the model ideal for products that are required on-demand, including fresh food, personal care items, medication, stationery, baked goods, pet supplies, and miscellaneous products such as smartphone chargers and batteries. The hyperlocal business model can also be used for on-demand services such as laundering, home maintenance, and pre-cooked meals.

The hyperlocal delivery industry is extremely lucrative and is predicted to grow to trillions by 2027. Growth in the industry has been facilitated by

  • Urbanization, with more people now living in cities with access to hyperlocal services.
  • The increasing penetration of smartphones and the internet. 
  • The proliferation of eCommerce companies and related delivery platforms.
  • The COVID-19 pandemic, which has constrained national and international supply chains, and
  • Consumer expectations, with most attracted to companies who can deliver products faster than their competitors. 

Characteristics of the hyperlocal business model

Here are some of the characteristics common to the hyperlocal business model.

1 – Personalisation 

The model allows local customers to connect with local vendors without the need for an intermediary. Some customers may become friends with their local vendors, which builds trust, transparency, and in some cases brand equity.

2 – Technology 

Sellers favor a digital payment system that ensures customers receive their orders as quickly as possible. 

They also need to define a strict geographical delivery area, which is normally done via an app. 

3 – Delivery and logistics  

Some sellers choose to deliver their own products, but many employ the services of a delivery company to ensure products are delivered on-demand. 

Most apps will be able to determine at the point of order whether a consumer lives close enough to qualify for hyperlocal delivery.

4 – Customer relationship management (CRM) 

Like most business models, there must be CRM procedures in place to deal with customer complaints. CRM tools can also be used to determine how to get the most traction with localized marketing content. 

American restaurant chain Johnny Rockets operates in more than 400 locations around the world with a relatively small marketing team. The company does not have the market saturation of a McDonald’s or Burger King, so it uses hyperlocal CRM to boost brand engagement and make more efficient use of local marketing dollars. 

The strategy encompasses geo-targeting, where a website visitor is sent content based on their location, and geofencing, where smartphone users are sent promotional messages when they enter a particular geographic area. Johnny Rockets also takes photographs of various outdoor scenes across 32 different countries to appeal to the local diners in each.

5 – Revenue model 

Revenue modeling is a process of incorporating a sustainable financial model for revenue generation within a business model design. Revenue modeling can help to understand what options make more sense in creating a digital business from scratch; alternatively, it can help in analyzing existing digital businesses and reverse engineer them.

There are two main options for revenue in the hyperlocal business model, delivery fees charged to customers and commissions from merchant partners. 

Note that some businesses will charge a premium on the delivery fee because of the speed with which the order is delivered.

Key takeaways:

  • The hyperlocal business model is one where the delivery of products is confined to a specific geographical area.
  • The hyperlocal business model has become more popular in recent years thanks to urbanization and the mass uptake of smartphones and the internet. Companies that can deliver the fastest to consumers tend to be the most competitive in modern markets.
  • The hyperlocal business model is characterized by personalization between the buyer and seller, location-specific technology, and tailored delivery and logistics systems. CRM is also important in hyperlocal marketing strategies, particularly for businesses with a more global presence.

Connected Business Concepts

Revenue Modeling

Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

Dynamic Pricing

Dynamic pricing is the practice of having multiple price points based on several factors, such as customers segments, peak times of service and time-based consumption that allow the company is applying dynamic pricing to expand its revenue generation.

Pricing Strategies

A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.

Market Segmentation

Market segmentation is the process of dividing the market into sub-groups. Market segmentation can be based on characteristics such as age, behaviors, income levels, and more. This process helps to understand what your key customers want, where they are, and how to talk to them effectively.

Customer Segmentation

Customer segmentation is a marketing method that divides the customers in sub-groups, that share similar characteristics. Thus, productmarketing and engineering teams can center the strategy from go-to-market to product development and communication around each sub-group. Customer segments can be broken down is several ways, such as demographics, geography, psychographics and more.

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