D2C hyperlocal market: Future of Supermarket FMCG bussiness

With the substantial change in consumer behaviour and surge in-home delivery and online shopping, now FMCG brands are stepping up efforts to sell directly to consumers. Many of the world's consumer brands have accelerated their investment strategies to D2C (Direct to Consumer). The traditional grocery shopping to brick-and-mortar stores with long queues to car parking and checkout have reduced substantially and are being replaced by web-enabled purchases providing safety, simplicity, and speed. This has opened a plethora of opportunities in the retail sector for innovation and improvisation. One such example has been the uptick of hyperlocal deliveries. The hyperlocal market has been a blessing in disguise for the logistics players, aggregators, and customers alike.

The FMCG sector is re-evaluating the importance to be given to hyperlocal channels. Promising the speed of delivery with an assortment of local stores along with added benefits of safety and convenience of e-commerce, hyperlocal platforms are set for marginal growth in the current situation. Let us look at what is meant by hyperlocal delivery and how the FMCG business is leveraging them to stay afloat in the market.

What are hyperlocal delivery services?

Hyperlocal services include services in which the seller/service provider acquires products with local markets or stores on demand by the customer and then delivers them to the customer located within the same geographical area. In this model, digital platforms play a crucial role by connecting local offline businesses to the end customer through enabling quick deliveries for short distances through a fleet of delivery agents. Owing to the convenience they offer and profitability margin in today's challenging environment, more and more brands increasingly prefer hyperlocal deliveries.  The main reason behind the success of these services is the lightning-quick speed they can cater to a customer's demand be it on food, grocery, or household items which is enabled through advancements in the logistics system. Many brands are using D2C fulfilment options to cater to the countless demands of their hyperlocal customers.

What is D2C fulfilment?

In D2C fulfilment the brand promotes/sells the products directly to customers without needing any intermediaries such as distributors, retailers, wholesalers, or other channels. Such brands manage the supply chain all on their own including the manufacturing, selling, promoting, and shipping of their products. Online channels are leveraged by D2C brands to reach out to their customers.

Why do FMCG brands prefer the D2C business model for hyperlocal services?

-  D2C enables direct interaction with the consumer, hence, helps better understanding the target audience and market

-  Opens up a wide range of opportunities for introducing innovative products on a smaller scale without any delays

-  Brands have direct ownership over reputation and customer experience

-  Provides an opportunity to create an omnichannel platform with ease

The D2C business model provides greater opportunities for innovation and higher profit margins. It is a win-win for both the D2C brands and the local retailers.

D2C Fulfilment options

There are different ways to build your D2C fulfilment network for hyperlocal customer service:

1. In-house fulfilment

2. Fulfilment by e-commerce marketplace provider- external

3. Fulfilment through the 3PL provider

In-House Fulfilment

The D2C hyperlocal brand handles the fulfilment themselves without any help from external third-party providers through inventory storage, order processing, returns processing, shipping, and receiving. The fulfilment process here, right from picking, packing, to shipping, is entirely handled by the D2C owner itself.   

Fulfilment by e-commerce marketplace provider- external

External marketplace providers like Amazon provide a plethora of opportunities to small-scale businesses to expand their exposure to reach wider audiences. This fulfilment option also helps brands save on costs related to infrastructure like warehouses, labour, fans, etc. You can choose to outsource the entire fulfilment operation to the external provider or use these external providers only for inventory management.

Fulfilment through 3PL provider

This option handles the entire fulfilment operations to a third-party service provider. Many 3PL providers offer high-quality services ensuring flexibility, diversity, and optimal prices for deliveries. This enables the brand to focus on brand strategy and growth.

Factors impacting the growth of D2C hyperlocal markets

The success of D2C hyperlocal markets is determined by special features that specifically enable efficient, effective, and customer-centric logistics.

Varied Delivery Options

Customers want numerous delivery options beyond fast and free delivery to suit their specific needs and situations like 24-hour delivery, same-day delivery, or even during specific time frames. These evolving consumer demands have increased the need for technology to streamline the supply chain functions like picking, packing, and shipping.

Transparency

Transparency in D2C eCommerce dictates the ability for the customer to track the status of the order. Hyperlocal sellers should enable their customers to track the status of their orders in real-time. Proper communication channels need to be in place to ensure proper handling of issues/customer complaints.

Accuracy and Consistency

The business model of hyperlocal D2C selling should be complemented by technological support systems. This would ensure consistency in the processes, especially with inventory management, digital transactions, etc. Automation technologies ensure cost-effective, efficient order fulfilment systems.

Future Trends for D2C e-commerce model

There has been a huge shift from offline to online shopping in recent years. Customers choose from varied options while buying a product online – either to pick it in-store, purchase a product in a store or ship it to their home as such user-friendly shopping websites play a huge role in driving traffic to stores. Brands are now working towards bringing in-store shopping experiences to online sites or mobile stores using Artificial intelligence and machine learning techniques.

Virtual and Augmented Reality

Today's customers do a lot of online research before they purchase the product in-store. Beyond what online experience offers, they still want to feel and touch the product before they buy. Virtual and augmented reality technologies enable an immersive experience and help customers make decisions before setting foot in the store. This also eliminates any logistics issues that are related to the trial of heavy items like furniture or electronic appliances.

Inventory systems to be made public

D2C retailers would soon tend to make their inventories open and transparent to public view. Customers would no longer seek stock-related information from store associates. Customers will now see all the items available in-store and online. If a product is not available in-store, they have the option to turn to online purchase through shipping. The blend of omnichannel fulfilment options has enabled hassle-free return options as well. Customers can now choose to purchase the product online but can return the product, if needed through online booking of door pick-up or walk into the store to process the return.  

D2C hyperlocal revolution will be channelled, to farms and factory products

Stores and restaurants that serve unique varieties of local products would now employ the D2C hyperlocal business model to serve their customers. For example, meat box companies now sell directly to customers who choose to buy high-quality meat without third-party interference. 

The D2C business model has become the best way to cater to thousands of demands of hyperlocal customers. Having an experienced and innovative D2C consultant like YRC gives you a clear direction and builds the right strategy for you comes into play, especially when you are up against some big-name competitors. 

About YRC

The retail experts at YRC (Your Retail Coach) have helped many global brands select the right strategy and tools to enable a seamless transition from B2B to the D2C model. YRC offers AI-driven solutions to optimise the supply chain and fulfilment channels. The retail experts would come together to discuss effective strategies to widen the customer base both online and offline while retaining the existing customer integrity. For more information on ensuring a smooth, flawless execution, please contact us.