What's the Hype with Hyperlocal delivery startups?

HyperLocal Delivery Startup space is on absolute fire. Just like how the deliveries are meant to be done within 10 minutes, the valuation jumps/acquisitions in this space are happening at that speed.

Latest Company to join this trend is none other than Reliance as Reliance Retail Buys 25.8% Stake in Delivery Platform Dunzo for $200 Million

Some other prominent players include Swiggy backed Instamart (Swiggy is looking to invest 700 Million dollars), Zomato backed Blinkit (Formerly known as Grofers) and Zepto (valuation doubled in last few months)

I’m extremely skeptical about this business model, I’m not even talking about valuations which come later. But how viable is this business model?

Business models of Zomatos and Swiggys of the world which at least has a use case of customers wanting to order something online from a restaurant when they find it difficult to cook at home or busy with work. When such a model is finding it difficult to be profitable, I wonder how the hyperlocal delivery business model will be profitable where the margin of error is too low.

Sure, One can argue that as the distance is less,the fuel costs and other costs associated with delivery will be cheaper than the food delivery business. But, what is the potential to scale up this business revenue and get profitable?

All I can say is, This space is a must watch space. I’m extremely sceptical about the viability but I hope i’m wrong about this.

Tell me what you feel about this space…

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i feel this is 80% weight of this post. who would not like it? atleast if you give it to them once, they would ask for it again. post what do you think…

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My doubt is also relatable,
I genuinely want to know, how do quick commerce companies, delivery items worth Rs.<500, in such competitive space and become profitable ?

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Zomato delivering food in 10 Minutes. Seriously !!! :astonished: :astonished: :astonished:

For Company and employees

  • Costs of running the business increases

  • Employee’s safety definitely decreases

  • Employee’s anxiety and work stress goes up like never before

For Customers and Society

  • Potentially more accidents due to urgency

  • Extremely less incremental value addition when compared to lets say 30 minute delivery

  • Quality may definitely be taking a hit.

What are your views on this folks ? Me thinks its not gonna work.

I don’t like such a hyper delivery service. While it might make sense for groceries and medicines as there is no preparation time involved, it makes no sense for food items as their preparation process is long. Besides, it increases the chance of mishaps and accidents.

It may not be successful but I’m glad Zomato folks are trying.

I’d pay for a service that knows that I automatically will order Bhel Puri on a Thursday Evening and Chicken Biriyani on a Saturday afternoon and can serve me hot food in <10 minutes on the order confirmation. That is the world I want to live in.

you can’t connect the dots looking forward; you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future. - Steve Jobs ( Text of Steve Jobs' Commencement address (2005) )

If they are able to use tech to manage this reasonably on average, then nothing like it. Obviously, meals will already be prepared in advance, so spoilage has to be managed and maybe that can be reasonable reason why this is not good idea. Perhaps they can start donating food that might go stale but before it does …

Big Basket has started delivering very quickly within 10-15m here - It seems to work rather well. Again, we can argue whether this will lead to extra fuel usage since fewer orders might travel together. Only people who know how this works and what the tradeoffs are can tell whether its a good sustainable idea. I am happy with amazon fresh too and they take atleast a few hours.

Minimum order size is also getting removed or reduced quite a bit, maybe result of competition. So now i can order fewer items if i don’t have immediate need. Local stores might feel the effect of this too …

Big Basket refused to improve their delivery services. I remember ordering on Big Basket and waiting for 2-3 days and still not receiving items.

I am now ordering with Swiggy Instamart and Zepto. Works well for me. IMO I don’t really care if they deliver in 10 minutes, I just want to get them in a reasonable time.

I am pretty sure that this is not the case.

Corrected. Thanks for pointing out

If this actually happens without compromising on quality and service, will take benchmarking to another level. If they are claiming, they might have a math behind the plan. Looking forward to how it executes

It depends on area i guess, we have been ordering for few years without issue. Amazon Fresh works well too so these two have most our grocery shopping these days.

Random theory which no one asked for but this phenomenon has its roots in Game theory and its interesting so might as well. This is about the beauty of Hypercompetition™. Real-life application of the quote “If you can’t win the game, change the game”.

If any game is played out for long enough, it will find itself in a position where it becomes virtually impossible to beat the dominant players by continuing to play by the same rules. In this case it makes complete sense to force the dominants into playing an absolutely ridiculous iteration of the same game. You don’t do it with the expectation that, just because you are forcing it to happen, you will win. You do it because you have no other choice. If it continues the same way you will lose.So inferior’s best chance is to bring vol into the system, and pray that somehow the tide turns to their favour. This is as old as evolution itself.

Some scenarios :

  1. Humans were created very weak in comparison to the rest of Nature. Literally everything can kill us at will. We had no claws, no fangs, no poison, no wings, no speed, no mass. So Humans decided to refuse to fight naturally and instead started sticks and stones to break mammoth bones. This game has continued to this day, and humans can kill anything from space and are apex predators even when a chimp can still kill any individual Human in a fair fight today.

  2. Although there is no good way to challenge say Magnus Carlsen to a chess match and not be completely destroyed. But if has to be done, it would make sense, to challenge him to a game of 1 minute Bullet and play as randomly as you can. This doesn’t mean you would win, but this is possibly the only chance for an amateur to make a game out of it. For all his greatness, he still isn’t world number 1 in Blitz and below.

  3. Rap artists today (~Post 2015) have no Bars and can’t tell a story to save their lives. This is simply because they came to adulthood in a different world.If they were to compete against the “Golden Generation” of Hip Hop through bars, albums and curation they would fail miserably. So they simply decided to start mumbling instead and went heavy on the beats and melodies. They have zero iconic bars, zero albums which can stand the test of time , but this gets them money, fame, or clout, whatever they are after.

  4. Basketball is a very “dynamic” sport. NBA until say 2014 was still a tactical league, every position had a specific role to play. And to play that way you need size, durability, deep knowledge of the sport. This is draining on any team, so it was natural that players simply started shooting as many 3s as they possibly could from anywhere on the court. Thus the sport changed from a defensive sport to an offensive sport. Where both teams simply shoot a barrage of 3s and hope for the best.

How can the dominant incumbents avoid being forced into Hypercompetition ? Well, in most cases they wouldn’t be able to, that’s the beauty of this. Competition avoidance is a luxury which not many have.

But there are still many instances where this is being done with great success. Apple simply refuses to play by anyone’s rules. It does its own thing at its own speed. They have developed a method which has worked and continue to follow it over the decades. Same with Vanguard. Same with Zerodha, same with Amazon.

Jay-Z has managed to do the same thing in Hip Hop. For the last 10 years atleast, all he has done, is come on a track, tell everyone that they are nothing in comparison to him, flex about his money, his family, his investments and the track ends. His entire discography in a sense is just telling other people they are ngmi. This gets dry and monotonous quickly, but nobody can say it doesn’t work.

So all this to say that basically in any environment where the only way to break statis is to force the other party into a game of speed, we are far from done as to how hyper this competition can go among delivery startups. We are still in early days.

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Common sense prevails in the end