Sunday, August 9, 2015

Emerging Hyper-local Aggregation markets and startups

Aggregation model of business brings various sellers and buyers on a common platform. Flipkart, Snapdeal, Redbus, MakemyTrip and many more companies have since matured the aggregation model and grown in both valuations and scale of operations.

These aggregators sacrificed profitability to build market share. The nascent e-commerce market and sluggish economy only added to their woes. Soon the long term sustainability of aggregator model came under questioning. But interestingly, the aggregator model is only picking up pace, now in its new avtaar of Hyper-local Aggregation.

New startups have cropped up who are aggregating at the local level of a city or even a neighbourhood. Big Basket is delivering locally sourced groceries at one's doorstep. FoodPanda, TinyOwl, Delyver are delivering food from nearby restaurants. And new players like Grofers are delivering from your trusted shops in the neighbourhood. Then there is Practo who helps locate and rank doctors locally. SeekSherpa aggregates local people who provide tours with real local flavour.

The urban lifestyle is fuelling the demand for such hyper local aggregators. A typical urban consumer has disposable income but not time. They look for convenience and tend to buy experience. It's not the lack of demand but the poor service delivery which can hurt a hyper local aggregator startup. Cracks are already showing up; Cab drivers do not show up, Food orders get cancelled, Low quality vegetables delivered, not enough SKUs. 

Another area of concerns is scale. Can these hyper local aggregators scale up and become unicorns? Or would their growth stabilize at a smaller scale. Unlike Flipkart and likes, these startups are not nationwide. The only way to grow in scale is to replicate their business model in as many cities as possible.

Nevertheless, its encouraging to see new sprouts of economic activity at local levels and should be nurtured. And with creative offerings of these young startups, its certainly interesting times ahead for urban consumer.

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