6 Reasons Why Hyperlocal Tech Initiatives Continue to Elude Consumers
Hyperlocal is a totally logical concept in the minds of technologists, analysts, and investors, but many hyperlocal tech initiatives have yet to catch fire with consumers.
Part of the challenge is people are creatures of habit. Most consumers don’t sit and ponder what’s coming next in the evolution of technology. To the contrary, most wish the pace of change would slow down and give them a chance to catch up. Some have yet to master their smartphone or even the microwave.
Here are six reasons why hyperlocal tech will continue to elude consumers’ grasp in 2016:
1) Most new tech isn’t habit-forming. Most consumers aren’t early adopters, but even those who are willing to try new tools and technologies tend to get sidetracked by the pull of the familiar.
New platforms can be wonderful, but unless they can become ingrained in consumers’ daily rituals, they will pass by like a fad and fail to develop into an enduring feature of the technology landscape. Groupon and Foursquare are good examples of products that touched many of us, but failed to sustain our long-term interest.
For hyperlocal apps to hit Main Street — and maintain their presence — asking what a hyperlocal habit is and what it takes to form one is essential. Many consumers intrinsically value local, but they are accustomed (or some might say addicted) to daily rituals on Google, Facebook, Twitter, LinkedIn, and other large global platforms. What’s more, these incumbents are continually evolving their product sets to maintain their hold on users, which makes the challenge that much harder for emerging vendors.
2) Mobile payment adoption is minimal. One compelling area that could make people change their habits is payments. When a platform can insert itself in a transaction, it can become an instant habit. Starbucks — the exception often cited as the rule — deepened its role in consumers’ coffee routines, first with its pre-paid cards and then later with its mobile app.
Multiple vendors are seeking to stake a claim in the hyperlocal payments process, including Square, Stripe, Amazon, Apple, and Google. None have yet truly succeeded.
In many cases, they are fighting the deeply ingrained habit of using credit cards and cash. There is little that new payment platforms do to “lock in” customers. Amazon Prime is a great example of how Amazon makes it easier for consumers to shop with Amazon, and provides a disincentive to shop with other merchants.
3) Limited scale limits network effects. Consumers like to try new things but what they like more is to be where their social graph is. This is something of a chicken-and-egg problem with hyperlocal technology and platforms, where limited scale continues to limit growth. Oftentimes, it means local solutions get stuck in first gear, and don’t get un-stuck.
Automating analog local processes isn’t a slam-dunk for other reasons. Consumers have to get accustomed to using technology where they once used other methods.
4) Commerce solutions need to progress beyond local deals. Groupon was the original use case for hyperlocal and it initially grew like crazy, but it turns out consumers associated Groupon (and its competitors) more with deals than anything else. In many cases, the deals came from big brands not local companies. The model played itself out, and we’ve yet to see a local app or a platform emerge that consumers can’t live without, at least not an app that identifies itself as a local company. Facebook, Airbnb, and Uber all have local components to their service, but they are not explicitly local companies.
5) Solutions need to be more about showing than telling. Millennials use Instagram as a visual search engine to see what’s popular. It’s a form of peer-to-peer learning. That’s a powerful statement: They’re skipping words, reviews, and ratings, indicating they want to be shown, not told, and signaling that less is more.
6) Consumers need a compelling reason to try something new. Everyone is experiencing app burnout. Any new hyperlocal service, which inevitably will have an app, faces an uphill battle in generating awareness and developing a following.
Local services need to do a better job of aggregating relevant apps and experiences into a bundle to tip people’s perception. Otherwise, consumers will have trouble connecting the dots and won’t rush to try (or adopt) new platforms.
Home delivery could be that compelling reason — the driver that gives hyperlocal tech the momentum it needs and makes it a habitual part of consumers’ daily routines.
Standing out from the crowd is undoubtedly a challenge; it’s up to local platforms and merchants to make consumers take notice and feel invested in their success.
Avi Lambert is CEO of Photonic Public Relations, a marketing and business development firm based in Victoria, B.C. He explores the barriers and opportunities for hyperlocal last-mile marketing from a public relations and business model canvas perspective.
Nick Kellet is the co-founder of social content platform Listly. He has a deep understanding of digital media. His BI Segmentation startup exited to Business Objects. GiftTRAP, his self-published board game, sold 100,000 copies globally, winning a Spiel des Jahres prize. He’s ever-curious about local.