Start a Hyperlocal Buying & Selling or Service Business

I’m back! If you were thinking that I was kept under house arrest without charge by a Soviet-influenced government and deprived of vape and alcohol then you would be correct. Light up those bootleg cigarettes it is a 1500 word doozy.

Today I will look at an emerging trend that has exploded under COVID-19: hyperlocal commerce.

What is “hyperlocal commerce”
Hyperlocal is defined as “relating to or focusing on matters concerning a small community or geographical area.” This is the selling of goods, foods (both perishable and non-perishable) and services within your local and surrounding areas. When I say your local and surrounding I am referring to the context of from your home.

A trend has emerged in recent years of people using Facebook Marketplace and WhatsApp community groups to buy and sell items, this could be due to convenience or necessity (for those that don’t have vehicles or can’t afford to buy from shops). This activity has increased under COVID-19 probably due to the schlep of going out and having your head scanned ten times and being sprayed with sanitiser and of course coming into contact with lots of people when you go out to the mall or “shops”.

This behaviour is also being driven by the thrift movement and the three R’s (Reduce, Reuse, Recycle). I want you to give you another example of this: people selling secondhand clothing on Instagram. We usually consider the purchase of secondhand clothing something that poor people do, and we see secondhand sellers competing on price (low-cost model). No more, there are now people making a living selling secondhand clothing to people who can afford to buy new but refuse to. It’s not just about being thrifty or recycling but also some styles such as vintage cannot be bought new, at least not authentic; while other people are still interested in styles that are not “in fashion”.

Advertising channels
Hyperlocal commerce uses what is considered consumer-to-consumer (C2C) advertising channels, even if you are doing it as a business, the channel was originally set up for people to sell things among themselves. Bidorbuy is C2C, so is Gumtree. But bidorbuy is mainly a national channel – people use it to trade among provinces (it has a rating and buyer protection system to deal with trust issues). Gumtree is popular with provincial and local commerce, however, and this is an important point hyperlocal channels differ to Gumtree, because most times on Gumtree the person is not in your immediate area, they have to drive quite a distance to you, meaning they can just as well go to shops if they were going to drive unless it’s a very specific item. Hyperlocal is different, and stuff sells there that would not be as popular on Gumtree. It is a completely different channel.

The advertising channels most popularly used in hyperlocal commerce are Facebook Marketplace and WhatsApp groups. Now Facebook Marketplace was intended for local commerce, dealing with people you know, friends of friends and people within your area. But people are using WhatsApp to drill down even further, into community buy/sell groups.

If you are not familiar with WhatsApp groups it is a similar concept as Facebook groups (or if you old enough Mxit groups), you sign up (or are added) and you get updates when something is posted to that group (these days you have things like push notifications which notifies you when something is posted), you get your hobby groups but it is a very popular and effective tool for hyperlocal causes: neighbourhood watch, buy-sell groups etc. And it is the latter that people are using to run a business.

Now it goes without saying that your location is important in hyperlocal commerce, it is more popular in densely populated areas than in say, for example, an area with a few smallholdings. Read Understanding hyperlocal below where I go into more detail. You also might be in a position where you not on Facebook, or there are no groups in your area and you have to start from scratch. I think local commerce on Facebook is going to grow more especially with safety-conscious people if the seller is a friend-of-a-friend you can ask your friend about the character of the seller.

As I said before people are selling goods, foods and services. The foods are usually purchased from factory shops (and even salvage goods), reject clothing and resold at a local level. You can even buy in bulk and make up smaller bags to resell.
The goods (often secondhand) are bought in various places, a popular source of goods are “charity shops”, like what they have with Goodwill in the US. There are many shops in SA that sell donated goods to raise funds for a cause. People donate everything from household appliances to clothing and books.
As for operational detail, common sense goes a long way. You need a sufficient fridge space if you are selling items that need to be refrigerated and there is of course the safety-conscious mentality that is needed in a place like South Africa. And don’t forget research before jumping in, ask about local groups where they are selling items and see what is popular. With services, it depends on what skill you have and whether that is popular on a local level.

Understanding hyperlocal
People have various definitions of a “local area”. What exactly does it mean? Does it mean in Cape Town, all in the Cape is local to me, just the northern suburbs where I live or only within my community? If you know in South Africa, we have provinces, districts (which is usually the district municipal level), and to use a census term: main places (local municipal level) and sub-places. Usually, the sub-places share the same postal code as the main place. So in South Africa, there are provinces, each province has various districts, and districts have main places and each main place has many sub-places.

It is on the sub-place level that hyperlocal commerce thrives, both within your sub-place and surrounding sub-places and even with sub-places next door to your sub-place but not necessarily in your main place. But this does not mean you can determine your market size that easily because it gets a bit complicated, often due to demographics. In the example below, Mandalay is a sub-place of Mitchells Plain, they share the same postal code, but Mandalay is completely different. Look at the demographics from the last census:

However, you can also have two separate main places as is the case of Parow and Goodwood. Technically they are separate main places but Parow and Goodwood you will find in the same WhatsApp group because they are right next door to each other.

So why am I getting into this minute detail? Hyperlocal depends on location, it is not something that you can change unless you move to another area. For any business to be successful you need to understand your market (which in hyperlocal is imposed on you). With census data, you have access to public data in this business: population, race, gender, households etc. Yes, it’s not exact and it’s almost a decade old as we are a year from the next census.

There is also another thing to consider: Within some main places there are sub places of varying income levels, in the Mitchells Plain example you will have more or less identical living standards, but in the case of Parow main area you have Plattekloof grouped with Connaught which is next to Elsies River. You have completely different living standards. That is another thing to be cognizant of especially if you are offering a very particular product or service.

Hyperlocal an example: Mitchells Plain
In the 2011 census Mitchells Plain had a population of 310,485 in 67,993 households. It has 18 populated sub-areas according to census: Bay View, Beacon Valley, Colorado, Eastridge, Lentegeur, Mandalay, Town Centre, Portlands, Rocklands, San Remo, Strandfontein, Strandfontein Village, Tafelsig, Wavecrest, Weltevreden Valley, Westgate, Westridge, Woodlands.

So over 300 000 people and this was a decade ago, even if we were to exclude the 8000 and odd from Mandalay. That is a considerable market even with shops and malls as competition. If you look at the two WhatsApp groups below, you will see a main place group on the left, and a group (Morgans Village) that is part of a sub-place Woolands (population 23,213).

Based on the sub place (Woodlands) using census data we can drill down further, into ambiguous terms called “small areas” but we can compare them on a map.

By my estimation that group targets an area (community) made up of around 3 “small areas”:

As you can see from above that group targets a roughly half a kilometre square area of 2525 people, now, of course, the people in the area won’t see the boundaries as rigid as we are here, and there will be people in the group from surrounding small areas and sub-areas and even from other main areas but it is an example of hyperlocal commerce.

I will go into this type of local business in future again from the perspective of local production and local consumption.

Main image credit: Hansueli Krapf, census data visualisations by adrianfrith

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