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The significance of dark stores in quick Commerce
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Thursday, 03 March, 2022, 14 : 00 PM [IST]
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Atul Kumar
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We live in an age of extreme convenience and instant gratification. Digital evolution and the rapid growth of ecommerce has led to a paradigm shift in consumer trends and habits. It has reached a stage where consumers expect all their needs to be met instantly at the click of a button; from apparels, footwear and consumer durables to essentials like fresh and quality groceries and more.
Thus, it is crucial for ecommerce businesses to evolve and build a strong infrastructure in order to meet the modern consumers’ need for immediate gratification and convenience. In order to service customers well and provide them with quality products delivered at a quicker pace, it is essential for ecommerce businesses to have a robust supply chain.
The end-to-end supply chain consists of automated processes wherein they procure the commodities, store them in collection centers, pack them for delivery after quality checks and then deliver the product to the customer.
When it comes to groceries in particular, it is paramount to ensure that the produce is fresh when delivered to consumers to ensure it is safe for consumption.
Hence, once sourced from farmers, it needs to be geographically stored smartly in the vicinity of residential complexes where demand for groceries on a day-to-day basis is high. This is to make sure that the produce remains fresh and is of good quality when ordered by consumers. Achieving cost-effective delivery and ensuring freshness of perishables has always been a challenge for businesses, especially e-grocers, and to combat this endless roadblock ‘dark stores’ were born.
What is a dark store?
A dark store, also known as a local micro-fulfillment center is a strategically placed warehouse dedicated towards fulfilling online orders. As these distribution centers are not open to customers, there is additional space to store inventory, and in the process complete orders in an organised manner. Therefore, they are essentially ‘dark’ to the public. They only serve as drop off points for suppliers and collection points for delivery personnel. Additionally, they either ship the order directly to the customer’s address or to a convenient collection point specified by the customer.
What drove the emergence of dark stores?
With new e-commerce merchants and platforms emerging in the market progressively, competition is being spurred on exponentially, paving the way to create newer and better mechanisms to service customers. This is one of the primary factors driving the need for dark stores as they fulfil consumer needs rapidly by virtue of their convenient placement that is well-connected to roadways.
Physical stores require outlets in locations of high footfall to attract customers, and these locations have a high rental cost which is a major expense for businesses. However, with the advancement of online shopping, customers don’t need to be physically present to buy something they need. They can place their orders while being in the comfort of their homes and have them delivered to their doorstep.
Therefore, a brick-and-mortar retail shop with the frills and costs of a high-street location is no longer a prerequisite to create a good shopping experience for customers. The layout of dark stores facilitates better storage and picking capabilities and is not focused around the aesthetics or interiors as they are not built for in-store shopping.
How do Dark Stores operate?
Typically, a dark store covers around 2,000 to 7,000 sq ft space and is operated by a dark store manager, delivery fleet manager, as well as packers and movers during an average shift. Moreover, in order to ensure smooth functioning of a dark store some essential equipment like cold storage refrigerators, bar code scanners, excellent packaging material, computer systems, are required, and periodic quality checks are performed.
The adoption of dark stores can considerably contribute to the bottom line, due to higher customer orders and lower overall costs. Orders are processed more efficiently by allocating them to the nearest dark store, and are kept ready for quick delivery. Also, the inventory gets updated immediately which helps in optimum supply chain management.
Here’s how the order fulfilment process works:
Dark store operators try to make their execution process as seamless as possible right from the point of ensuring that they get fresh supply of produce early in the morning, to order management and final delivery. A typical process involves listing of inventory online, followed by the customer making their shopping choices and confirming them after completing the payment. Subsequently, a dark store in the nearby location immediately receives this order and one of the packers identifies the relevant items from the efficiently stacked aisles to get them scanned, packed and sealed. The package is then instantly dispatched and picked up by the delivery agent for delivery to the customer’s location, where it is handed over to the customer directly or dropped off at the doorstep, depending on the customer's preference.
How are they functional and how are they beneficial?
Dark stores existed even before the pandemic but their importance was felt more during the surge as the need for contactless delivery mechanisms was required to evolve effectively and rapidly. Visits to physical shops stopped completely as stores shut down thereby affecting supply chains. Hence dark store models became a significant and sustainable way to conduct business.
Moreover, as online shopping escalated and the need to visit shops reduced, local warehouses or dark stores helped to keep groceries and other perishables up to date, and served in completing orders promptly and efficiently. Essentially, a dark store is used as a storage and packing site, or as a central delivery pickup center for local deliveries.
Big Benefits with Dark Stores:
• A quick and contactless shopping experience
• Express delivery, instant gratification and hence high customer satisfaction
• Optimum Inventory management and ability to store large volumes of stockpile in smaller and effectively managed spaces
• Easier to administer perishables with systematic order completion to minimise the time between procurement and delivery
• An extensive range of products can be sold online as the storage, layout and pickup capabilities in a dark store can be planned more meticulously
Thus, building a network of dark stores is a great way to reduce costs, optimise the supply chain, ensure freshness of perishable goods, and leverage the online shopping experience. Websites and shopping apps are being optimised for high quality shopping experiences with favourable delivery times.
Dark stores have proved to be the most efficient means of shopping and delivery both from the point of online merchants as well as customers. They help e-commerce players refine storage and distribution processes at lower costs, allow them to maintain the freshness of grocery items and enable them to provide great experiences all the way up to each customer’s doorstep.
Online grocery shopping will only continue to grow as customers increasingly value and demand convenience plus receiving top quality, fresh groceries. Hence, dark stores are a remarkable way forward in expediting a high-value seamless customer experience. It is crucial for grocery delivery startups to capitalise on dark stores in order to stay ahead of the competition. Consequently, it is safe to say that dark stores are revolutionizing the last mile delivery landscape as customer satisfaction takes centre stage, and are here to stay.
(The author is CEO and co-founder at Fraazo)
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