Dark Stores – Giving Competitive Edge to Online Grocery Merchants

Posted on November 16, 2022

Companies are competiting for rapid delivery of groceries as it gives them an edge in establishing an advantage in the market.

This is where the dark store model can help businesses. Dark store is a distribution center. It is used for fulfillment of operations.

These centers are not open for visitors, hence allowing more space for inventory. Dark stores provide facilities like online purchasing, same day delivery and pick-ups.

These stores are not set up in shopping malls or places with large number of footfalls, but in places with good connectivity.

Types of pick-ups

A dark store typically offers three types of pickups.

Curb-side pickup

Curbside pickup usually consists of a parking space near the store.

Customers can wait in their cars in this parking lot. An employee of the store delivers the order to the customer so that the customer does not have to get out of the car.

Curbside pickup is a convenient way for picking up orders quickly.

In-store pickup

The stores offering this facility has a dedicated area near the front of the store. Customers can come and pick up orders from this area.

This is another way to deliver the order quickly and has no delivery expenses.

Home delivery

Home delivery is another method of delivering items from a dark Store. An employee picks up the order from that store and delivers to customer’s door steps.

The delivery is usually contactless. During the pandemic, this method was widely used across most of the megacities in India.

The home delivery method may involve some additional expenses on the part of the customer, as the vendor has to recover transportation cost.

Advantages of a Dark Store

  1. Contact free shopping experience
    Dark stores offer quick and contactless shopping experience. A customer can shop online, select the items, make the order, complete payment and the rest is done by the dark store. There is no physical contact in the process.
  2. Quick delivery
    Dark stores fulfill orders quickly, usually within 10 – 30 minutes. This is a far cry from the time that the customer had to spend earlier, which would run in to hours in a shopping mall, or the local grocery store.
  3. Improved distribution
    Dark stores are typically closer to customers. Which means, order delivery is quick and distribution is optimal.
  4. Wider range of products
    Dark stores do not allow customer visits. This facilitates greater storage space. More items can be stored in a dark store because the space required for human interactions is minimal.
  5. Improved inventory management
    A single store can manage the retail requirements of several grocery stores. Due to being customer free can having larger space destroyed can also handle larger volume of customer orders.
  6. Reduction in cost
    The management of stores with customer footfalls is significantly higher than customer free dark store. Being customer free, a dark store does not need beautification and physical advertisement costs for its space.
  7. Expand presence of the merchant
    Dark stores enable merchants to venture beyond their physical presence. A dark store can expand e-presence of a merchant in a geographic area where a physical store is not present.

The additional cost associated with extra space of a physical grocery store or a shopping mall store is also not present with a dark store.

A dark store being online can also serve a larger customer base than a physical store. This tends to increase the gross revenue and cut down overall costs.

Dark Store Apps

Digitisation is an important part of a dark store. The grocery merchant which fulfills order through a dark store typically has an app or an online website to collect customer orders.

Such an App will typically be available through Google Play Store or apple iStore.

Customers can download the app install on their mobile phones or visit the merchant website to do the shopping. Payment in general is online, but in some cases cash on delivery is also offered.

Workforce

Dark stores usually employ people consisting of inhouse staff like order receivers, monitors, labelers, packers and floor managers and also external staff like delivery boys.

The inhouse staff is commonly salaried, and the external staff or the delivery boys work on a per order or per hour basis.

Attrition rate among delivery boys is higher, as competitors often offer higher rates to lure them away.