Dark Store Business Model – How Dark Convenience Stores Work

Last Updated on June 29, 2022

Dark stores concentrate on internet order delivery in high-demand locations. For retailers in large geographical regions and areas, the presence of dark stores is important.

Converting your retail room to a dark space will support you in a lot of ways. Dark stores will also play a vital role in supply chains in the future, according to a Deloitte survey. D2C (Direct-to-Consumer) stores enable services such as same-day delivery, online purchases, and store pick-up. 

Dark stores are distribution centers that only deliver internet orders. Customers are given the option of not having to go to the supermarket to pick up items and pay. Everything they have to do is place an order online and have it delivered to their house.

Instant providers are now the focus of e-commerce. As a result, retailers will set up a dark store to fulfill consumer needs and respond to consumers at all contact points in real-time. Regardless of the business model used, customers now want their service providers to be involved, omnipresent, and responsive across all business platforms. 

As the online delivery industry expands, the idea of dark stores is gaining ground in e-commerce. Consumers now want a stress-free shopping experience. Thus, getting goods from a nearby dark store is simple and convenient. Most retailers are adopting this tactic to reduce cart abandonment and raise sales.

The Rise Of Dark Stores 

A Dark Store, as the name implies, operates in the dark for the shopper. It isn’t one of those shops with a visually appealing storefront or decoration.

Dark stores were first launched in the United Kingdom with a common aim in mind: to provide click-and-collect delivery with online purchases. As a result, these retailers do not operate in heavy-traffic areas such as shopping centers or high streets. Instead, they’re tucked away in comparatively unassuming establishments geographically located along major highways.

Pickers scurry inside, gathering ordered goods for online shoppers and sending them off for distribution. Inside, you can see cars zipping in and out, picking up one order after another for delivery to the assigned pin codes.

If the supermarket is fully automated, you might also see machines choosing products and products, which necessitates, of course, greater product precision but also ensures much greater productivity. Many dark grocery store apps have come up over these years and have successfully made a mark in the grocery delivery industry like Cajoo and Gorillas.

Purpose Of A Dark Store App

When opposed to a brick-and-mortar location with minimal product storage, dark stores allow brands to stock more inventory. Dark stores aided merchants with physical locations in providing contactless distribution and pickup alternatives for their customers, especially during the COVID-19 pandemic.

Many retailers are realising the long-term advantages of providing one or more dark store sites, which have been shown to increase order quality, reduce shipping time, and provide more space to store inventory. It’s also a smart way to expedite the fulfilment of orders to consumers by including a variety of distribution solutions.

Who Should Open A Dark Store App?

Any merchant that wants more options and space to satisfy a huge number of online orders from their physical store should consider a dark store app. Due to the pandemic, ecommerce expanded exponentially this year, and this trend is expected to continue. Retailers who formerly focused exclusively on selling goods in a physical location can now easily increase their online sales by turning their physical space into a warehouse, enabling them to quickly satisfy orders and store more inventory.

Why Dark Stores Are So Popular With Grocery Delivery Services 

Grocery has its own range of problems at the category level, such as the need for a significant number of SKUs and, of course, perishability. Furthermore, with the ‘good old’ street-side sellers and marts readily accessible and now even providing near-real-time doorstep delivery to their hyper-local buyers, online grocery stores are far less essential. 

All of this means that the challenge of supermarket eCommerce isn’t about making the online order, but also filling it and getting customers to return week after week, or even day after day. 

Although anyone from well-funded entrepreneurs to eCommerce behemoths like Amazon and Flipkart has tried their hand at hyperlocal grocery commerce, none have yet nailed it. The segment has become even more dynamic as brands like Spar and Reliance Smart invest in hypermarket eCommerce solutions and enter the fray.

Dark Shops enter the photo at this stage. They perform really well for groceries because they fix certain basic issues. Let’s take a look at how:

• The SKU Challenge

One requires a gluten-free 6-loaf box, whereas another requires a multi-grain, full-size pack of pesticide- and preservative-free home-made bread. When it comes to groceries, there might be as many SKUs for basically the same thing as there are customers, precisely because everyone wants their food their way.

Dark Stores can improve SKU management in a variety of ways by focusing on storage and click-and-collect capabilities. One, they save money on real estate by avoiding high-traffic areas in cities. Two, they will serve many online grocery stores at the same time, reducing real-estate costs. 

They also conserve space and they aren’t concerned about the retail experience, show, or in-store ads. As a result, dark stores will stock a lot more variety per item for a lot less inventory. Furthermore, the ability to improve SKU control improves distribution accuracy and avoids mix-ups, which are all too frequent in online grocery delivery.

• The Perishability Challenge

Both of the ingredients are in the same order: yogurt, pulses, and fresh spinach. Things in the grocery store have a variety of expiration dates. And they’re all supposed to be distributed in their perfect states at the same time. Crackers must not break, liquids must not leak, and airtight containers must stay airtight. It’s not easy to do this on a large scale. 

Unless there are dedicated facilities and procedures in place to ensure object freshness not only during packaging but also before it hits the consumer’s plate. That means filling online grocery orders isn’t as easy as taking an item off the shelves (assuming it’s in stock!) and putting it in the cart to be shipped whenever it’s convenient.

It necessitates flawless warehouse control, product replenishment, and order fulfillment – all of which must work in tandem to minimize the time between off-the-store-fridge and in-the-home-fridge. To put it another way, supermarket fulfillment necessitates pickers working at a high rate, which is difficult to do in a typical discount grocer where aisles are clogged with leisurely shoppers gliding around in their shopping carts.

• The Fulfilment Window Challenge

Online grocery shoppers don’t plan ahead more than a few days. Orders are sent not so much in advance as in the event of an emergency. And delivery is due the next day, if not the next day, which adds to the burden. 

Consider a scenario in which internet orders pour in at midnight, with arrival scheduled in time for the next day’s breakfast planning, i.e. in the early morning. Obviously, brick-and-mortar grocery stores are not the only place to meet such a need. As a result, there’s another grocery eCommerce problem that dark stores are much better at addressing.

To build a dark store app like Gorillas, it is important for you to completely understand the workings and the process of developing such an app.

How does Dark store order fulfillment work?

For all forms of retailers, dark store app  fulfillment is a strategic and lucrative choice. However, in order to be fully competitive, it can offer a variety of delivery and pickup choices. The three most popular delivery choices for dark stores are mentioned below.

• Curbside Pickup

Customers will pick up their orders easily at the curbside. It normally consists of designated parking areas where a retailer employee can carry the order out to the customer without requiring them to exit their vehicle. Customers will be protected not only during the pandemic, but it will also be very handy.

• In-store Pickup

Inside many typical dark stores, there is a designated pickup area, which is normally near the front entrance. Customers won’t have to walk through the dim shop to get their package in this direction. Customers will appreciate the ease, and shipping costs will be reduced.

• Home Delivery

Home delivery has become more popular, especially among local retailers. Customers benefit from quick, simple, and contactless delivery, particularly when it comes to necessities. However, home delivery can also be made by building an online shop and mailing orders to consumers that are located farther out.

You may either fulfill orders for distribution inside the dark store or contract with a third-party logistics (3PL) vendor to handle fulfillment and delivery of online orders on your behalf if you don’t have the resources to do so.

Benefits Of Using A Dark Store App

In addition to COVID-19, major retailers such as Walmart, Kroger, and Bed Bath and Beyond have recently begun experimenting with dark stores. Whole Foods will open its first ‘online-only new store in Brooklyn, New York, in September 2020. However, a growing number of small, independent businesses are seeing the advantages of using dark stores to not only serve local clients but also to extend their client base at a cheaper rate. Here are a couple of the reasons why dark shops aren’t just a fad.

• Dark stores stock a vast range of products

Customers are not permitted within practical dark stores (even if they are, they must use a dedicated pickup area), so the layout should be designed to maximize stock and picking capability. Improving storage space means a wider inventory selection, while quicker choosing ensures that orders are filled more quickly without sacrificing order accuracy.

• A better view of stock levels

Dark stores are much easier to manage inventory levels than conventional warehouses because they are much smaller. Many dark retailers already have inventory tracking software to help them keep track of stock levels in real-time. 

This technique will also help retailers determine whether they have too much inventory (known as “deadstock”) or not enough, which can result in stockouts. You will ensure that you still have an appropriate degree of inventory by simplifying the inventory management process.

• Increased warehouse efficiency

One dark store may sometimes be used to help the retail fulfillment of many stores in a given geographic area. Dark retailers can handle a huge number of orders and these warehouses are customer-free areas where pickers can quickly access aisles without having to dodge shoppers and their carts.

But only if the right hardware is in place. Though dark stores can easily provide consumers with more distribution choices, optimizing dark stores without the right technologies to automate fulfillment tasks can be difficult.

• Increases in order consumption

Shoppers who become accustomed to your brand’s fast, dependable, and accurate delivery of products are more likely to become long-term, loyal customers. Dark stores offer you the opportunity to do more for your consumers, whether it’s local pickup options or multiple shipment options, which eventually encourages more purchases and increases customer lifetime satisfaction.

Frequently Asked Questions For Dark Store Business Model (FAQs)