What is a dark store?
The rise in eCommerce and a decline of in-store purchasing predated Coved, but the pandemic occasioned a surge in eCommerce growth that now has many businesses re-evaluating their use of retail space.
Dark stores do use physical outlets, but these spaces are eCommerce warehouses, distribution centers or micro-fulfilment hubs. Dark stores get their name from being dark – that is, closed to the public, since they are only used to fulfil online orders.
More common in the grocery and whole food sectors, dark stores are becoming increasingly prevalent in fashion, big box retail and the homeware & furniture industries.
These customer-free, highly automated stores combine the strengths of online shopping with the convenience of a physical store to provide an optimal customer experience. All a customer needs to do is place an order online and have it delivered directly to their door, or pick it up from a collection point.
How do dark stores work?
A basic requirement of a dark store is that it’s located close to the customer base to help businesses deliver rapid, on-demand order fulfilment and enable retailers to seamlessly satisfy eCommerce consumer demand. Dark stores operate around the clock to fulfil online demand.
Digitization and automation are fundamental to the success of dark stores – however, companies looking to implement the dark store concept do not need to invest large sums of capital into full automation and AI technology. The fundamental operations of any dark store can be undertaken with a robust inventory software system, an efficient team of pickers and a store layout optimized for rapid picking.
The floor plan and layout of a traditional retail or grocery store is strategically designed to direct the flow of customers. Encouraging longer time in-store, tempting customers with end of aisle displays and POS impulse buys. Lighting, music, merchandise displays, and even carefully planned aisle space are all features used to enhance the in-store shopping experience.
A dark store differs to a retail outlet because it is set up solely for functionality and rapid order fulfilment. Basic warehouse racking is used to store inventory stock, which is strategically positioned for ease and speed of picking.
Dark store order processing is much like the steps taken for warehouse order fulfilment, however on a smaller scale:
Online orders are received and processed
Orders are electronically sent to the shop floor
Employees pick orders displayed on a digital screen attached to their shopping trolley
Multiple orders can often be collected simultaneously
Orders are packed and shipped
In other words, dark store does not have any of the frills you would find in a traditional, customer-centric retail outlet.
How to ensure a dark store is profitable
Start with existing demand. Map out current online order demand currently being fulfilled by existing stores. Highlight areas where there is enough demand to shift out of existing stores before considering opening a dark store.
While some larger organizations are converting existing space into dark store distribution centres, this may not be a viable option for smaller SMEs. Seek out locations in nearby industrial locations that offer lower rents and offer better access for delivery vehicles and easy dispatch.
Selecting the right product categories and the best location are key considerations to ensure the profitability of your dark store. Location should be based on local demand patterns because this is critical to ensure fast order fulfilment and delivery.
Keep the fit-out simple and easy to navigate. Implementing an effective inventory management system is vital to monitor real-time inventory stock and manage inventory replenishment to avoid stock-outs.
Why are dark stores on the rise?
Covid-19 intensified the trajectory of eCommerce with a dramatic surge in online shopping, contactless transactions, and on-demand deliveries.
Covid also highlighted vulnerabilities in the long – and often complicated – global supply chains of many organizations. The closure of a single company or even the smallest disruption could filter along the supply chain to affect delivery times. Shutdowns and shipping disruptions could suspend production on the other side of the world, leading to supply shortages.
As retailers are increasingly more reluctant to accept the risk of supply chain disruptions in the face of increasing pressure for on-demand delivery, dark stores are a way to help them succeed in Q-Commerce, or the ‘quick commerce’ era.
Why use a dark store?
Dark stores and micro-fulfilment centers are on course to become a retailer’s core strategy for solving supply chain vulnerability. Five of the many benefits offered by using dark stores include:
Dark stores enable fast and contact-free shopping
Covid-driven social distancing and safety measures have necessitated contact-free shopping. Dark stores enable consumers to purchase from retailers without having to enter the store. After placing an order online they can either pick it up or have it shipped.
Distribution and delivery are more efficient with dark stores
Transforming physical stores into dark stores expedites order fulfilment. By physically locating products closer to a specific market and including a variety of distribution options, last-mile delivery is quicker and more efficient.
Dark stores have more products and a larger audience
The layout of customer-free dark stores can be optimised for rapid picking, and improved storage capacity allows for a more extensive range of products. Meanwhile round-the-clock online accessibility facilitates broader reach, and potentially a much bigger audience.
Dark stores improve SKU management
Grocery stores particularly benefit from the dark store concept, focusing on storage and click-and-collect capabilities to significantly improve SKU management.
Inventory control is enhanced with dark stores
Dark stores can enhance inventory control, and companies can achieve larger order volumes in these customer-free zones. A single dark store can maintain the retail fulfilment of several other stores in the same geographical location. Article Source : https://bit.ly/3D3Xd2R
Comments