Retail has changed completely in the wake of the global coronavirus pandemic. As brick-and-mortar storefronts shutter their windows, the dark store concept has seen massive growth as a viable alternative for traditional retailers to maximize their physical location while also providing the instant gratification that retail shoppers expect.
As shoppers continue to embrace online shopping, it’s likely that the dark store will become the dominant retail model – a concept that many large retailers such as grocery store Whole Foods and home vendors Bed Bath & Beyond have already begun to embrace.
In this article, we’ll learn what a dark store is, why they’re becoming so popular and how retailers can adapt to this model themselves? Here’s what we’ll cover:
What is a Dark Store?
The term dark store is any physical store or retail space that has been converted into micro fulfillment centers. Dark stores, also known as dark shops, can provide more retail fulfillment options for shoppers by fulfilling online orders through click and collect capabilities, curbside pickup or in-store pickup.
While a dark store usually caters exclusively to online orders, some dark stores provide a hybrid shopping experience. Physical stores can offer a dedicated pickup area inside while also denoting some areas as customer-free zones to allow for optimal picking and collecting.
Unlike a traditional store, the focus of a dark store is on order fulfillment, not the retail experience. One brick and mortar location can supplement a business’s supply chain, offset delivery expenses and provide increased warehouse efficiency by acting as a micro fulfillment center for electronically generated orders.
This hybrid approach to fulfillment offers the instant gratification and convenience of a brick and mortar store with the efficiency of a large warehouse.
Benefits of Dark Stores
While this model grew to prominence during the pandemic, many retailers have been experimenting with the concept long before the advent of COVID19.
Retailers, especially grocery stores and clothing brands, appreciate the reduced strain on their supply chain and the increased visibility over store inventory. Grocery stores, in particular, can shorten the time between off-the-store-fridge and accurate delivery fulfillment.
At the same time, customers and online shoppers enjoy the vast range of fulfillments options they now have access to and the ability to pick up and receive their order the same day they make their purchase.
Here are some other benefits that dark stores can provide:
More Fulfillment Options
Since physical locations for dark stores are usually located in dense, urban centres, one dark store can provide a variety of fulfillment options for their customers. If a customer chooses to order online instead of shopping in-store, they’ll have flexibility in how they’ll want to receive their product. Curbside pickup and in-store pickup for online sales can now supplement same-day delivery options as an alternative.
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Dark stores can also have sale displays and check-out counters while also setting aside physical space to focus on online sales.
Some parts of the shop floor might also be dedicated to providing exclusive click-and-collect capabilities. In contrast, other parts of the store may be cordoned off to allow store employees to better pick and organize products ordered online. This keeps loyal customers engaged in the shopping experience while also preventing the need for pickers to dodge shoppers and their carts.
Depending on the volume of online orders, more space may be dedicated to allowing a retailer employee to focus on picking and packing. Orders can be collected simultaneously, lowering the time it takes to prepare an online order and optimizing the process.
This hybrid model is extremely efficient as it lets stores dispense orders quickly while also giving them the option to pivot if the need arises.
Better Warehouse and Inventory Management
Dark stores allow businesses to split their inventory across multiple geographical locations instead of relying on a limited number of warehouses and fulfillment hubs for online orders and stock replenishment.
By splitting up their stock levels between multiple micro fulfillment centers, dark stores’ stock becomes synonymous with warehouse stock, reducing the likelihood of storing too much inventory at one single location as well as increasing order accuracy. This increased visibility over stock levels can improve SKU management, provide flawless warehouse control and help businesses more accurately fulfill orders.
Increased Affordability
In addition to increased fulfillment options, dark stores can also provide these options at a much lower cost. Dark stores can leverage physical locations in or around urban centres to waive the typical logistics and warehousing fees involved with online order fulfillment.
With more inventory stored at their location, brick and mortar stores can now dispatch last-mile delivery couriers to provide home delivery for online orders at a much lower cost and with much greater speed.
How to Switch to a Dark Store
Making the switch to a dark store is no easy task. Dark stores not only provide multiple delivery, fulfillment and pickup options, but they must stay on top of stock and inventory levels.
For most retailers, offering express delivery is an expensive option that they can’t afford to implement by themselves a la carte. Local retailers can rely on a delivery van to help fulfill some online orders, but the economies of scale simply don’t make sense if a business has many stores.
Businesses can leverage a third-party logistics (3PL) company to help bridge the gap between dark stores and fulfillment centre and provide fast fulfillment options for online shopping orders and inventory and warehouse consolidation.
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3PL Companies like Cantec Couriers can provide software and technology to easily upload and consolidate store inventory online and transform a traditional retail location into a dark store.
For e-commerce focused businesses, renting a small retail space and establishing a pop-up shop is an effective way to engage in traditional retail while also providing fast, home delivery fulfillment. With that being said, support from a 3PL company is still needed to facilitate store fulfillment and warehousing.
Key Takeaways
As more and more customers switch to online shopping, businesses and brands are finding it increasingly difficult to justify the high rent prices that traditional retail locations demand. Dark stores, with their variety of fulfillment options and their convenient ability to deliver instantaneous gratification in the form of same-day delivery, could be the only way forward.
Many retailers have already leveraged dark stores to keep them afloat during the pandemic. With that being said, the convenience and affordability that dark stores offer aren’t going to disappear overnight.
To stay competitive within both the eCommerce and traditional retail space, dark stores aren’t just important – they’re essential. If you’re curious about transforming your store into a hybrid dark store, Advesa Digital is here to help.
Our international, interdisciplinary team of dedicated designers, developers, writers, and SEO specialists has been helping businesses not just survive; but thrive. Contact us today for a free quote or to learn more about our hybrid eCommerce services!
