On-demand delivery is expanding, and at the heart of this fast commerce resides black store — a customer-free store, eCommerce warehouse, distribution-center, or micro-fulfillment hub where online purchases are packed to meet the end as quickly as possible.
The phrase ‘dark store’ was first coined when Tesco, the UK's largest supermarket chain, built its first customer-free stores in Croydon, Surrey, and Kent in 2009. At that time Tesco was shipping roughly 475,000 online orders each week from its 4,000 current retail outlets. But with the supermarket struggling to meet strong demand from online orders and in-store shoppers having to contend with pickers and personal shoppers, Tesco needed to shift its online picking out of its existing locations. Tesco considered the dark store concept as a more effective approach to deal with the increase in online sales, and it planned to open one per year. And by 2013, Tesco had multiple dark stores and had constructed six 'dotcom' centers in and around London, accounting for over 45 percent of internet deliveries in the UK. Though the insides of an online dark store resemble that of a traditional market, with aisles of shelves, they are not found in shopping malls or on main streets, but rather in grim and gritty regions with good road connections. From the outside, the structures are usually unremarkable and utilitarian. Inside, the stores dispense with assistants who provide clients with product advice, point of sale displays and check-out counters. After they have been processed online, orders are then sent to the shop floor. Further for optimal selection, these electronically generated orders are subsequently routed and processed according to the store's layout. In contrast to a regular supermarket, where a picker walks around the aisles with a shopping trolley, they remain still. Multiple orders are frequently collected at the same time on the basis of demand. Customers finally receive their orders after they have been filled by a fleet of vans that return during the day to be refilled. In this era of purchasing, the delivery drivers or customer delivery agents (CDAs) are the face of online dark businesses. Clients hire them based on whether or not they want them in their houses, considering they act as brand ambassadors, and who must excel at customer service. Here, technical managers and quality-control checkers play critical responsibilities, from verifying that nothing is broken or missing to ensuring that the systems are in good working order and that automation is running properly. The emergence of eCommerce and a reduction in in-store purchases predated Covid, but COVID-19's arrival in early 2020 acted as a stimulus for India's speedier adoption of dark shops. It caused a surge in eCommerce growth, prompting many firms to reconsider their retail space usage. 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 this quick commerce era.
These 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: fast and contact- free delivery, broader reach, improving SKU management and inventory control.
What started with grocery chains is now moving to other industries too. Join Ventures, a house of D2C brands for celebrations, IGP.com and Interflora.in is on its way to launch 100+ dark stores to cater to a wider audience.
Fast food restaurants such as, Fassos, Ovenstory ,have established "ghost" kitchens that only serve delivery orders and have no dining room or carryout. These ghost kitchens play a key role in the brands expansion strategy, including in regions where the company does not have a presence. This dark store type enables merchants to reach markets where they do not have physical locations by "ghosting" through delivery.
And if you think it’s just a trend, you might have to think again: Ola Dash, Blinkit, Dunzo are all increasing their dark stores counts and many delivery start-ups in recent years have indeed raised billions in funding, making dark stores the way to go for businesses all around.
According to a Forbes report, the number of Internet users in India will surpass 550 million by the end of this year, putting online shopping platforms within reach of around 41% of the population. Along with this more than 33% of the population has used one or more of the 50+ Indian e-wallets, indicating that the digital payment landscape is changing.
All of these elements, combined with a shift in Indian consumer shopping behavior during the lockdown, spawned that a black store business model could meet customers' online shopping needs while also promising quick delivery and cost-effectiveness.
Today, the Dark stores are the lemonade solution to former “lemon” stores, helping retailers envision and squeeze out the next, most cost-effective systems for reaching more customers.
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