Shop without windows: what is a dark store

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Let's be honest, we don't like supermarkets. Queues at the checkout counters during the evening rush hour, surly security guards, fiddling with baskets and bags…. All this is annoying and time-consuming. In the digital and post-pandemic world, the supermarket format is losing its relevance and businesses are looking for its replacement.

Just such a replacement is the dark store model: a shop without displays, cash registers or customers. In fact, this is not a store, but a compact warehouse somewhere in the city. Orders are sent to the dark store via a digital platform where they are promptly assembled and delivered to customers. Unlike a traditional warehouse, goods are not stored on pallets but are laid out in advance on shelves for speedy assembly of orders.

A dark store is a digital retail warehouse store

In such a “warehouse” there is no trading floor; the entire inventory is available to customers via a smartphone. In a nutshell, this format can be described as an “online store” to the max. It works according to the usual ecommerce retail scheme, but is tailored specifically for consumer goods (FMCG). In this case, orders must be completed and delivered as quickly as possible, typically within 15-20 minutes.

The darkstore model was invented by British retailer Tesco in 2009 but, until recently, it had not been greatly upscaled. The pandemic changed everything. Now shopping online has become the norm all over the world. In the summer of this year, for example, the first grocery darkstores opened in Kiev (Glovo, Bazar) and all large retail chains are now, one way or another, introducing similar practices in their stores.

How a dark store works

How a dark store works

From the point of view of the buyer, everything is simple: open a website or an application, fill your cart, pay for the order online, wait for the courier or walk to the nearest dark store on foot, picking up the order on your own.

From the point of view of the seller, you need everything to be carefully organized in the warehouse, as well as advanced infrastructure and well-trained staff. The goods in the warehouse are labelled and laid out based on the expiration date, demand and ease of assembly. Assemblers usually use barcode scanners and special applications. Such an application can arrange goods in the most convenient order for collection so that the employee does not have to “run circles” around the warehouse.

This approach resolves possible errors and confusion and requires no more than 15 minutes to complete each order. The processing and shipment of orders is automated and becomes a “conveyor belt”: making queues a thing of the past.

The tasks of couriers are also determined through a mobile application. The system can monitor the staff workload, predict peak hours and call on more employees if need be. All this happens automatically - it is enough for a ready-to-work courier to “check in” to the system and staright away begin taking orders for work.

Darkstore logistics are close to brick-and-mortar logistics, but better automated. These can be small spaces in residential areas that serve their delegated area of responsibility.

Of course, the darkstore is built on a digital ecosystem of multiple synchronized platforms. The information in it is updated in real time.

Dark store advantages

Dark store advantages

The digital store is superior to the traditional store in many aspects: it works faster, is not affected by pandemic and can actively use digital analytics and marketing tools.

For many buyers ordering groceries online has already become an everyday thing: you no longer need to go to the supermarket, look for the right products in the aisles, compare prices and look for a free cash register. Previously, shopping could easily take an hour and a half but now it’s easily accomplished in 20 minutes.

This model attracts retailers too. Darkstores can provide a business with a number of benefits:

  • protects against a lockdown situation;
  • savings on retail space;
  • the ability to provide the optimum storage conditions for goods (especially perishable goods);
  • Eliminating the possibility of theft of goods from the trading floor;
  • New opportunities for analytics and attendance to clients’ needs.

As shoppers' habits change, retailers will be able to reduce needless sales area and allocate a great deal more for warehousing. A small darkstore, for the buyer at least, does not require the same high standard of desirability as a premises for sales. It’s much more feasible to rent an, although perhaps unpresentable, inexpensive warehouse. Traditional expenses for shelf and aisle stocking, refrigerators, cash registers, and the more demanding design of a physical sales area, can become a thing of the past.

Dark store Technologies

Dark stores can only be successful if they exist within a cultivated digital ecosystem. They should include a number of basic elements:

  • Flexible WMS-system for running the operation of the warehouse smoothly
  • CRM for interfacing with clients and monitoring the work of employees
  • Digital platform for buyers (normally a website or application)
  • Platform for employees (managers, couriers, etc.)

Dark store infrastructure should enable a few specific things: firstly for a buyer to place an order through any communication channel, it also should aid the personal shoppers complete orders, it further needs to provide couriers with optimal routes for loading point and destination, as well as generating a delivery status in real time (as in our case with the IKURA delivery service). Digitalization of the warehouse helps to accuerately keep track of stock numbers and automatically generate orders to suppliers.

AI algorithms are becoming increasingly vital to the dark store model. They can predict the number of orders and peak periods of the store to almost instantaneously assign priority tasks to employees and couriers if necessary.

And most importantly, all these tools should be based on a single database that is updated continuously. Even a small mistake in this process can turn into excessive losses for the dark store.

The future of the dark store

The future of the dark store

The world has been transformed by the pandemic and take-over of digital tech, which have greatly affected our everyday habits. Online commerce in all will only grow across all spheres, and traditional retail will be forced to adapt to these new trends.

In the coming years, we will see more startups utilizing dark and cloud store models. Large retail chains will also focus on ecommerce, evolving their own systems as dark store elements integrate with existing stores. All services related to proprietary warehouse management and courier service will experience great benefit.

In conclusion, we also need to keep in mind that understanding and refinement of the dark store model itself will also advance rapidly. As the digital foundation allows retailers to collect and process huge amounts of data on users, they can accurately forecast demand and piece-together individual offers for each client. Couriering itself is also on the verge of great advance, with sellers currently working on prospects like crowdsourcing and drone experimentation.

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Guzenko Sergey
WRITTEN BY
Guzenko Sergey
Founder and owner Wezom
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