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Retailers open dark stores to stay afloat



With e-Commerce brands trying to outdo each other, dark stores or micro-warehouses came up when companies were catering exclusively to online customers at reduced logistics costs. Also the dark stores maintain the freshness, especially of perishable products, says Aditya Vazirani, CEO, Robinsons Global Logistics Solutions.

At a time when consumers expect instant satisfaction, it comes as no surprise that last mile deliveries are gaining huge traction. Online shopping was a hit before the pandemic, and it accelerated when people were confined indoors. As global shopping volumes increased, e-Commerce brands scrambled to outperform each other with superior customer experience.

Same day deliveries was thus a strategic move adopted by retailers to stay afloat amidst stiff competition and brands started partnering with 3PL logistics and warehousing providers to achieve faster deliveries. According to a recent report, the quick commerce market is poised to be a $5 billion market by 2025 and the last mile delivery is one of the key determinants of customer satisfaction.

Achieving the last mile delivery at reduced costs was a challenge for businesses. But that is when the dark stores came to rescue. For the uninitiated, dark stores are micro-warehouses located in close proximity to high-demand areas. Dark stores aid the last mile deliveries for groceries, personal care products, and their utility is spreading across other categories as brands turn to third-party logistics and warehousing providers to optimize operations for speedy delivery. Let us understand how dark stores can address key challenges pertaining to the last mile deliveries.

Reduces logistics costs

The dark stores are similar to brick and mortar retail stores, but are not designed to accommodate customers inside the store. They are exclusively dedicated for fulfillment operations. They are located in strategic urban areas closer to customers which significantly reduce the pick-up per unit and last mile costs. As the dark stores only have goods meant to meet internet orders, it drives better efficiencies and can help save between 10 per cent and 30 per cent of logistics costs.

Stores range of products

The layout of the dark stores is such that it facilitates better storage and picking capabilities. Businesses don’t have to spend on aesthetics or interiors of the dark stores as they are not built for in-store shopping. A dark store that focuses on a set of high-demand products, there is a better opportunity for businesses to store more product varieties as opposed to traditional retail stores. More product options to choose from mean increased customer orders and better profits.

Quicker delivery

Perishable products such as groceries, milk and meat need to reach the customer’s doorstep within their respective expiry windows. Dark stores help maintain the freshness of perishable products and enable quicker delivery owing to their proximity to delivery points. During COVID-19-induced lockdowns, when consumers were forced to stay indoors, and safety concerns made the simplest of tasks such as grocery shopping seem daunting, retailers tied-up with the dark store service providers and capitalized on this opportunity with the promise of instant and contact-less deliveries.

24-hour operations

Dark stores operate round-the-clock to fulfill customer demands. Due to the strategic location of dark stores, orders can be delivered at the time convenient for the customers. The customers have the freedom to choose a time slot since the dark stores are optimized for easy pick-up and delivery.

On-demand delivery needs

The dark stores cater to on-demand delivery requirements. The customer expectations are evolving and the order and purchase process is different from what it used to be a few years ago. A consumer stumbles upon a product when casually browsing online, makes an impulse decision to buy it, and expects delivery within a matter of minutes or hours. Such on-demand delivery requirements are possible with the dark stores as they facilitate optimized SKU management, and last mile connectivity. The dark stores are an efficient solution to keep up with the unplanned ordering behaviour observed among today’s consumers.

The dark stores are revolutionizing the last mile delivery landscape as the consumer convenience, meeting growing demand, and accessibility take centre stage. It has changed the way products are delivered to the customers. The rising demand for dark stores has led to robust growth of urban logistics spaces. The urban logistics space is likely to surpass seven million square feet in India by 2022. The dark stores act as last mile storage space that facilitate movement of goods across urban areas with cost optimization and efficiency benefits. With product assortment, super-efficient order fulfillment and better view of stock levels, and inventory management aided by technology, the dark stores unlock the path towards fast, dependable, and accurate product delivery.

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