As the world tries to adjust to the “new normal” due to the coronavirus pandemic, online shopping has become the most convenient way of shopping. Moreover, online shopping has become the most favourable choice of consumers because of multiple factors such as an array of options to choose from, promising quality, home delivery, and a robust digital payment system. As a result, people are opting for online platforms, even for buying daily grocery items.
With the rapid growth of the online market, there’s a rise in an innovative business model termed dark stores. These stores are generally mini-warehouses that offer on-demand deliveries to the customers directly. Thus, the dark store concept is based on the direct to customer (D2C) model. Dark stores are rapidly growing across the globe amid the lockdown. Many established e-commerce companies have come up with dark stores to maximise their profits.
What are Dark Stores?
Dark stores are a direct to customer (D2C) business model that can exist in any market, be it grocery, clothing, footwear, or other goods. The stores offer excellent customer experience in terms of online ordering, same-day delivery, last-mile delivery and in-store pickups. In simple terms, dark stores can be described as a combination of retail and eCommerce. Although dark stores are open to end customers, people can buy products through the dark store online platforms, including mobile apps and websites. The products are then delivered to the home of the buyer or at the location chosen by them.
Dark stores are usually set up in high demand areas. These large warehouses cater especially to online shopping; hence they can even be established on the city outskirts. The warehouses store, sort, and manage the orders to facilitate quick delivery and easier automation. Dark stores ensure that retailers have better customer retention and acquisition. Most businesses are coming up with dark stores to increase their profits and reduce cart abandonment rates.
Industry best practices to start a Dark Store with International Standards
There are multiple parameters that need to be taken care of in order to start a dark store with international standards. Here are some of the best industry practices that should be paid heed to:
1. Right Layout
You cannot underestimate the importance of having an excellent store layout plan for your dark stores. It is important to understand that dark stores need quite a lot of space to accommodate products in bulk quantities. A retailer should look for a valuable location to set up a dark store. When it comes to choosing the right location, look for a densely populated area to have more customers and a quick home delivery process. Besides the space to accommodate products, you should also focus on how to accommodate delivery fleets. Hence, a lot of space is usually required to have a dark store and choosing the right location with an excellent transport link makes your business strive. Even those businesses who are unable to generate profits because of inconvenient locations would benefit the most from the dark store model. To create a perfect dark store, focussing on the layout plan is necessary, along with an analytical framework.
2. Well-Defined SOPs
SOPs or standard operating procedures are crucial when it comes to designing the product proposition. If you are thinking of establishing a dark store, you need to invest your time. Therefore, ain developing SOPs to manage the operations. With SOPs in place, you can carefully handle and manage your entire operations. For instance, you need SOPs to train your new staff and ensure they follow the right steps. In addition, if your store uses expensive equipment such as weighing scales and ovens, SOPs can guide the staff about it. Thus, SOPs can be created to manage every operation associated with the dark store.
3. Effective Inventory Planning
An effective inventory planning to ensure high stock variety and rotation is a must, especially for dark grocery stores. Dark stores grocery remains the most challenging market, and hence it makes sense to have more visibility and planning. For this, retailers need to ensure the best inventory management and order fulfilment system. Retailers should be able to monitor inventory in real-time to avoid any loss in sales that may occur due to out of stock products. However, monitoring and regulating inventory is not easy for a dark store, especially when handling multiple order fulfilment. Hence, an inventory management system has to be set up especially to keep a tab on those orders that are not picked by the customers and need modification in the picking slots.
4. Data Analytics
Structured data analysis is required to handle dynamic product mix, stock level, service level, process and product alignment. Dark supermarkets need data analytics to ensure that the popular products are always in stock and easily accessible to the customers. Besides this, data analysis can help you to keep a check on various other parameters, including order accuracy, order fulfilment time, etc., to develop a more efficient process. This also eventually improves productivity and helps in cost optimization because of proper management on the production side.
5. Robust Softwares
Dark stores are a complex model, and to ensure better efficiency in terms of cost and operations, dark stores need a multitude of software. For effective overall store operations, oversight and management, dark stores require order management systems (OMS) and Auto-Replenishment Systems (ARS). In addition, dark stores can be operated easily with IT integration and automation software.
6. ISO Standards
ISO stands for International Organization for Standardization. When a dark store is ISO certified, it suggests that they have High-quality management systems, Data security,
Risk aversion strategies and Standardized business practices. However, ISO-certified dark stores have to go through a strict conformity assessment. Multiple standards, including ISO 9001, ISO 8583, ISO 14001, can be used for dark stores.
Why YRC to develop international industry standards for Dark Stores?
When it comes to the dark store model, YRC is the guiding hand you need. Our dark store consultants would assist you at every step at Your Retail Coach, be it layout planning or SOPs or deciding which software to invest in. YRC has helped many companies evolve as big names in the dark store industry. We can help you know how you can offer a seamless and hassle-free shopping experience to your customers. Contact YRC today to grow your business and to become an emerging name in the dark store market.