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What is a Dark Store in Retail?

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  • 26th August 2014
dark-stores

The term dark store refers to a retail distribution center or outlet that caters exclusively to online shopping. It is generally a large warehouse that can either be used to facilitate a collect-and-click service whereby a client collects an item that they have ordered online or an order fulfillment platform for online sales. The format was established in the United Kingdom, and its popularity has also spread to France.

What is a Dark Store?

A Simple Description

Not open to the public, the interior of an online dark store may appear like those that are found in a conventional market set out with aisles of shelves that contain groceries and other items for sale. However, they are not located in shopping malls or High Streets but in gritty and grim areas where good road connections are present.

The building themselves are frequently non-descript and utilitarian from the outside. Inside, the stores dispense with assistants who provide clients with product advice, point of sale displays and check-out counters. After the orders have been processed online, they are sent to the shop floor.

These electronically generated orders are then routed and processed according to the store’s layout for optimal picking. Unlike a traditional store where a picker moves around the aisles with a shopping trolley, they stay in a single spot. A mechanized system or goods-to-person pick station sends lower selling products such as spices and cordials from storage along a conveyor belt to the picker.

Goods that usually sell fast such as bananas and Coca Cola are placed on shelves in aisles in another portion of the dark store. More than one order can frequently be collected simultaneously. Fulfilled orders are then delivered to customers through the use of a fleet of vans that return throughout the day to be refilled.

There are generally two picking shifts from 8 P.M. to 4 A.M. and 4 A.M. until midday although some people work through the night. The shelves are replenished during the afternoon.

A New Face

In this new world of shopping, the delivery driver is the face of online dark stores instead of the individual who is manning the checkout counter. However, they are not called drivers but customer delivery assistants or CDAs for short. They are hired based on whether clients would want them in their homes. These individuals are the brand ambassadors, and they need to be service superstars.

Technical managers and quality-control checkers play important roles in online dark stores. A quality control checker ensures that nothing is damaged or missing and everything is packed properly. On the other hand, technical managers make sure the systems are in working order and that automation flows smoothly.

The Benefits

• Additional Capacity

There are a number of benefits an online dark store provides that are not found in a conventional retail outlet. One of them is additional capacity. They give retailers the ability to pack, deliver and pick goods in areas with high order density.

• Full Range of Items

Unlike a typical store, they have a full range of items, and they can vary in size usually from 100,000 to 200,000 square feet. This is something that they cannot always provide if orders are being picked from a standard-sized market.

• Great Availability

Online dark stores also offer great availability. As their operations are dedicated to fulfilling orders that are made online, they have a much clearer view of stock levels and therefore have better product availability than a pick-in store fulfillment solution.

• Increased Efficiency

Aside from that, they have increased efficiency as well. With the adoption of more technology in the load, store and pick stages, they have the capability to increase the number of units that are delivered while at the same time driving a more efficient operation.

• Enhanced Quality

According to a study from ShopperVista, one in five shoppers have stopped shopping online because of short product life. One in six has done so due to unsatisfactory product quality. This is not the case when they order from an online dark-store.

They manage stock rotation excellently and have operating zones that are separately chilled. This leads to high quality fresh food. Goods are in ambient temperature for a matter of minutes while they are loaded into vans. In addition, all items have guaranteed product life lengths. This is a clear advantage over store-based solutions.

• Improved Picking Accuracy

These stores also have improved picking accuracy. This is because the technology used ensures that the conveyor belts do not move groups of trays to the next station for picking unless the right goods have been scanned. This leaves little room for picking error. Additionally, if merchandise is out of stock, the system automatically identifies a perfect substitute instead of leaving this to the discretion of the picker.

• 24/7 Operation

As they are not restricted by opening hour regulations that are imposed on stores, online dark stores can operate 365 days a year around the clock. Orders can be delivered at the most convenient times for customers.

• Centralized Route Planning

Because they use vans to deliver their goods, online darks stores implement centralized route planning. This ensures maximum drops per van while delivering goods in the shortest possible time.

Implications

• Opportunities for New Goods

Online dark stores open up chances for retailers to sell new goods that consumers would not find in store outlets because of space constraints and fixture designs.

• Helps Encourage Faster Consumption

Products can be chilled in an online dark store in order to encourage faster consumption when they are delivered.

The Future

Economy experts expect that more online dark stores will open across the U.K. in the coming years. Aside from that, they are likely to expand across North America, Europe and other markets as online grocery retailing takes off. This form of online business will give retailers the capability to launch operations in new regions and markets where they do not have existing physical operations.

 

 


Danny Chard is the Managing Director of Assigns Point-of-Sale and Graphic Display Systems in both standard and customised formats and sizes. Our range of Graphic Displays are designed to enable retailers to get their products and services noticed on all levels, whatever the retail environment.


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