At a time when consumers expect instant gratification, it is no surprise that last mile deliveries are gaining huge traction. Online shopping was already a hit before the pandemic and further 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 or quick commerce was thus a strategic move adopted by retailers to stay afloat amidst fierce 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 become a $5 bn market by 2025 and last-mile delivery is one of the key determinants of customer satisfaction.
Achieving last-mile delivery at reduced costs was quite a challenge for businesses. But that’s when ‘dark stores’ came to the rescue. For the uninitiated, dark stores are micro-warehouses located in close proximity to high demand areas. Dark stores aid last-mile deliveries for groceries, personal care products and their utility is slowly spreading across other categories as brands turn to third-party logistics and warehousing providers to optimize operations for speedy delivery.
Let’s understand in detail how dark stores can address key challenges pertaining to last-mile deliveries.
Reduces logistics costs
Dark stores are similar to brick and mortar retail stores but aren’t designed to accommodate customers inside the store. Dark stores are centres exclusively dedicated to fulfilment operations. They are located in strategic urban areas closer to customers which significantly reduce the pick per unit and last-mile costs. As dark stores only have goods meant to meet internet orders, it drives better efficiencies and can help save between 10% and 30% of logistics costs.
Stores an extensive range of products
The layout of dark stores is such that it facilitates better storage and picking capabilities. Businesses don’t have to spend on the aesthetics or interiors of dark stores as they aren’t built for in-store shopping. With a dark store that houses a focused 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.
Facilitates easy storage and delivery of perishable goods
Perishable products like groceries, milk and meat need to reach the customer 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. Especially during the pandemic, consumers were forced to stay indoors and safety concerns made even the most simple tasks such as grocery shopping seem daunting and stressful. Retailers tied up with dark store service providers and capitalized on this opportunity with the promise of instant, contact-less deliveries.
Facilitates round the clock operations
Dark stores operate round the clock to fulfil customer demands. Due to the strategic location of dark stores, orders can be delivered at the time most convenient for customers. Customers have the freedom to choose a time slot as dark stores are optimized for easy pickup and delivery.
Fulfils on-demand delivery needs
Dark stores are highly effective to cater on-demand delivery requirements. Customer expectations are constantly evolving and the order and purchase process is quite 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 a few minutes or hours. Such on-demand delivery requirements are possible with dark stores as they facilitate optimized SKU management and better last-mile connectivity. Dark stores are an efficient solution to keep up with the unplanned ordering behaviour observed among today’s comfort-oriented consumers.
Dark stores are revolutionizing the last mile delivery landscape as consumer convenience, meeting growing demand and accessibility takes centre stage. It has changed the way products are delivered to customers. The rising demand for dark stores has led to the robust growth of urban logistics spaces. The urban logistics space is expected to surpass 7mn sq. ft. in India by 2022. Dark stores act as last-mile storage spaces that facilitate the efficient movement of goods across urban areas with cost optimization and efficiency benefits. With greater product assortment, super-efficient order fulfilment and a better view of stock levels and inventory management aided by technology, dark stores undoubtedly unlock the path towards fast, dependable and accurate product delivery.
This article is authored by Aditya Vazirani, CEO – Robinsons Global Logistics Solutions.