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dark grocery store

Supplementing the on-demand market with a dark grocery store

Have you only been shopping online lately? In the first quarter of 2021, e-commerce reached $196.66 billion – with nearly $1 in every $5 spent on online retail purchases. In the past few years, the online shopping industry has rapidly expanded, becoming a multibillion-dollar industry. The rising need for greater convenience is driving significant growth in online grocery demand.

The retail industry is essentially in the midst of a consumer revolution. The retail paradigm has shifted from a physical touchpoint with consumers to a multi-channel approach that intertwines both digital and physical channels. With the conventional brick-and-mortar retail store no longer being the dominant medium, consumers now seek an integrated shopping experience. The key drivers of this consumer revolution are technological advancements, the adoption of mobile devices, and the rise of digital media.

A catalyst for the online grocery industry, the COVID-19 pandemic helped bring e-retailers to the forefront. A combination of consumers’ interest in avoiding public places, government-mandated lockdowns, and the continued need for essential goods and grocery items made online grocery delivery services an indispensable part of the consumer experience. From offering detailed product descriptions, competitive pricing to same-day delivery, e-retailing made shopping convenient and safe.

The Advent of the ‘Dark Grocery Store’

A dark convenience store is a retail grocery store whose primary purpose is to facilitate pickup of delivery orders. They are usually located at the last few miles of the consumers, are smaller than a normal grocery store, and tend to stock a wider variety of products. These retail distribution outlets are not open to shoppers, which enables them to provide more space for storing inventory, packaging, and fulfilling orders accurately. In essence, dark grocery stores are distribution centers for online orders. A simple, convenient solution, these dark stores help support the irreversible shift brought about in consumer shopping habits.

According to Insider, online grocery adoption will reach 55% of US consumers by the end of 2024. As we know it, nearly everything about traditional retail has turned upside down with the global coronavirus pandemic. The accelerated growth in demand for grocery stores propelled chains to find solutions for automation and fulfillment quickly. With these systems in place, dark grocery stores can turn into permanent fixtures as more retailers continue to realize the long-term advantages of such stores.

Dark Store Business Model: How Does It Work?

A dark convenience store simplifies the picking and packing process. A strategic, lucrative option for a wide variety of retailers, the dark store operating model offers three common delivery options.

In-Store Pickup

Most dark stores have a designated pickup area inside the store, which is typically near the front entrance. This way, customers can easily pick up their package without having to walk through the entire dark store. Ultimately, this offers them more convenience and saves on delivery costs.

Home Delivery

Home delivery has become increasingly popular, particularly among local retailers. This allows for fast, convenient, contactless delivery to customers, especially when it comes to necessities. However, home deliveries can also be done by building an online shop and shipping orders to consumers that are located far off.

Curbside Pickup

The curbside pickup option makes it easy for customers to collect their orders quickly. This sort of option usually involves dedicated parking areas where a retailer employee will bring out the order so the customer doesn’t have to get out of their car. This not only offers safety to customers during a pandemic but is also convenient.

The Significance of Dark Stores for The Grocery Industry

Globally, all major retailers have adopted the ‘dark grocery store’ business model. A dark convenience store combines the perks of a store with a fulfillment center, allowing retailers to complete orders as close as possible to their consumers. Guiding the future of retail, dark grocery stores are built to stock a vast range of products, increase warehouse efficiency, offer optimized inventory management and ultimately elevate consumer loyalty.

The popularity of dark stores extends far and wide. These sort of fulfillment centers are most beneficial to industries where order timeliness is of paramount importance. A game-changer for the retail industry, a dark grocery store helps in addressing critical challenges that plague the grocery market.

Perishability Challenge

The grocery market, in particular, grapples with the challenges of dealing with perishable items. A majority of grocery items, such as vegetables, dairy, fruits, and pulses have a short expiry window. The golden rule of fulfillment is to deliver the items to the consumer’s doorstep in their ideal state. Yet, when dealing with inventory on a large scale, it can easily become a burdensome process.

With the fulfillment process not being as simple as it seems, dark stores help in overcoming the perishability challenge. They offer adequate space, visibility for pickers, flawless inventory management, and stock managers required for maintaining the ideal freshness level for each given perishable item.

SKU Challenge

A dark convenience store can enhance SKU management by focusing on click-and-collect capabilities and storage. They not only save money on expensive real estate by avoiding high-traffic areas but also serve several other online grocery stores simultaneously – helping reduce real estate costs.

They conserve space and aren’t interested in offering an appealing retail experience, in-store ads, etc. As a consequence, dark stores tend to stock a wide variety per item for a lot less inventory. Additionally, their ability to optimize SKU control enhances distribution accuracy and prevents mix-ups, which are quite common in online grocery deliveries.

Fulfillment Window Challenge

In an increasingly fast-paced world, consumers expect everything to be instant. With most consumers purchasing essentials when grocery shopping, they can’t wait around for days to receive their orders. However, when dealing with a high volume of orders, managing deliveries can be challenging. This is where dark stores come into play, as they have the space and a systematic method in place to deliver packages on time.

The Disrupters of The Grocery Market – DoorDash, Grab, Talabat & Glovo.

The future of retail is digital. With consumer behavior evolving at a breakneck pace, immersing them in a quick, reliable, and consistent shopping experience is the need of the hour. In March 2021, online grocery sales hit a record of $9.3B in the US – indicating just how prevalent online grocery shopping has become. Moreover, as the frequency of shopping increases, the trend of e-retailing is only expected to grow steadily.

DoorDash, an online food delivery platform, partnered with convenience stores situated across the US to launch its new initiative ‘DoorDash Essentials’. This service promises to deliver grocery items to consumers’ homes as fast as possible. Selling a range of miscellaneous items, DoorDash’s dark stores aim to bridge last-mile delivery challenges. Similarly, other corporations such as Grab, Talabat, and Glovo have initiated their respective dark grocery store launches, which aim to offer the widest selection of groceries at the best prices and shortest delivery time.

Tap Into the Potential of a Dark Convenience Store – Build an On-Demand App

A dark grocery store wields limitless possibilities for the grocery industry. If you’re looking to build an on-demand app for your new dark convenience store initiative, consider opting for ODTap. We are specialists in building custom performance-intensive on-demand solutions based on your requirements and industry.

Our on-demand delivery app allows customers and retailers to keep track of deliveries in real-time. It offers multiple payment methods, has features such as service scheduling, rating, instant notifications, and also provides access to app data history. Known for our technical expertise and experience, our team is well-versed with building apps that deliver value to both retailers and consumers. So, get in touch with us today for a consultation.

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