Dark Stores are Shining a New Light on Retail
November 23, 2020
Retailers are leveraging their stores along with ecommerce to drive more sales and faster service. How? They’re going dark.
As consumers expect more from what they can access, schedule for pickup, or get delivered to their doorsteps, retailers have come under tremendous pressure to make more products readily available. According to the latest figures from the U.S. Census Bureau, ecommerce sales increased nearly 45 percent year-over-year in the second quarter to reach more than 16 percent of total sales.
To fulfill an ever-growing list of holiday orders while continuing to deliver the right product, fastest service, and highest-quality customer experience, dark stores are providing much-needed relief for retailers and their shoppers. A dark store refers to a retail distribution center that is dedicated solely to fulfilling online orders. It’s typically a warehouse or repurposed store used to pack up online orders, which have skyrocketed during the pandemic.
Today, the model has evolved with new technology to help a variety of retailers from home goods to hypermarkets to use dark stores as local fulfillment centers to facilitate buy online pickup in store (BOPIS) and delivery. Similar to ship-from-store fulfillment, dark stores can enhance a retailer’s overall physical layout and logical workflows to accommodate optimal picking routes and capacity.
Retailers like Target and Walmart started testing ship-from-store fulfillment before the pandemic. Jewelry retailer Kendra Scott, when forced to close their doors at the height of the pandemic, used a ship-from-store strategy to turn their 108 closed stores into micro-fulfillment centers in just a few weeks.
In recent months, Home Depot, Whole Foods, Bed Bath & Beyond, and Apple have all shifted to add dark stores for online orders or converted existing stores to permanent micro-fulfilment centers.
Demand for Dark Store Capabilities
According to a September Accenture survey, nearly 80 percent of U.S. shoppers want their purchases delivered directly to their homes.
Ship from store or from dark store provides lower cost, high-speed delivery options to help achieve this by distributing the capabilities of warehouses closer to shoppers. By optimizing the picking process and leveraging staff at select stores, retailers can create responsive ecommerce fulfillment centers.
7 BENEFITS OF A SHIP FROM STORE OR DARK STORE FULFILLMENT STRATEGY:
- Expose and move more inventory. Ship from store exposes on-the-shelf, brick-and-mortar inventory to a larger online market. Rather than warehousing ecommerce inventory in a location that is isolated from stores and store inventory isolated from online markets, ship from store shares inventory across a retailer’s locations.
- Efficient inventory management. Ship from store requires better inventory management. With the adoption of technology in the load, store and pick stages, retailers are better able to increase the number of units that are delivered along with more efficient operations.
- Greater availability. As dark store operations are dedicated to fulfilling orders that are made online, they have a much clearer view of stock levels which results in better product availability than a pick-in-store fulfillment solution.
- Additional capacity. Having the flexibility to adjust and deal with volume is important. By shifting a fulfilment center to high-volume markets or having a small fulfillment center in a remote location, give retailers the ability to pick goods, pack, and deliver in areas with high order density or specific needs.
- Increased hours of operation. Unrestricted by regular store hours, dark stores can operate around the clock to fulfill demand. Orders can also be delivered faster and at the most convenient times for customers.
- New goods and new markets. Dark stores expose ways for retailers to sell new merchandise that shoppers would not typically find in their stores due to space limitations. It also gives retailers the ability to launch operations in new markets without having to open a traditional brick and mortar location.
- On-demand delivery. Shoppers welcome having any number of products delivered to their door in minutes. Delivery platforms like Uber, DoorDash, Roadie and Shipt, just to name a few, are helping to provide that instant gratification. A well-placed dark store along with these services can help retailers ensure demand is met while delivery times are kept to an all-time low.
Veras Locate for Dark Store Fulfillment
Veras Locate’s lightweight, easy-to-deploy architecture and efficient order picking allows retailers to meet these challenges without breaking the budget on costly, overly complex warehouse management systems. Moreover, Veras Locate addresses multiple fulfillment use cases to make the best use of resources across stores, warehouses, and offices.
Ultimately, Veras Locate delivers a comprehensive solution to optimally locate, pick, ship, and restock inventory to meet the needs of the cross-channel shopper through:
- Real-Time Inventory Availability. Many ERP and ecommerce systems rely on batch inventory updates that can’t readily expose the available inventory data for real-time requests. However, Locate can expose the data at any level and to any system.
- Ship from Store or Dark Store. Successfully compete with ecommerce players by maximizing the impact of your stores. Optimize the picking process by leveraging staff at every store, or select stores, to create responsive ecommerce fulfillment centers.
- Detect, Replenish, and Move Inventory. With real-time POS integration, alert stores of out-of-stock items on the floor and replenish on the fly from the backroom or off-site storage. From managing backroom inventory to speed customer service or aiding satellite stores to move inventory from a shared location, Locate gets the product in hand to the customer.
- Easy and Efficient BOPIS. Veras Locate gives the store quick visibility to inventory position for picking the BOPIS order, as well as audible and visual alerts that let associates know they’re falling behind to better prioritize orders and ensure they’re ready for pickup.
Entering the holiday season, we anticipate these dark stores will be bustling around the clock with order fulfillments. And as we look ahead to once the pandemic has settled, it’s certain that shoppers who have experienced fast delivery, BOPIS, or curbside pickup will likely keep some of these shopping habits moving forward.