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Opportunity 2015-11-26

Dark stores, a bright concept in franchising

“The future of Dark Stores is bright, I see dark store concept as an emerging concept in franchising,” believes Gaurav Marya, Chairman, Franchise India.

Dark stores, a bright concept in franchising

Call it Dark Stores, Collection centres, Dotcom centres or Fulfillment centres, for a layman, a dark store is generally a large warehouse that can either be used to facilitate a "click-and-collect" service whereby a customer collects an item they have ordered online, or as an order fulfillment platform for online sales. Many online players and even some offline brands are now adopting the dark store concept to smoothen the progress of their brand in certain areas. Let’s know more on this fast rising trend.

The rapid growth of the online grocery market in India has begun to put pressure on traditional store picking operations, leading to the rise of dark stores. These days a lot of e-commerce players are opening their dark stores at most populated areas in particular cities. Navneet Singh, Co-founder, PepperTap, One of the fastest on-demand grocery delivery service platforms in India comments: “We have around 200+ partner stores. Our dark stores are majorly in Delhi, Mumbai, Bangalore, Hyderabad and we soon plan to enter smaller towns too. Dark stores have numerous benefits as customers are not allowed to enter. They can just come and collect their products and this removes hassles and delivery issues. Dark stores can do deeper integrations. The staff knows where the stock is kept and how much is kept.”

DLF brands which runs Mothercare stores in India also has plan to open its Dark Stores. Dipak Agarwal, CEO of DLF brands informs: “Currently, we don’t have any Dark Store but we plan to have many dark stores in the next 6-12 months across India.”

Benefits of Dark Stores

Extra space

Dark stores provide retailers with good space to pick, pack and deliver online grocery shopping. Size can be from 1-2 lakh sq.ft

Huge availability of stock

A retailer may not be able to store everything in his small or medium sized store, so here comes the bigger role of Dark Stores to offer extra items to the customer that are otherwise not available.
Maintained quality- Quality maintenance becomes more typical in case of frozen foods and milk products. The Dark stores have separate chilling zones where these products are stores. So, a customer can come and pick the products ordered and be sure of his choice.

24/7 operation

Dark stores do not have customers that visit them through day and night, so they can easily operate 365 days a year and orders can be picked anytime.

Win-win for all

The Dark store concept is a brilliant opportunity for partners/investors. Since the online brands don’t own the inventory, the partner store is completely benefitted by associating. Navneet of PepperTap says: “Since we are a market place, we don’t own the partner stores but by associating with us the stores are benefitted and hence it is also advantageous for us. More than 90% of our dark stores are through current partners and it is valuable for us and them too.”

Jaipur’s leading Pinkcitykirana.com also has its dark stores in the city and has plans to move out soon. It’s Co-founder, Sandeep Agarwal says: “Future of dark stores is bright. If you are planning for a long term business in this industry then you must have at least one dark store according to the place where you are serving. This industry works on daily price fluctuations and if you do not store your products in a dark store you cannot run it according to the market. So having a dark store helps you in maintaining the quality and control over the prices.”

A dark store may look like a superstore or a large retail space but it is not open for the general public. The format is known to be first initiated in the United Kingdom, and its popularity has also spread to France followed by rest of European Union. Online grocer Big Basket has set up a number of small warehouses or so called Dark stores across the country to be able to ship orders faster to customers under its express delivery service. It will also use the warehouses to expand into smaller towns.

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