The Future of the Dark Store and How to Go About Starting Your Own

Since Tesco started the trend over ten years ago, retailers everywhere have utilized dark stores for hyper-agile fulfillment. 

The dark store, a term for converted retail spaces being used to fulfill online orders, became an important survival technique for in-person retailers during lockdown. 

During COVID, they were a survival tactic and sprung up like weeds seemingly overnight. It was an easy transition: Turn a retail store into a facility for pick-up and e-commerce fulfillment. Retailers of all industries, from pharmaceuticals to fashion, were using dark stores to stay afloat. 

As the memory of the 2020 lockdowns fades, many in the e-commerce sphere have questioned if the dark store will continue now that there is no real reason not to go out and shop at stores. 

However, for those thinking that dark stores would die out after the pandemic, consumer preferences are saying otherwise for 2024 — particularly when it comes to online grocery shopping. 

In a survey by Bank of America, 61% of respondents said they planned to shop online for groceries in 2024. So, while reports show that in-person shopping is making a comeback, it looks like the dark store is here to stay, one way or another.

What’s in store for the dark stores in 2024 and on? And how can you effectively start up and run a dark store in tandem with your e-commerce and in-store operations?

Below, we have some tips for retailers who need a little enlightenment on how to succeed with dark stores.

Read About CBIP's Full-Service Adaptable Logistics Solutions

The future of the dark store

The short answer is that the dark store looks like it is here to stay, but the scenery is changing, just as the market is. 

Even after COVID-19, dark stores provide a few benefits that traditional warehouses cannot. This is because unlike the traditional warehouse or fulfillment center, the dark store is typically located near highly populated areas.

Benefits of the dark store model include:

1. Super-fast shipping: Same-day or next-day delivery is often only possible with a dark store or micro fulfillment center that is placed near consumers, allowing more agile fulfillment processes to take place.
2. Curbside pickup/BOPIS(Buy online, pick up in-store): Customers can shop for items online and go pick up the items to save them money on delivery/shipping fees
3. Refrigerated delivery: Items that need to stay chilled can be delivered with less risk of spoilage.
4. Low up-front cost: Compared to the cost of setting up a fulfillment center, it’s easier and cheaper to repurpose retail stores with low foot traffic.

Should you set up a dark store?

Considering that the dark store market that is expected to grow CAGR 37.80% from 2022 to 2032, it may not be a bad idea to see if your business would benefit from a dark store model. 

However, it depends on what kind of demand you are seeing, and where. 

Look at your existing demand. Do you have retail stores where items are being picked and packed to send to online customers, instead of bought by in-person ones)?

If you notice one or two among them that sell a lot of merchandise for online orders, those stores may be good candidates for converting into dark stores.

For smaller businesses, particularly ones with one storefront only, this is not generally an option. You should instead search out other low-cost low-volume options for fulfilling your online orders quickly and inexpensively.

Tips for setting up your dark store

In some ways, the dark store is a fulfillment shortcut. If you don’t want to spend the time and resources on a fulfillment center, you can just convert an existing retail store to a dark store in a matter of months.

However, the dark store comes with its own challenges.

Automation is key

The whole point of the dark store is flexibility and agility. You cannot have that without operational fluidity. With so many items entering and leaving the dark store quickly to achieve super-fast delivery, one mishap can land you in a very tangled web. 

Things get complex fast, meaning you need to employ the right SAAS systems to keep things running smoothly and diagnose problems quickly.

Location, location…

Cost is important, as is traffic. Although you want your store close to the people, you will likely find that placing your store right smack in the middle of an urban center will get prohibitively costly and jam up the works in a hundred other ways.

You’ll want to set up your dark store on the outskirts of large cities, in a cheaper, suburban area.

Related: How Intermodal Shipping Saves E-Commerce Retailers Time and Money

Even if it's not called a fulfillment center, fulfillment employees are needed

Dark stores are different from fulfillment centers in several ways. One way they are the same is in their need for skilled workers who can pick, pack, and process orders efficiently.

Plus, if you are promising super-fast delivery, you’ll need plenty of employees working around the clock to meet shipping deadlines. 

Integrate your dark store seamlessly with the rest of your logistics

As great as they are, the dark store is not your only operation. You need to be able to manage the store along with any brick-and-mortar locations and e-commerce fulfillment centers you have.

The best way to do this is to either build an internal technology solution that tracks all aspects of your business on one interface, or work with a partner who does this for you.

Work with a 4PL that will never keep you in the dark

At CBIP Logistics, we work with e-commerce retailers all over the world to set up e-commerce logistics using our partner providers. 

However, we don’t just set up your logistics and leave you to sink or swim: We manage and consult you on logistics as you go along, and funnel all the data and KPIs from your business into one place: Our in-house CMS system.

When you are managing multiple small locations, keeping track gets tough quickly without an experienced, dedicated team. That’s where we come in. With CBIP, you aren’t just “hiring out” the work. Our goal is to be a genuine partner to you, advising and assisting you on anything logistics as you grow and scale your business.

Whether you are looking to convert a store to the “dark side”, scale your business to a new market, or just have some help managing your logistics in 2024, we’d love to help. Get in contact with us today, and we’ll have a chat about what great logistics could look like for you.