Before the coronavirus pandemic, many were hesitant to shop for groceries online. Habits change quickly, however, as consumers embrace a new way of shopping for food items.
Prior to the pandemic, the U.S. grocery sector was lagging other retail sectors in e-commerce adoption, with a penetration of only 3% to 4%, compared with 10% to 20% or more for other goods. As consumers came to learn during lockdowns, “dark stores” — retail facilities used exclusively to fulfill online orders — can take the convenience of online shopping right to their doorstep at impressive speeds.
Companies are increasingly turning to dark stores and order fulfillment centers that operate without the need for customers to enter, and have the ability to handle same-day rapid delivery requirements to respond to these new shopper preferences.
The trend was already here. People love to order fast food, office supplies, and Christmas presents from their favorite online stores, and are willing to spend more for a faster delivery promise.
Amazon ranks number one in customer satisfaction among all retailers because it gets more goods to buyers faster than anyone else. According to Larry Freed, chief executive officer of Verint ForeSee, “Satisfaction is a metric that can predict the future success of a company.”
Dark stores are essentially micro-fulfillment centers containing the must-have items that are typical of quick commerce. Online orders are packed, handed to couriers and dispatched to a customer’s address in minutes rather than days.
Dark Stores Deliver Speed
Dark stores have evolved far beyond a traditional delivery service. They combine the technology of online ordering with the convenience of a personal courier. By moving the most commonly ordered products closer to consumers, dark stores eliminate the majority of the time needed for the shopping process.
Online orders can be filled in a nearby warehouse in seconds. Next, they’re assigned to a courier who rapidly delivers it to the customer.
A growing number of retailers are impressed with the dark store model. Bed Bath & Beyond, for one, has announced that it will convert over 25% of its retail space into dark stores.
The rise of dark stores is a global trend. Companies can deliver more products per day when they move their inventory closer to the customer. Gorillas, a German on-demand grocery delivery company, operates directly from hundreds of dark stores. Each is limited to a particular zone within which goods can be delivered to customers quickly via couriers. They’re aided by the deployment of advanced last-mile logistics models that take into account traffic and population density.
While supermarkets rely on products with a longer shelf life to cater to the weekly shopping model, Gorillas focuses on serving customers who need to stock up on fresh groceries, the miscellaneous kitchen item, or the forgotten key ingredient for tonight’s recipe.
Gorillas’ dark stores operate as small-scale warehouses, carrying nearly 2,000 types of grocery items. Each team member focuses on a specific task, from picking items to packing orders, preparing to ride and overseeing the process.
The dark store model also creates efficiencies that strengthen the bottom line. With only employees allowed inside the store, fewer shopping carts create less congested aisles, and staffers don’t have to maneuver around customers. The extra space also allows for better storage and picking capabilities. Retailers are able to increase customer satisfaction by fulfilling more orders and getting them out the door faster.
The Role of Technology
Through the use of optimization algorithms, an intelligent location platform enables seamless delivery-route planning for drivers, walkers and even cyclists, based on real-time traffic and road conditions, lane and turn restriction, and historical data. The tool can assist delivery services by determining the best order in which to make each delivery, while evenly distributing deliveries across a fleet of workers to make deliveries faster than ever.
As dark stores move into the limelight, best-of-breed intelligent location technology can offer logistics solutions for quick commerce. With purpose-built software for fleet management and turn-key navigation apps, companies and delivery drivers can easily generate and navigate the quickest delivery routes. Fleet management strategies decrease delivery times by optimizing the order of multiple stops in a delivery route, accounting for traffic, weather and road conditions in real time.
Embedding turn-by-turn navigation into any application, the system gives detailed driving instructions from starting point to destination. Software aids in keeping drivers in an app to avoid distractions and safety incidents, while alerting them to changing delivery circumstances like cancellations by modifying the delivery schedule in real time. By accurately matching GPS data to a road network, the right technology provides more precise ETAs.
Isochrones represent geographical areas that can be reached within a set period of time from a single location. They determine which stores can best fulfill an order. By testing delivery times for different warehouse locations, the software determines which sites provide the greatest range for rapid delivery.
Delivery times are the new benchmark for customer satisfaction, making dark stores and rapid delivery the preferred model for retail success. To optimize their dark stores, businesses should consider an all-in-one technology platform that can calculate the rapid delivery ranges of warehouses, and provide couriers with the best routes for on-time drop-offs.
Garrett Miller leads navigation and logistics for Mapbox.
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