Inside the fast-paced business of dark stores

Inside the fast-paced business of dark stores

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Supriya Roy

16 reads
author-image

Supriya Roy

16 reads

Once located outside city limits, order fulfilment centres are popping up in prime areas and even on high streets as instant grocery delivery grows popular. Startups are racing to set up facilities and test various models, but can they limit cash burn and earn better margins?

January 19, 2022

10 Min Read

On CMH Road, a popular shopping haunt in Bengaluru’s Indiranagar area, changes caused by the pandemic are very apparent. Some well-known businesses have disappeared, while a few upstarts have taken up space.

The high-street retail outlets here are hoping for the rush of customers to return soon. There is a Zepto store midst them, but it is not expecting, or admitting, anyone other than light-footed delivery executives on site. One after another, the executives fan out to complete 10-minute grocery runs, the company’s big promise to its users.

Zepto’s competitors in the ultrafast delivery war, Dunzo and Swiggy Instamart, also operate from this stretch. 

Before Covid-19 struck in 2020, hyperlocal warehouses and micro-fulfilment centres, commonly known as dark stores, didn’t exist in upscale neighbourhoods like Indiranagar and south Delhi’s Saket. Today, such facilities with in-your-face branding can be found in prime localities.

Quick commerce’s current order format of 10 to 20 minutes is part of a broad trial in the industry, and its success hinges on instant customer convenience and delight, unlike in the case of next-day delivery models. 

But just as Flipkart had to create its own logistics network to kick-start Indian ecommerce’s growth story, the new crop of online grocers needs to make huge investments to set up physical infrastructure.

Context: Space on the high street costs twice more than real estate elsewhere. Moreover, the prices of bare-shell properties, preferred for dark stores, have climbed by 30%, as per industry estimates.

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