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Dark Supermarket Business Model

Dark Supermarket Consulting

‘Dark supermarket’ is an amalgamation of retail and eCommerce. These retail businesses sell and deliver to customers via the eCommerce model. Physically, these dark supermarkets exist in the form of warehouses or distribution centres. Not open for customers but customers can make their purchases via online shopping platforms in the form of websites or mobile applications and goods are delivered at their doorstep. Some dark supermarkets also exist in the form of the click-and-collect model.

Areas with a high online purchasing trend provide a solid reason to have dark supermarkets there. For existing supermarkets, it is also a way to bifurcate online and offline sales operations.  Because dark supermarkets need not be located in premium areas, the rentals are softer on the budget. There are also savings on interior design and fancy retail things.

The dark supermarket business model can be of two broad types:

  • Inventory model
  • Marketplace model

1. Inventory Model

In this model, a retail supermarket business operates via the dark supermarket route. This is just like any other supermarket business but done via the dark supermarket route i.e. where you take orders online, process them internally at your warehouse/distribution centre, and home-deliver to customers. The key sources of revenue are margin profits, delivery charges (if applicable), and membership subscription fees.

Website/app Development

For a dark supermarket business, the online store or the online platform whether it is in the form of a website or a mobile application is the face of the business in the absence of any physical store.

The online shopping app/website should be compatible with all operating systems (iOS, Android etc.), be user-friendly and deliver a superior user experience. It should fulfil all the modern-day expectations of customers from an online shopping app or website. Customers need to be able to search for products by filters, find product specifications and prices, product images and videos, access and read product reviews, area delivery details etc.

On the backend side of the platform, there should be a proper order management system in place for receiving and processing orders and for communication with customers in the likes of sending order confirmation notifications, live tracking of their orders, delivery timelines, etc.

Robust Inventory Management

When you are running a dark supermarket business, you do not get the flexibility of a longer supply chain or that of many fulfilment centres. The scope of leniency in demand and sales forecasting is thin. At any given point, your running inventory must commensurate with the running demand for all product variations, sizes, and volumes. At the same time, your storage calculations and purchases have to be precise if you would not prefer stocks to be lying on the floor.

You will need to have strong procurement SOPs and an accurate inventory replenishment system in place. JIT inventory system and material requirement planning could be extremely helpful to optimize the inventory requirements.

Layout Planning and Optimization

The layout of a warehouse plays a decisive role in how inventory is moved which in turn affects the time required for order fulfilment. The layout should be planned and organized in such a way that it optimizes the time required for the movement of inventory to its final checkout. There would be thousands of products in different SKUs, hundreds of shelves and close to as many aisles, multiple storage areas, packaging points, trolleys, etc. If the space layout and the movement of inventory and people are not planned and implemented accordingly, it could result in delays in order fulfilment.

Last-mile Delivery

After the website/app, the last-mile delivery is the second most sensitive customer touchpoint for a dark supermarket business. Even if everything was done right so far, any deviation from the expected or promised standards in the last-mile delivery could be a big turn off for customers. This operation could be carried in-house or by outsourcing it to a third-party logistics or delivery partner. In either case, the standards of service and operations in the last-mile delivery must be clearly established and communicated to the delivery team or the delivery associate entity.

Digital Marketing

Digital marketing for a dark supermarket business is similar to that of any local online B2C enterprise. The target audience here is the local population in the targeted geographic areas. Local business listing on search engines and promoted social media campaigns are effective at reaching out to the local residents. These dark supermarket businesses need to ensure that they have listed multiple working phone numbers, correct website URL, authentic app download link, directional support, device compatibility, etc.

Digital analytics could provide meaningful insights on buying patterns, high demand locations, high demand products and their SKUs, sources of online traffic, conversion rates from the web, app and social media, etc. The effectiveness of conventional marketing also cannot be ruled out here.

SOPs for Order Fulfilment

Process manuals or SOPs are essential for any business including dark supermarket businesses to ensure that its processes and operations are carried out as planned so that the intended operational standards are achieved throughout the order fulfilment process. Right from the moment an order is received to the delivery of the order, all the batches of activities separated by different operations need to be defined and mapped in the form of process manuals or SOPs so that these can serve as operational roadmaps for concerned process or activity owners.

Launch Preparation

This is where the reverse countdown is set for the take-off and the time comes to bring your new dark supermarket business to the light of the day. It is much more than ribbon-cutting. The launch program needs a bit of planning and marketing efforts. The first impression should be a lasting one and to make sure it happens, there are a host of activities like a trial run of the website (preceded by beta testing), the onset of digital marketing campaigns, print media advertising campaigns, promotional pricing, etc. The idea here is to impress stakeholders, strike digital visibility, and make the business presence felt from the word go.

Responsive and Effective Customer Support

The truth is most businesses miserably fail at customer support.

An order value of INR 100 is as important as an order value of INR 1,000. The statistical science we follow here falls a bit flat. A customer with a smaller bill could be your next big customer or could bring ten more. Most business owners fail to send that simple message across to their frontline or delivery staff.

Customers nowadays expect real-time order details to be made available to them with fewer taps or clicks. The shopping web or app must provide for it. Customers may even seek to change their payment mode at the time of delivery. These kinds of automated self-service features have become the norm of the day.

For manual support, customer service representatives should be guided by SOPs. These frontline staff should not appear confused or appear to be routing customers.

2. Marketplace Model

In the marketplace model, you provide a marketplace platform to the retailers who serve as the suppliers post registering with your business. After receiving customer orders, you pick up the goods from these retailers and deliver the order to the customers. It is similar to what popular eCommerce marketplaces do but dark supermarkets operate at the local level. In this model, the key sources of revenue are sale commission from retailers, delivery charges from customers, and advertising and promotion.

Merchant Onboarding Process

The process of on-boarding a new merchant can entail a wide range of activities like scrutinizing applications, documentation formalities, physical verification, registration fees (if any), acquainting the merchants about the applicable policies, terms and conditions, operational standards to be maintained, the processes and procedures for order processing, etc. Different companies may have different approaches to how they carry out this onboarding process. Having SOPs can simplify a complex and lengthy onboarding process. A well-planned, systematic, and process-oriented approach will ensure that all the required areas of work are duly undertaken and finished on time.

Merchant SOPs (order processing)

Merchant retailers need to be well-acquainted with the order processing part. They should know their role and the activities to be undertaken by them in the order fulfilment process right from the moment an order is sent to them to getting the order ready for pickup and delivery by the logistics team. At every step in this process, they need to maintain the established standards of performance.

Merchant Training

As a marketplace platform, it is your business prerogative to help your merchant partners get acquainted with the policies, order fulfilment process and standards of performance you want them to imbibe. You will have to bear in mind that your team and your merchant partners are going to work remotely. If there are any gaps in understanding policy, process or procedure or any step thereof, it might be more convenient to fill such gaps with unapproved patchwork or out-of-the-book decisions.

With relevant training and SOPs, such deviations can be eliminated. And more than that, merchant partners will have a better understanding of the policies and processes and the standards of performance to be maintained in a win-win situation.

CRM for Merchants and Customers

Customers and merchant partners are two important external stakeholders for a marketplace business enterprise. You are providing services to both. If anything is out of the place in the service model, they will come back to you for assistance or queries. You will need to address their concerns and grievances in a responsive, speedy, and effective manner. Hence, the need for a robust CRM arises. Similar to CRM support in the inventory model, customer service representatives should be guided by SOPs aided by CRM software.

Audit

You should ensure if your merchant partners are consistently abiding by the agreed terms of performance in terms of the quality of goods, storage conditions, order accuracy, packaging standards, adherence to SOPs, safe and hygienic working conditions, updated trade license, etc. All these can be assessed with the help of audits. Customer feedback and reviews are an important consideration in audits. These audits are important because it has ramifications on your brand. The burden of such operational audits can be significantly reduced if there is a robust IT platform in place where real-time activities can be tracked and overall merchant performances can be checked any time on the system. The scope of audit also extends to your internal business functions like HR, finance, marketing, logistics, etc.

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We work only for Visionaries.

PROCESS AUTOMATION

The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

VIDEOGRAPHY & PHOTOGRAPHY

No matter how good your product is, the customer would know only if it looks good.

Photography includes the following steps:

  • Cataloguing your products
  • Cataloguing your images
  • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
  • Choose the right camera & lens (You may also outsource the photography to a third party agency)

DIGITAL MARKETING

Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

IT INTEGRATION

Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

WAREHOUSE & LOGISTICS PLANNING

  • How many cities or countries you wish to sell in?
  • Where should your Warehouse be located?
  • Should you have one warehouse in each country or city?
  • Should you be having your own delivery team in your base city?
  • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
  • How should I manage the logistics if my goods are coming from different countries?
  • How should the goods be stored and barcoded?
  • How much space do I require for warehouse?
  • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

 

At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

UI & UX DESIGNING

This Step involves 03 distinct parts:

Part 1: Choosing the right Platform:

From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

Part 2: UX Designing:

“UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

“As per statistics, 68% of the customers abandon the carts before payment”

An interesting UX ensures the customer sticks on to the website for a longer time.

Part 3: UI Designing:

UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

If User experience is the bare bone, user interface wraps it up with an attractive cape.

At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

SAMPLING & PRODUCTION

This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

Production Sample is made before the production which is the replica of what is going to be finally produced.

Once you are through with all this, you are good to go ahead & get your goods manufactured.

PRODUCT DESIGNING / SOURCING

Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

Product Designing / Sourcing can be done in several ways, as follows:

  • In-house Design Team
  • Freelance Designers
  • Outsourced Design Team
  • Ready Product Sourcing (From Manufacturer or Wholesaler)

At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

BRANDING

Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

It is an integral part to attract the target audience.

ORGANOGRAMS & SOP’s

Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

CRITICAL PATHWAY

Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

BUSINESS STRATEGY & BUSINESS PLAN

Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

MARKET RESEARCH

Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.