Dark Grocery Store vs. Micro Fulfillment Center: Which is better for e-grocery delivery and takeaway?

Dark Grocery Store vs. Micro Fulfillment Center: Which is better for e-grocery delivery and takeaway?

January 10, 2024
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With the rise of online shopping and home delivery, many supermarkets have turned to a dark grocery store as a solution for fulfilling digital orders.

However, these facilities can be costly and geographically limiting — arguably the biggest challenges in online grocery business. That's why some opt for a micro fulfillment center (MFC).

This innovative approach to e-grocery delivery and takeaway is revolutionizing the industry by providing a more efficient and cost-effective alternative.

In this article, we'll explore how MFCs are slowly inching their way over dark grocery stores in the grocery fulfillment race.

Understanding the Dark Grocery Store Concept

The world of e-commerce has been rapidly evolving, especially in the grocery sector. According to a Future Market Insights outlook for the next decade, the online grocery market is expected to grow at a CAGR of 24.6% between 2023-2033.

Source: https://www.futuremarketinsights.com/reports/online-grocery-market

Dark grocery stores are not a new concept in the e-commerce landscape. Amazon has been using them as fulfillment centers in different regions of the country and around the world. Essentially, these are large warehouses where supermarkets stock inventory and fulfill online grocery orders.

Unlike their traditional brick-and-mortar counterparts, dark grocery stores are not open to the public. Instead, they are solely focused on delivery.

The concept arose as a response to the increasing demand for online grocery shopping and the corresponding need for efficient inventory management, order fulfillment, and optimized delivery orchestration. Because retail stores are neither built nor equipped to fulfill online orders, grocery operators found it necessitated a separate structure altogether.

While they filled in the gap, dark grocery stores did come with their own challenges, such as high costs and limitations on location. Thus, retail businesses started looking for cheaper options nearer to customers to offer faster delivery.

The Rise of Micro Fulfillment Centers

Recognizing the new and lucrative opportunity, existing physical stores and small-scale warehouses located in densely populated urban areas grabbed it. And the MFC business model was born.

MFCs offer numerous advantages for online grocery businesses:

  1. By utilizing these established locations, retail companies can tap into an already efficient supply chain, reducing costs and streamlining operations.
  2. This approach also helps startup online grocery stores leverage the infrastructure and resources of an existing supply chain supermarket.
  3. Retail chain operators can expand their reach and provide customers with convenient delivery and pickup options.
  4. Being near the end consumer minimizes last-mile delivery costs and meets their same-day delivery demands.
  5. Without checkout lines and catering to individual shoppers, higher volumes of orders can be fulfilled.

MFCs aren’t resting on their laurels nor letting up on improvements. They’re capitalizing on technology to ensure a firm foothold in the e-grocery ecosystem.

Technology’s Role in MFCs

To guarantee profitability, scalability, and sustainability in this digital age, adopting and applying technology is a must for any business. MFCs are no exception.

Automation and speed are the strengths that MFCs gain from technology, which they pass on to their retail clientele, such as integration with existing systems for efficient fulfillment.

Various providers are also poised to contribute to the efficiency of MFCs. For instance, the Hy-Vee grocery chain aims to conquer the Midwestern micro fulfillment market by commissioning Takeoff Technologies.

Other holistic grocery solutions providers, such as Wave Grocery, have also helped streamline how supermarkets and online grocery stores operate. Wave Grocery not only offers to create a web and mobile app, but also a delivery app, picking app, phone ordering software, and loyalty software for that seamless online grocery experience.

The Future of Retail with Micro Fulfillment Centers

In the 2023 report of Research and Markets on micro fulfillment, the prediction on MFC installations is a growth of 20 times by 2030. The MFC market size will likewise grow by 12 times in the same year with a value of $2 billion.

Source: https://www.researchandmarkets.com/reports/5232422/

As e-commerce continues to dominate the retail industry, it looks like the future of e-grocery lies in the hands of micro fulfillment centers.

These innovative hubs are transforming the way consumers shop online for groceries with faster fulfillment. At the same time, they are enabling retail businesses to thrive in their ultra-competitive space.

At Wave Grocery, we encourage our partners to leverage the benefits offered by MFCs, which can support you on how to start a grocery store online at an advantage. Using existing physical stores is definitely more cost-effective than investing in a dark store.

For many years, Wave Grocery has supported MFCs — an example being the Kritikos supermarket chain in Greece, whose online shop and mobile app we built. In our experience, integrating our apps and various e-grocery software with our fulfillment capabilities can take your bottom line and business growth to new heights.

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