Retail

The Power Of Invisibility In Retail

Immediacy in retail is no small advantage. In fact, immediacy is what the brick-and-mortar players of the world indisputably do better than their digital counterparts. While consumers often report a broken physical shopping experience, the agreement is universal that if you need it now, you’re going to have to go to a store.

But Darkstore might just be able to neutralize that advantage, making immediacy much more accessible.

While being invisible is something of an odd goal in retail — as it’s hard to sell one’s goods and services if consumers don’t know you exist — Darkstore, as its name implies, is a bit different. Because the company works to facilitates commerce — specifically same-day delivery — it is happy to operate in the shadows.

So, What Is It?

Founded in May 2016, Darkstore’s strategy is to find and exploit storage spaces that already exist but are underutilized. Think bodegas, storage facilities and empty shopping malls. Instead of letting those spaces sit vacant — often in prime delivery locations — Darkstore leverages the power of mobile to make it easy to transform those spots into fulfillment centers.

Why build a new location — in an expensive urban or suburban area — when one can utilize what’s already there (and in some cases in desperate need of use)? Brands and retailers that don’t have a local foothold for their inventory now get one. If desired, they can use those access points to ship to consumers on the same day.

“Uber is the largest transportation company that doesn’t own a car; Airbnb is the largest hospitality business that doesn’t own a hotel,” Darkstore’s Founder and CEO Lee Hnetinka said. “We’re not going to take on real estate leases, and we’re not going to run these warehouses ourselves, so we want to be the largest fulfillment company that doesn’t own a fulfillment center.”

If Hnetinka’s name looks a bit familiar, you might recognize it from his previous entrepreneurial effort: as Postmates’ competitor WunWun.

WunWun had a similar starting idea as Darkstore: to use stores as warehouses. But, he said, lots of players were raising money on similar concepts. With competition like UberRUSH, Postmates and Instacart all building to scale, his option was looking increasingly unlikely. The market, Hnetinka said, is ready to move on.

“Technology is moving so quickly that now, people are no longer buying stuff from stores offline. They’re buying stuff from different guys … what’s not needed is to power offline stores online. What’s needed [are] dark stores.”

Dark stores are a retail concept that are common in the U.K. and Taiwan.

“In Taiwan, the way it operates is, under bodegas there’s extra space, so virtual retailers store their stuff there,” Hnetinka said. “That’s where we got the idea to exploit excess capacity and not build the dark stores themselves.”

When it comes time to delivery the goods, Darkstore partners with delivery-focused firms like AxleHire, UberRUSH, Deliv and, most recently, TForce Final Mile. Partner merchants can then use Darkstore to track their inventory, orders and deliveries.

So far, the brand’s partners include Tuft & Needle, premium headphones maker Master & Dynamic, clothing brand Wildfang and sofa startup Burrow.

The company is also working to recruite more brands to their platform, as might be expected. Hnetinka and his team are also hard at work building and updating plugins for popular commerce platforms like Magento, Shopify and BigCommerce.

Darkstore doesn’t charge for store inventory, instead charging 3 percent per item that ships, with a minimum of $2 and a maximum of $20. The goal, according to Hnetinka, has been to hit $110 million in products fulfilled by the end of the year. But that metric has already been exceeded.

Since Darkstore’s launch in May 2016, the company has gone on to raise more than $1.5 million in funding. In April of this year, following a $1.4 million round of funding from PivotNorth Capital, Darkstore’s goal was to hit $110 million worth of products fulfilled by the end of this year. The company hit that metric “faster than we anticipated,” Hnetinka said.

Through its new partnership with TForce Final Mile, Darkstore was able to add 33 additional markets across the nation and 40 new warehouses to its fulfillment center list.

The firm has also recently released a hosted shopping cart to make it easier for brands to flip on instant delivery for consumers by merely inserting a line of code.

In the end, it is all about the brands themselves: making it easier for companies to develop a relationship with their customers by offering those customers a service that is now a viable alternative to a trip to the mall.

Darkstore is happy to be an “invisible retailer,” according Lee Hnetinka, because the improvement it is making to the digital shopping experience is visible enough.

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