The concept of dark warehouses is becoming increasingly popular, says Krisha Chettiar.

A dark warehouse is a fully automated facility that operates with minimal to no human involvement. It relies on robotics, automation, and smart technologies to handle all warehouse operations, from receiving and storing goods to order processing, picking, and shipping. The term ‘dark’ refers to the ability to run with little to no lighting, as robots don't require illumination to function effectively. These warehouses are designed to operate 24/7 with maximum efficiency and minimal resource consumption, leveraging technologies like high density storage systems, autonomous robots, automated material handling systems, artificial intelligence and machine learning (AI/ML), Internet of Things (IoT) sensors, and a software platform.

While every facility is different, the operation of a dark warehouse is a fascinating blend of advanced technologies working in harmony. Incoming goods are unloaded, sorted, and stored by autonomous robots and automated systems. Order processing, picking, and packaging are handled by robotic arms, conveyors, and sorting machines, with minimal human intervention. Automated storage and retrieval systems (AS/RS) like AutoStore enable high-density storage and rapid put-away/retrieval of goods. Autonomous mobile robots (AMRs) and automated guided vehicles (AGVs) can transport goods between different zones within the facility, while IoT sensors and RFID tags track inventory locations and movements in real-time. At the heart of it all, a central warehouse management system (WMS) orchestrates and optimises all operations, ensuring a seamless flow of goods and maximising efficiency.

Dark warehouses may be all the more significant especially during Coronavirus-like pandemic situations when people are required to stay indoors, maintain social distance, etc. Though staggered shifts help to address the issue of social distancing and avoid overcrowding to a certain extent, it is not a complete solution. Integrating the dark warehouse concept in the supply chain network would expand conventional automation beyond limits, making it highly beneficial in the near future. With the idea of robotics and complete automation, the dark warehouse brings out a lights-out facility in the supply chain and logistics business. It involves the execution of an autonomous warehouse that operates without human workers. The system is based on the automated WMS concept, and managers have to think of how to integrate it into their operations and take advantage of the fully automated process.

Dark warehouses are considered the present market's latest trend, and a cost effective solution at a time when the industry is facing a shortage of manpower. A 2023 report by

McKinsey & Company had indicated that globally, the labour force will face a shortage of 85 million workers by 2030 due to aging populations, changing demographics, and skills gaps. Warehousing is an otherwise labour-intensive industry. Moreover, in setting up a dark warehouse, the capital expenses involved can be very high, and usually, such costs need to be paid upfront. Modern warehouses can be converted to dark warehouses quite easily by having automated storage and retrieval systems and sorting machinery.

Dark warehouses that depend on the robotic workforces have many advantages over their human counterparts. They do not require breaks or vacations. Thus, the same machines can execute all three-day shifts without getting tired or having any complaints. Therefore, they can withstand extreme temperatures better than humans (thus saving on the cost of heating/cooling), even as they do not report sick or require any health insurance, etc. The Dark Store is operated entirely by intelligent robots without the involvement of any human labour.

The concept of dark warehouses is becoming increasingly popular. They can significantly improve the efficiency of the conventional warehouse. Since machine handling is considered more hygienic than operations by human workers, cold storage facilities, pharmaceutical warehouses, and the food industry are increasingly opting for dark warehouses. This is also borne out by the emerging concept of  the dark kitchen business model, also called the cloud kitchen, ghost kitchen, or virtual restaurant, using the same operational processes. These kitchens focus on preparing and delivering food online without a physical dining space. They streamline operations for online orders and delivery, making it efficient for delivery-only food businesses.

Key vendors and their offerings

Some of the leading vendors catering to the dark warehouse segment are listed below:

Logistics companies

• Companies like Shadowfax offer a range of services, from last-mile delivery to managing entire dark store operations, including inventory and fulfillment.

Automation and robotics companies

• Novus Hi-Tech provides solutions including AI-driven software and robotics like AMRs and ABOPTs (Autonomous Battery Operated Pallet Trucks).
• BEUMER Group develops automated material handling systems.
• KNAPP offers a variety of warehouse automation solutions.
• Addverb specialises in automated warehouse systems including AMRs and AS/RS.

Software and WMS providers:

• Pyrops WMS offers warehouse management systems (WMS) solutions for dark store operations, including features like real-time inventory tracking and order optimisation.
• ShipZip provides software and solutions for optimising warehouse operations and fulfilling orders in dark stores.

Other notable companies

• 1MRobotics is known for pioneering fully automated dark stores.
• Honeywell explores the integration of automation and digitalisation in dark warehouses.
• Element Logic discusses the future of fully automated warehouses and the role of AI and sustainability.

Dark stores in India

The concept of dark stores is relatively new in India, but its roots can be traced back to successful implementations in developed countries. Zepto's founders, Aadit Palicha and Kaivalya Vohra, recognised an opportunity to adapt this model for the Indian market.

With over 200-250 dark stores strategically located across major cities like Mumbai, Delhi-NCR, Bengaluru, and Chennai, Zepto has created a network that allows for rapid fulfillment of customer orders. These dark stores are designed to be efficient. The magic happens in less than 60 seconds from the moment an order is placed to when it is packed and ready for delivery. This is made possible through a combination of technology and human ingenuity.

Each store is equipped with a sophisticated inventory management system that ensures popular items are always in stock, allowing for swift picking and packing.

Operating dark stores does come with its challenges, particularly concerning cost management. According to Palicha, running a dark store typically costs about 5-10% of revenue, covering expenses like rent, utilities, and employee wages. This low overhead allows Zepto to maintain competitive pricing while still investing in expansion.

However, profitability remains a long-term goal rather than an immediate reality. While Zepto could achieve profitability by halting its expansion plans, the company is focused on growth—planning to open more dark stores and expand its product offerings beyond groceries into categories like electronics and personal care products. For quick commerce players such as Swiggy Instamart or Zepto, where delivery timelines are often under 30 minutes, dark warehouses can revolutionise operations. These facilities can be strategically located near high-demand areas to speed up deliveries.

Conclusion

Summing up, dark warehouses represent a significant leap forward in supply chain efficiency and automation. These are especially suited for the burgeoning e-commerce industry where businesses are shifting towards adopting automated systems steadily. Dark warehouses streamline the logistics processes and help in meeting the demand of customers in a digital world.

Krisha Andrew Chettiar, Research Associate at Industrial Automation Magazine, combines a background in Economics and Statistics with a deep interest in the future of industrial technologies. As a third-generation contributor to this legacy, she brings fresh insight into automation trends with a keen research-driven lens.