Tightrope economics of darkstores. Qcom are you listening?

Dark stores are at the heart of the Quick Commerce (QCom) revolution, transforming the last-mile supply chain model. Unlike traditional e-commerce, which relies on large fulfillment centers and last-mile sortation hubs to serve a wide range of pincodes, dark stores operate as micro-fulfillment centers, catering to fewer pincodes and delivering orders in minutes. This rapid delivery is the key value proposition of QCom.

However, while traditional e-commerce companies often own and manage their fulfillment centers, dark stores are typically operated by franchise owners. These owners are compensated as a percentage of the revenue generated by the store. This compensation model reveals a fundamental problem: dark store owners are responsible for operating the store but have no direct control over generating revenue, as this function is managed by the QCom company.

Should Compensation Be Fixed Instead of Revenue-Based?

Some argue that revenue-based compensation gives dark store owners the potential for higher earnings, as their income scales with revenue. However, this structure places significant financial risk on the dark store owners. They are required to finance and manage the stores while QCom companies control the ecosystem, marketing, and business generation. Let’s analyze the typical financial structure of a dark store to understand this imbalance.

Financial Commitments of a Dark Store Owner

1. Initial Deposit: ₹60–80 lakhs (~10% non-refundable) used by the QCom company to set up the dark store, including racks, inventory, software, generators, and infrastructure.

2. Brand Fees: ₹1–2 lakh as a non-refundable fee.

3. Monthly Overheads: Operating expenses like brokerage, staff salaries, and maintenance. Staffing requirements can be estimated at 60 orders per day per employee.

4. Store Management: Handling inbound goods, putaway, inventory management, and order fulfillment in seconds.

5. Staff Recruitment and Training: Responsibility for hiring and managing staff.

Contributions of the QCom Company

1. Rent and Electricity Bills: Paid on actuals.

2. Staff Training: Provided by the QCom company.

3. Store Setup: Overseeing the establishment of the dark store.

4. Business Generation: Running marketing campaigns and managing the ecosystem to boost average orders per day (OPD) and average order value (AOV).

5. Controlled Competition: Imposing caps on OPD per dark store and opening new stores once a cap is reached, creating internal competition.

6. Revenue Sharing: Base commission of 2.5–3.5%, with up to 1% for achieving extended targets and service-level agreements (SLAs) and up to 2% for ramp-up support, totaling a maximum of 6.5%. However, meeting these targets is challenging, and ramp-up support diminishes as revenue grows, becoming zero once monthly revenue reaches ~₹3 crores.

Monthly Expense Breakdown

• Initial Investment Amortization: ₹10 lakhs (deposit + brand fees) spread over 24 months = ₹42,000/month.

• Cost of Capital for Refundable Deposit: ₹54,000/month.

• Monthly Overheads: ₹3.5 lakhs for 700–800 OPD.

• Total Monthly Expense: ~₹4.46 lakhs.

With an AOV of ₹400 and 750 OPD, the monthly revenue is ₹90 lakhs. Expenses of ₹4.46 lakhs account for 4.95% of revenue, making it difficult to break even with the base commission alone. This forces heavy reliance on extended targets, SLAs, and diminishing ramp-up support. Realistically, net effective income for the owner is only 1–2% of revenue.