Lee Hnetinka: Revolutionizing a Saturated Market

The past several years have seen digital commerce rapidly replacing traditional retailers through reduced costs and rapid shipping capabilities. Amazon, Wal-Mart, e-Bay and other online retailers and distributors have continued to invest millions of dollars into getting items to people quickly. The only competitive advantage that traditional retailers have managed to maintain is their ability to provide products in store. In response, Amazon has announced PrimeNow – a two-hour delivery service aimed at eliminating the need for brick-and-mortar stores.

With multi-billion-dollar market cap tech giants attempting to tackle the world of speedy delivery, you wouldn’t think there would be much space for smaller fish in the pond. But Lee Hnetinka of Darkstore has different ideas – he’s created a lightning quick delivery service that has given Amazon and Wal-Mart a run for their money.

The Niche

Hnetinka saw an opportunity to help traditional brick-and-mortar stores get products to their customers quickly. Not all consumers want to buy goods online without inspecting them first, and certain items require more first-hand research than others.

“Some items remain fairly immune to online commerce,” says Hnetinka, “For example, you’re not going to find many consumers who are willing to purchase a mattress without seeing it. People purchasing mattresses are making a considerable investment; they want to feel it, lie on it, and see what it looks like in person.”

And for this reason, Hnetinka believed there were certain niches that Amazon and other mega-retailers wouldn’t be able to crack. He opened Darkstore in 2016 to help smaller brick-and-mortar operators attain the delivery capabilities of larger retailers without the associated costs. One of their first clients was Tuft & Needle, a large mattress producer in Phoenix, Arizona. The company was looking for a way to deliver their products quickly, while maintaining their brick-and-mortar showroom for potential customers to visit.

The Method

Darkstore’s ability to provide low cost shipping is derived from an innovative storage technique. Hnetinka leases existing warehouse space from third-party storage facilities and charge their production partner a 3% fee every time a product is shipped from the facility (this charge is capped at $20). The fee is then split between Darkstore and the storage facility. This unique arrangement means that producers only pay for items that are being shipped and the storage facility ends up making more money than through traditional storage fees. On top of this, Darkstore can deliver these goods within metropolitan areas the same day an order is placed.

Because of this new method, Tuft & Needle have been able to guarantee their in-store customers same day delivery for mattresses purchased within Phoenix. But the business model is only compatible with certain types of businesses.

“We ensure our compatibility is feasible prior to entering any agreement with a retail partner,” Hnetinka says, “We have to be certain our clients have enough order volume to justify the utilized storage space. On the other hand, this means we have a vested interest in our client base, and work closely with our retail partners to get the most cost effective delivery solutions for their businesses.”

Hnetinka believes another variable that will propagate Darkstore’s success is the close partnership they have with their retail partners. Many producers have grown tired of Amazon’s associated fees and search engine competition. They believe their money would be far better spent marketing their products and creating a personal online presence. Hnetinka allows this freedom and lets companies break free from the cut throat nature of larger online distributors.

Moving Forward

Amazon has been adding an array of benefits for its Prime members, hoping that adding digital content on top of free two-day delivery will provide even further incentive to sign up for their subscription service. In the same manner, Wal-Mart has been attempting to join the arms race by issuing its own version of two-day shipping. Instead of a paid subscription, Wal-Mart is offering customers free two-day delivery on every online order over $35. Hnetinka’s success as a delivery entrepreneur will rest in his ability to find niches and continually innovate.

This isn’t the first time he’s created a unique solution to delivery problems. Prior to Darkstore, Hnetinka opened Wun-Wun – a New York based delivery service that could deliver almost any item in less than 30 minutes. The mechanism was based off similar concepts to what UberEats has now employed in their operations.

“As an entrepreneur, you constantly have to develop both yourself and your business,” Hnetinka says, “I’m satisfied that I’ll be able to continue bringing cutting edge solutions to whatever industry I’m working in – Darkstore is just getting started.”

If you or anyone you know is interested in Darkstore and services they can provide for your business, head to their website: https://www.darkstore.com/.