6.5.18 Business Solutions

A Spirited Marketplace: How Drizly Connects Local Retailers of Beer, Wine, and Liquor with Customers Ready to Buy Online

By: Michael Senecal

The Crunch: More American consumers have grown accustomed to the convenience, selection, and price transparency that modern e-commerce platforms, like Amazon, have popularized. But those shopping experiences have yet to take hold in more traditional brick-and-mortar sectors, especially within the beer, wine, and spirits market. For legal and cultural reasons, alcohol has long been difficult to purchase online, but Drizly is changing that. A marketplace for alcohol, Drizly connects alcohol retailers to customers of legal age who want to purchase beer or liquor the same way they purchase anything else — with a click of the mouse or tap of a screen. Thanks to Drizly, these retailers can now leverage a new channel to garner sales gain valuable business insights.

In the wee hours of a dreary Massachusetts morning, two inquisitive Boston College undergraduates texted each other: “Why can’t you get beer delivered?” Nick Rellas asked his friend and fellow finance major Justin Robinson. “Because it’s illegal,” Justin typed back.

Nick wasn’t so sure. He did some digging and found out that it wasn’t illegal, just extremely complicated because of the layers of regulation and the traditions of the industry. But the friends felt they were onto something, and they continued to familiarize themselves with the intricacies of the three-tier system that has governed alcohol distribution in the US since the repeal of prohibition.

Drizly CEO Nick Rellas talked to us about what inspired him to create the e-commerce alcohol marketplace.

“Eighteen months, many discussions with lawyers, liquor store owners, distributors and suppliers, and jobs at a local liquor store later, Justin and I were in business as Drizly,” said Nick, who serves as the company’s CEO. “The solution involved putting many pieces together, and no one had ever done that.”

Their idea is now the leading e-commerce marketplace for alcohol sales, bringing the convenience of shopping online for beer, wine, and spirits to consumers of legal age in more than 70 US and Canadian cities. It’s an audience composed mainly of millennials — Drizly’s average consumer is 32 years old.

“What’s new about Drizly, and why we’ve been so successful, is that we’ve tipped the scales in favor of consumers who are ready to buy alcohol online,” Nick said. “Our mission is to make the experience of shopping for alcohol better, using our website and apps as the front doors to that experience.”

Drizly connects consumers with the retailers that can best serve them, depending on what they value most. “Whether it’s getting the best price, browsing a deep selection, or the ability to get delivery quickly through a nearby store,” Nick said. “We’ve made it possible to shop thousands of products offered by multiple retailers with complete price transparency.”

A Technology Platform Facilitating Simple, Seamless Partnerships

As an e-commerce portal, Drizly holds no inventory and employs no delivery people, leaving those functions to the selling retailer. Customers shop for beer, wine, and spirits across multiple stores and compare prices and delivery options with no markup. Drizly also makes product recommendations and lets customers track orders and post reviews.

A screenshot of Drizly open on a smartphone and laptop

Customers can shop for alcohol products at local retailers by accessing Dizly on their smartphone or computer.

Retailers gain access to new customers and sales, and, because Drizly integrates with more than 75 POS systems commonly used in the industry, partners can get up and running in as little as 15 minutes. To ensure customers are ordering a product that’s in stock at the right price, the POS integration technology pulls inventory data in near real time.

“We’ve worked really hard at making Drizly simple,” Nick said. “When a retailer chooses to join our platform, we give them technology and tools to get up and running quickly. There are no long-term contracts, and we charge a monthly fee rather than take a cut of sales.”

The benefits in terms of incremental revenue generation typically get realized early on. “If someone from way across town is looking for a very rare bourbon, and you’re the only store in town that has it, that bourbon fan will find that one bottle on Drizly, and you’ve made a sale you otherwise wouldn’t have made,” Nick said. “And, while they’re purchasing that bottle, there’s a good chance they’ll buy other items as well.”

A key impediment to the growth of alcohol delivery has been fear of making a sale to an underage customer, but Drizly has that covered, too. The Drizly Driver App scans and verifies the customer’s ID at the point of delivery. “It’s proprietary ID verification technology that goes well beyond a quick manual scan,” Nick said. Add in the Store Portal with order management, inventory control, and reporting tools, and the result is a seamless e-commerce integration for the retailer.

The Drizly Data Distillery: Returning Actionable Insights to Retailers

The Drizly platform also generates data, and Drizly uses it to better understand the needs of its customers, the trends it’s driving, and where the industry is headed. Through the Drizly Data Distillery, the company shares that data with the industry it supports.

The Data Distillery, which launched in 2017, offers free access to findings in which Drizly explores the conclusions it’s drawn after parsing its data. Those insights are available to everyone, from the smallest independent retailers to the biggest distributors and suppliers — “and even to consumers, if they want to dig in,” Nick said.

A screenshot of consumer monthly industry findings provided by the Data Distillery

The Drizly Data Distillery provides retailers with monthly insights on industry trends.

For example, the Distillery recently presented a new way to look at consumer segments. “The segments we identified are not mutually exclusive,” Nick said. “They cut across different ages and other demographics, and run the gamut from ‘Seasoned Sippers,’ or deep enthusiasts, to role players, which we labeled ‘Wine Hosts’ and ‘Office Organizers.’ It all goes to marketing on a more personal level, which has been such a tough nut to crack in our industry.”

On request, Drizly also offers access to raw data generated by the Distillery, which comes in a format suitable for importing as spreadsheets. “Allowing end users to manipulate raw data to glean insights that matter to them is bringing much-needed transparency to the alcohol industry,” Nick said.

Finally, Drizly offers consultative partnerships to players that want to launch their own marketing programs based on Drizy data. “Partnerships bring a level of insight that allows people to look ahead of the curve and see what’s coming next,” Nick said.

The response has been overwhelmingly positive. “It has solidified for us that what’s been missing most from the adult beverage industry is good information and analytics for making sound business decisions,” Nick said. “It really is the Holy Grail.”

Transforming the Way Alcohol Is Shopped, Sold, and Shared

With the Distillery, Drizly is well on it sway to achieving its ultimate vision: “A world where adult beverage shoppers, suppliers, and retailers all have perfect information — or as close to that as possible — in order to make the best decisions,” Nick said.

Consumers and the industry seem to be on board with Drizly. Last year, the company filled its one-millionth order ahead of schedule, and it no longer relies on advertising to drive revenue, pivoting to what Nick calls a true two-sided marketplace.

“As we have been all along, we’re focused on giving people an entirely new way to shop for alcohol, but we’re also putting the full power of the data generated by those shoppers to work for suppliers and retailers to help them make better decisions,” Nick said. “That pivot is changing the industry, and it certainly changed our growth trajectory.”

It hasn’t been an easy ride. State laws regarding alcohol sales are diverse, complex, and — due to the influence of the craft beer industry — changing. Retail partners present distinct delivery parameters and integration challenges. Product information needs to be made consistent for consumers across all retailers. And Drizly has had to ensure that customers could share the site with their friends, send gifts, and make purchases through corporate accounts.

But Nick, Justin, and the Drizly team are emboldened with each milestone they hit on the road to e-commerce success. As more consumers demand the convenience of shopping online and receiving groceries and other goods by delivery, Drizly looks to be the go-to platform for the alcohol sector.