Apps have changed the way consumers shop. Over the past decade, we’ve experienced an irrevocable shift in the consumer shopping experience, from physical to digital, giving rise to countless start-ups filling the gaps in this innovative market space. Drizly is one of these start-ups.
Founded in Boston by Nick Rellas, Drizly is an alcohol delivery app. Despite the various and often complicated liquor laws in the US, this start-up has achieved unrivalled success in the alcohol delivery sector, formed an exclusive alliance with the Wine and Spirits Wholesalers of America and has just finished raising almost $18m in funding. We spoke to Nick about starting up the app, its users and his view on the US alcohol industry.
What inspired you to start up an alcohol delivery app?
My co-founders and I were intrigued at why regulated industries didn’t have a presence in the on-demand delivery space. You can get a ride through Uber, your pizza delivered by Dominos, but there was no way to get a six pack of beer delivered. We knew if we could make it work, we’d be solving a consumer need, it was just a matter of figuring out how to do it in a compliant way.
What research did you do when starting up and what problems did you face?
A deep dive into local regulations was the very first point. Growing up and living in Massachusetts gave me an appreciation for the complexity of law in this industry, my co-founders and I don’t think of it as “disruption”, but rather as figuring out a way to provide value to all three tiers – an approach that has lent itself well over the past three years.
How does the app make money?
We partner with local retailers across the country to provide a technology solution to make alcohol delivery safe, compliant and convenient. Our retail partners pay Drizly a franchise fee of sorts to be a part of our network.
How have apps changed the consumers’ shopping experience?
We’re seeing a paradigm shift from the physical shopping experience to the digital one over the past 15 years. Consumers are now able to use mobile apps and the internet to become smarter, savvier consumers. With that said, many apps are complements to the traditional shopping experience, we feel that way about retail liquor sales. App and delivery experiences will continue to build upon what great retailers have done, not destroy it.
Have you witnessed any trends in your customers’ shopping habits? Which products are more popular?
It is certainly interesting to see how similar consumers’ drinking habits are across the country, but the same can be said about how they differ as well. Tito’s vodka, Stella Artois and Oyster Bay sauvignon blanc are some of the top sellers when you look at all our markets as one. When you break top sellers down by market you’ll see one or two of these items typically fall in the top five or ten every time, just falling somewhere different within those spots. For example, in Boston (year to date) the top five sellers are Bud Light, Tito’s, Oyster Bay, Lagunitas IPA and Stella. In New York City the top five sellers are Tito’s, Oyster Bay, Stella, The Pinot Project and Bud Light. And in Seattle (year to date) the top five sellers are Tito’s, Stella, Rainier, Absolut and Svedka.
Many companies are seeing the potential in offering a food and drink delivery services, including DrinkFly and Minibar. How do you plan to stay ahead of the competition?
As the first mover in the space we’ve created a handful of advantages for ourselves. From ID verification to working with the majority of the largest retailers in North America, having a deep understanding of the industry has disproportionally benefitted us, something no one else has. In addition, earlier this year we created an exclusive alliance with the Wine and Spirits Wholesalers of America and have raised just shy of $18m in funding, both testaments to our growth and approach.
What’s your view on the US alcohol industry? Is there much space for new innovative start-ups?
We see the industry as a green field for innovation, but that’s in large part to the open-mindedness of the industry itself. It’s hard to innovate when there is little demand from an industry to do so, but we’ve found very little push back from all three tiers to what we’re doing. There’s no reason why compliant innovation can’t thrive, it just may happen slower than other industries due to the controlled nature of what the industry sells.
In one sentence, why is Drizly innovative?
Drizly is changing the way consumers shop for and purchase beverage alcohol, a process which has remained unchanged for the past 80+ years.
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