Confessions of a retailer: Drizly

Nick Rellas, co-founder and CEO of leading on-demand alcohol delivery service Drizly, spills the beans on how tech is impacting the traditional retail environment.

For the first time, liquor retailers are joining the shift from the physical to the digital world, which other consumer industries have embraced over the past 15 years. Retailers are now able to compete online, using the tools that so many other sectors have benefited from to boost online sales.

Because of Drizly, these retailers are now seeing a customer that is spending more, buying more often and a more profitable product mix. At the end of the day it’s a win-win for retailers.

On-demand drinks delivery is less competitive than it has been. We’re coming into a cooling period for the second tech cycle and see companies that have created real businesses and are able to stand on their own. Those companies that enjoyed the era of easy money are having a much tougher time or going out of business.

App-based buying will become much more popular in the liquor industry because 16- and 17-year-olds use their phones for everything, and as they become of legal drinking age, they are going to wonder why they can’t buy alcohol online like they can every other product they are interested in.

As Drizly continues to evolve from a world where we only worked with one retailer in a particular area, we are now looking to any retailer that can meet our criteria in a given area. The main question we ask is, does a retailer have a point of sales system that is up-to-date?

For alcohol brands, especially smaller craft labels, the path to market is often overlooked because they may think putting their products in as many mixology bars as possible will get consumers excited, but that’s a crowded environment. Everyone has been doing it for the past two to three years and if you continue to do that, you’re going to drown in a sea of noise.

Liquor retailers have to be good at something to stand out, whether it’s price, selection, location, convenience or service. Being a middle of the road retailer is becoming increasingly more difficult as the world of grocery encroaches on local liquor stores and as bigger liquor stores become even bigger.

Middle-of-the-road small businesses that don’t offer the best prices or best selection face a lot of pressure. We hear this from our retailers all the time.

Retailers are stuck in a difficult situation where they are essentially being polarised, but over the next five to 10 years we’re going to see grocery get bigger, big chains get bigger and smaller retailers are going to start to attack specific areas where they can compete best.

The opportunity to be at the forefront of change in a massive industry is an opportunity that young entrepreneurs like me dream about. It’s compelling, it’s fulfilling, it’s exciting – every day is new and challenging, and I don’t think there is anywhere else I’d rather be.