The Future Delivered

Liquor Retailers Need To Dial Up Delivery Systems

If any retailer was still in doubt that delivery is the way of the future, Amazon’s Jeff Bezos has put that firmly to rest. The e-commerce giant recently bought Whole Foods for US$13.7 billion, not because Bezos wants easy access to organic avocadoes and house brand coconut water, but because he wants access to the upscale grocer’s warehouses and distribution centres. As Mark Hamrick, senior economic analyst at Bankrate.com, told CNBC, “This is an earthquake rattling through the grocery sector as well as the retail world.”

If you think that won’t affect how Licensee Retail Stores (LRSs) do business, don’t forget: in the US, and increasingly in BC, the grocery sector includes beverage alcohol. Although it’s too soon to tell just how profitable home delivery will be, the fact that investors are putting big money into delivery apps suggests that the potential is huge. The real bottom line though, is that if your store isn’t delivering, you’re already missing a big part of the market and stand poised to be left behind completely.

Promote a Competitive Advantage

Right now, private liquor stores have an advantage over the government retailer. While BC Liquor Stores are reportedly working on their own delivery model, so far only private retailers are in a position to deliver liquor to consumers. That is a big opportunity, but one that won’t last forever.

In the US, Drizly’s consumers can browse a marketplace of multiple local retailers, giving them access to the biggest possible selection at the lowest possible prices.

Liquor delivery in BC only became feasible with the recent overhaul of BC’s liquor policy. Previously, an LRS could advertise its products online, but not sell them. Then on October 17, 2016, the Liquor Control and Licensing Branch issued Policy Directive No. 16-13. It stated that private liquor stores and wine stores could sell their products online and deliver them to customers, provided the stock came from the retailer’s brick-and-mortar location and not an off-site warehouse. The directive also noted that several stores could share a website, as long as each was clear about who was selling what.

Deliver Yourself

Several smart retailers quickly took advantage of the new rules. Darby’s Liquor Store in Kitsilano is a good example. Its distinctive, black-and-white delivery truck is a mobile advertisement for the store as it zips around town, dropping off nearly 1,500 types of beer, wine and spirits to consumers in downtown, East Van, UBC and the west side, seven days a week.

Similarly, Legacy Liquor, Liquor Barn, Coal Harbour Liquor Store and Everything Wine now deliver in Vancouver, while Liquor Express and Beer and More deliver in Victoria. Legacy Liquor has even partnered with Pint Post, BC’s first online liquor subscription service, to get craft beer delivered right to customer’s doors.

Use a Service

The Metro Vancouver area also has services such as:  Dial A Bottle, which offers one-hour delivery of liquor, cigarettes, snacks and pop; Liquor Valet, which offers rush, same-day or scheduled delivery; and Munchies Delivery, which delivers restaurant meals and alcohol from any BC Liquor Store or private store. ParcelPal delivers alcohol, groceries and clothing within an hour in Vancouver and North Vancouver. There are a handful of similar services across BC, like Drinks Delivered in Kelowna or Speedi Delivery in Nanaimo.

Get the App

So far, though, that’s small beer compared to the potential of a company like Drizly, the American alcohol delivery app that partners with local retailers to deliver alcohol within one hour. It launched in 2013, and has since accrued investments totalling US $32.8 million. It has also expanded to 25 markets across the US and Canada, including Calgary and Edmonton, where it works with Liquor Depot.

In the US, Drizly’s consumers can browse a marketplace of multiple local retailers, giving them access to the biggest possible selection at the lowest possible prices. Drizly’s co-founder and CEO Nick Rellas anticipates that this sort of marketplace retailing will account for close to 40% of online spending by 2020. He believes that it is also beneficial for retailers, not only because it gets their products into consumers’ hands, but because it brings in new consumers and gathers data that can help retailers target customers more accurately.

Here Comes Amazon

Unless, that is, Amazon / Whole Foods takes over the entire grocery retail sector. The company’s Prime Now program already offers one-hour delivery of food and alcohol in 25 US communities. Like Drizly, it offers an app customers can download to their phones. With the new Whole Foods deal, the potential is enormous, including on this side of the border.

Combine Online & In-Store Experiences

However, online shopping and home delivery are only part of the story. What most industry watchers suggest is that the successful retailer will be the one who marries both online and in-store shopping experiences.

Legacy Liquor has even partnered with Pint Post, BC’s first online liquor subscription service, to get craft beer delivered right to customer’s doors.

The website Information Age reports that, in July 2016, online shopping accounted for only 14.2% of the market, leaving the lion’s share to traditional “offline” retail. That share was up from 12.6% a year before. In the same period, online searches by shoppers grew by 52% and a poll by Kibo Commerce found that more than two-thirds of UK respondents researched items online before purchasing them in physical stores.

What it comes down to is that consumers are increasingly demanding convenience, service, selection and information. If your store doesn’t deliver, someone else will.

How to Really Deliver

If you are a store with big inventory and plenty of storage space, consider starting your own liquor delivery service. You’ll need to brush up on the regulations, invest in a delivery vehicle and driver, and advertise your services online and in store.

Smaller retailers should consider banding together in a marketplace or partnering with a delivery service.

Make it mobile. Consumers want to order from their smart devices, so make your site mobile friendly–and the same goes for your payment systems. Instead of credit cards or cash, think mobile wallets such as smart phones and wearable devices like the Apple Watch.

Use technology to improve the customer experience with special deals, loyalty points, invitations to special events and the like. Create a dialogue with customers, and gather feedback on likes and dislikes, as well as special requests.

Follow through–if you promise delivery in an hour, make sure you deliver the goods on time. Once you disappoint the customer, there’s no rebuilding that breach of trust.