How Drizly Helps Stores Optimize Their Alcohol Delivery Operations
Informed inventory monitoring and creative staffing management can help retail partners excel
In a technology-fueled world where products from everyday to luxury are available for purchase online, e-commerce was already poised to be an increasingly important sales channel for alcohol. In 2019, the e-commerce channel in IWSR’s ten core markets was worth $21 billion, and online alcohol sales were growing at a rate of 15 percent per year.
With the onset of the Covid-19 pandemic and ongoing mandates to stay home discouraging U.S. consumers from venturing out unless absolutely necessary, e-commerce sales have now become essential to the survival of alcohol retailers. According to Nielsen, online alcohol sales quickly skyrocketed as Covid-19 began impacting U.S. consumer behavior, reaching 477 percent sales growth year over year for the week ending April 25. Comparatively, in-store alcohol sales were up just 26 percent year over year for that same week.
As the largest beverage alcohol marketplace, Drizly provides tools that help retailers employ strategies for monitoring inventory competitively, managing staffing creatively, and providing exceptional customer service to excel when partnering with Drizly.
Delivery is Booming
Offering online delivery has never been more important for alcohol retailers. Even though many states include alcohol retailers as essential businesses, online alcohol sales soared as Covid-19-related stay-home mandates were ordered across the country in March and April. Drizly sales reflected this immediately, jumping 233 percent above baseline, or what they would have expected to see during that time, for the week of March 16. Sales growth peaked at 460 percent above baseline for the weeks of April 6 and 13, and it has hovered just above 400 percent, on average, in subsequent weeks.
“It is crucial to have e-commerce capabilities for the success of [alcohol retail] business, in my opinion,” says Tim Panagopoulos, the owner of Top Shelf in Boston. Panagopoulos partnered with Drizly several years ago, but in the early days of local shelter-in-place orders, he estimates that Top Shelf had twice the number of orders than it usually does. Having strong sales is crucial right now, he adds, because if a store isn’t moving through existing inventory during the pandemic, they won’t be able to pay for it due to thin margins.
At RED Spirits and Wine in Nashville, providing delivery through Drizly has been a convenience that the team has loved to offer for the past five years. During the Covid-19 pandemic, it’s been a huge sales booster. Before stay-home orders were enacted in Tennessee, the shop’s highest one-day number of delivery orders was 32. During the stay-home mandate, RED Spirits and Wine reached 147 Drizly orders in one day, and daily orders have remained strong since.
It isn’t just the quantity of orders that increased during the quarantine and as the country has reopened; it was the size of orders as well. Drizly data shows that average order sizes have increased significantly since mid-March — depending on the day, they have been between 15 and 75 percent above baseline. Panagopoulos has seen this reflected in Top Shelf’s sales; he estimates that orders were double in size in the initial weeks of stay-home orders.
Some of the increase in e-commerce has been from existing online alcohol shoppers, but new off-premise alcohol consumers are purchasing online, too. According to Nielsen, there were three times as many online buyers in the two weeks ending April 18 than in the two weeks ending February 29.
“Our name has gotten out there more,” says Christine Brackney, the administrative manager of RED Spirits and Wine. “Some of our customers didn’t know about Drizly until [Covid-19] happened, and a lot of people didn’t know we were here until they started ordering through Drizly.”
Leveraging Inventory Competitively
To excel as a Drizly partner, director of account management Kathryn Lehman encourages retailers to do what they would to excel in-store. “We encourage our partners to aim to provide the best customer experience possible,” she says. “That means maintaining accurate and in-demand inventory, providing excellent customer service, and hitting delivery time expectations.”
When it comes to maintaining accurate inventory, Drizly works to connect with each store’s POS system to keep product availability up to date. “Each individual POS system is different in how you can account for consistent inventory [between the store and Drizly],” says Panagopoulos. “When we receive inventory, we input it into the POS, and it automatically sends to Drizly, so when somebody goes online they can see it’s available.” And if a SKU is not recognized on Drizly—a rare occurrence reserved for eclectic or unique items—Brackney recommends reaching out to a Drizly account manager, who will easily link it for sale.
Staying up-to-date on consumer trends is also essential for success. In addition to knowing his shop’s neighborhood and demographics, Panagopoulos reviews Drizly’s list of top movers and sellers weekly to make sure his inventory meets demands. “If I don’t carry a top product,” he says, “or if I see it’s a trending varietal of wine, I will make sure I have that. Instead of buying two cases, I’ll buy eight or ten.”
Because all Drizly partners can set their own pricing, it can be difficult to explain to consumers why one store’s product price might be different from another’s. Rather than discounting pricing to a level that would be unprofitable, given Top Shelf’s Beacon Hill rent and labor costs, Panagopoulos offers value in other ways, like having a broader selection of popular items, or keeping the Drizly delivery window open later. “If I’m the only store that’s open past 10 pm, customers will order from me,” he says.
Maintaining Accuracy and Efficiency
Because retail partners may not be liaising with delivery customers in person, the best way to provide excellent customer service is to fulfill a correct order quickly. “Accuracy and timing are the keys,” says John Wolf, the owner of Chicago Lake Liquors, who began working with Drizly in February. He recommends spending time training employees not only on the system for receiving, packing, and completing Drizly orders, but on the store’s inventory itself. “It’s very expensive for items to be returned that were picked incorrectly,” he adds.
Panagopoulos concurs. “We’re firm believers that the faster you do things, the better,” he says. In order for wines to be delivered quickly, the Top Shelf floor sales team packs all Drizly orders before its third-party delivery drivers arrive.
While some shops may be able to employ staff to work the floor and manage online orders at the same time, some may want to adjust staff responsibilities to maximize efficiency and accuracy. When Top Shelf’s order numbers increased in March, Panagopoulos limited the hours of operation for in-store sales while keeping the Drizly delivery window open, allowing staff to have more time to fulfill delivery orders while restocking and cleaning the shop. Brackney, on the other hand, has assigned one team member to oversee Drizly orders amidst high demand, with a second manager reviewing every order to minimize errors. “Streamlining it through one person makes a huge difference,” she says.
Retail partners must also decide whether to execute deliveries internally or contract with a third-party delivery service, if legal in their area. Balancing costs versus quantity of online orders is important. “How much are you paying to deliver that product?” asks Panagopoulos. “If you’re doing a larger volume, you might want your own staff.”
There are other advantages to operating deliveries internally as well. At RED Spirits and Wine, where state laws do not allow retailers to use a third-party delivery service for alcohol, internal drivers offer more staffing flexibility because many salespeople are also trained to deliver. “If something happens and a driver becomes ill,” says Brackney, “I have someone else who can step in.” And if the retail sales team is too busy to pull wines for a Drizly order, the drivers are trained to find and pack the correct items.
Of course, mistakes happen, whether a customer orders a bottle that is out of stock or a bottle breaks mid-delivery. “At the end of the day, it all comes down to the customer,” says Lehman. Communicating with the customer over the phone is a way to make them happy while potentially building a loyal future client base. “We have no problem calling our customers,” says Brackney. “And I do consider them my customers and take care of them.”
While some operations may have changed amidst the Covid-19 pandemic, and the future is uncertain, Drizly retailers are embracing the shift to e-commerce—and they expect it to stick. “We’re preparing the store to handle more orders on a regular basis than we’ve had,” says Brackney. “We don’t expect our Drizly orders to go back down to where they were.”