Starting a Liquor Delivery Service: A Comprehensive Guide

As online shopping continues to revolutionize the way we buy goods, the market for alcoholic beverages has seen a significant boost. According to a new study by IWSR, the eCommerce sale of beverage alcohol in key economies is predicted to reach 42 billion by the end of 2025, marking a 66% increase from the current figures. This surge has made online liquor delivery services a compelling business opportunity for entrepreneurs seeking to tap into the ever-growing demand.

The Opportunity in Online Liquor Sales

The survey by IWSR analyzed 16 major markets around the world, including the United States, United Kingdom, Canada, and Spain, revealing a steady rise in alcohol eCommerce sales. In 2019, sales climbed by 12%, and it's anticipated to increase by 43% in 2020, indicating that nearly half of all drinkers now prefer to place their orders online. Such trends underscore the massive potential in the market and provide an ideal environment for businesses to innovate and thrive.

Case Study: Drizly – Pioneering the Liquor Delivery Space

Drizly, a leading liquor delivery startup founded in 2012, has successfully consumed the market with its innovative business model. The company operates out of Boston, Massachusetts and has been making waves in the industry. Drizly works closely with local alcohol retailers, facilitating the delivery of both spirits and beers to clients within the network. Here’s an overview of how their unique approach is structured:

User Interface and Order Process

Customers on Drizly must first register for the service, providing all necessary personal and payment information. Once registered, they can browse a wide selection of alcoholic beverages and complete their orders through a user-friendly interface. The app provides detailed information on the store, delivery time, and price, ensuring transparency and convenience for the user.

Business Model and Partnership

One of Drizly's unique features is its non-ownership of inventory. The company does not hold alcohol stock or manage transactions. Instead, it partners with local merchants who have the legal permits to sell alcohol. Drizly ensures these merchants meet quality standards and seamlessly integrates their POS systems to update inventory in real-time.

Drizly’s business model revolves around several key revenue streams, including licensing fees, advertising, and penalty fees:

Licensing Fee

The primary source of revenue for Drizly is the licensing fee, which ranges from $100 to $10,000 per month. This fee is determined based on various factors, such as the store’s location, product offerings, and transaction volume. By leveraging the licensing model, Drizly eliminates the need for individual stores to purchase their own licenses, streamlining the process and reducing costs.

Advertising

Drizly also generates income through targeted advertising. The app strategically positions certain products and stores at the top of the list to attract customer attention, thereby increasing exposure and driving sales. This not only benefits the store partners but also ensures a continuous flow of income for Drizly.

Penalty and Delivery Fees

Drizly collects various fees from its users and partners to ensure smooth operations and maintain service quality. For instance, it charges a $5 delivery fee for each order, aiding partners in coordinating their logistics. Additionally, a $1.99 service fee is applied to cover modification and maintenance costs. If a customer under 18 orders alcohol without proper ID verification, Drizly imposes a $20 penalty fee.

Expanding Reach and Enhancing User Experience

Drizly's value proposition extends beyond simple delivery; it also offers specialized services for event planners via Driz for Biz. This service enables businesses to order liquor for corporate events and parties, providing a seamless experience for clients and partners.

For regions not covered by Drizly, the app offers alternative delivery options, albeit with a longer turnaround time of up to 48 hours. Nevertheless, the user-friendly interface and efficient navigation system continue to enhance the overall customer experience.

Entrepreneur’s Guide to Liquor Delivery Service

If the potential of the liquor delivery market has piqued your interest, there are several steps you can take to start your own successful business:

1. Conduct Market Research

Thoroughly study the local market and understand the current demand for online liquor delivery. Analyze competitors and identify gaps in the market that your service can fill. Understanding consumer behavior and regulatory requirements in your area is crucial for success.

2. Plan Your Business Model

Decide whether you want to take a subscription-based or pay-per-order approach. Consider partnerships with local alcohol retailers and ensure you have the necessary permits to operate legally. Use a similar model to Drizly to streamline your operations and offer high-quality services.

3. Develop a User-Friendly App

Working with a mobile app development company is essential for creating a user-friendly app. Ensure that the interface is intuitive and that the app supports seamless order placement, real-time inventory updates, and secure payment methods. Make sure the app is available on both mobile and desktop platforms.

4. Promote and Market Your Service

Utilize social media, SEO, and local SEO optimization to promote your liquor delivery service. Create engaging content, such as blog posts, videos, and infographics, to attract potential customers. Engage with your audience through social media and provide exceptional customer service to build a loyal customer base.

5. Ensure Compliance and Safety

Adhere to all local regulations and laws regarding alcohol sales. Implement strict ID verification processes to prevent underage sales. Emphasize the importance of safety in your services, including proper packaging and handling of alcoholic beverages to ensure they reach customers in good condition.

Conclusion

The liquor delivery market is rapidly evolving, and businesses that can adapt and innovate will thrive. By following these steps and learning from successful pioneers like Drizly, you can position your service to meet the growing demand for convenient and reliable online alcohol purchases.

With the right planning and the support of a reliable development team, you can successfully launch your own liquor delivery app and make a significant impact in the market. The future looks bright for entrepreneurs willing to embrace the digital transformation of the alcohol industry.