There are a few places like New York City or Buenos Aires where anything not tied down can be delivered. That is not the case in most of the world, and much of the United States has been hungry for better delivery services, particularly in the suburbs and less-urban areas of the country.
A number of tech companies have entered the market to provide third-party services for both consumers and retailers. Inspired by Amazon’s impressive delivery platform, they are constructing smartphone sales applications to sell directly to a broader base of consumers, as well as figuring out new ways to deliver wines and spirits.
It has been a crowded field for the past year, with a number of national delivery vehicles think Drync, City Hive, Drizly, Saucey, Minibar Delivery and Thirstie, among others trying to compete in a handful of top U.S. markets for both sales platforms and delivery services. Since Amazon’s game-changing withdrawal from the spirits and wine delivery business at the end of last year, many of these players have gained more steam.
San Francisco-based Instacart has been one of the most successful delivery models in the business, and the company provides delivery in 245 U.S. markets, according to Dacyl Armendariz, who works in the communications department. The service offers customers a number of local retailers that can deliver both food and alcoholic beverages.
Most national delivery services, such as Minibar Delivery and Thirstie, are focused on specific markets, such as the New York City metro area for Thirstie. Both have also inked deals to distribute unique wine options through partners Thirstie pairing with an LVMH DBA called Clos19 and MiniBar selling its Vineyard Select line to add greater value to their current distribution structure.
The delivery vehicle that has the greatest market share, given its deep pockets and the investment of a separate DBA from the Washington D.C.-based Wine & Spirits Wholesalers of America, is the Boston-based Drizly, which declined to comment for this story. It is by far the country’s largest, functioning in 70 cities, according to the company’s website.
A Ripe Market
Given that retail margins are slim and local stores have been doing combat against chains both big-box entities, like Costco and the new German superpower Aldi, and wine-specialized giants such as Total Wine & More operators benefit from getting as tech savvy as they can.
Smartphone sales apps have much higher sell-through percentages than average online orders, according to Brad Rosen, Drync’s Boston-based CEO. So building individual apps, like Drync has done on a retailer-by-retailer basis, is advantageous to operators because they can interface with the consumer where they are comfortable on the couch or the subway.
“We are the dominant player for medium to large retailers who are ready to have their own mobile shopping app,” says Rosen. What's more is retailers who use Drync keep all their profits, although the company does charge setup and management fees that depend on the number of stores but run roughly $599 a month. He adds that the app is “seeing an average order value of approximately $100. In general, cart sizes in mobile apps are 34% higher than desktop and buyer conversion in apps, powered by Drync, is five times higher than desktop."
Some of the application’s most successful partners, such as the single-location of 67 Wine & Spirits on the Upper West Side of New York, have very local shopping demographics. “We have a unique demographic when it comes to delivery,” Seth Weiser, the store’s director of business development, who has used the app for more than a year, said in a past interview.
Danette Atsalis, the owner of the single-location Cape Cod Package Store Fine Wine & Spirits, started working with Drync approximately a year and a half ago. “We will be initiating more app-related marketing programs this year to include promotions on hand-selected products that … are otherwise hard to find in our area,” she says. She says that “overall, sales patterns haven’t changed” but adds: “We see this as an investment to build our brand and increase our reach. Having an app is not only about the purchases; it’s about building loyalty, showcasing our amazing customer service, connecting customers with our staff and store.”
Chris Benoit, the owner of the Belmont, Massachusetts-based, single-location Spirited Gourmet store, has used the Drync application since last May and notes that he has seen a modest increase in sales. “It is more of investment in the future for me as online purchasing becomes more and more popular.”
While he is a fan of sales platform applications, he (and other retailers) haven’t always had the best experience with third-party delivery applications. Some retailers most of whom won’t go on the record have had negative experiences with some delivery providers who initially promised the service at no cost and then decided to charge a fee.
Industry consultants, such as Paul Mabray, a Napa-based industry consultant who is a member of the board of directors at Emetry.io, still think that some of these delivery services can bring more business to the retail sector than they currently cannibalize. He adds that as long as operators become more proficient in digital marketing which has historically never been their strength then those same stores can become higher-valued destinations.