Complete Case Study
First, What is Drizly?
If you are not yet aware, Drizly is basically an e-commerce platform for the delivery of all types of alcohol to the doorstep within an hour. The company is famous for selling a wide variety of alcohol at affordable prices and is famously known as the Amazon for Liquor
The History Of Drizly
Drizly first originated from Boston and has gone on to become the best online alcohol storage and delivery service which is available since 2012. Currently, Drizly is connected to nearly 1000 brick-and-mortar stores in the USA and Canada. It guarantees the delivery of alcohol within an hour and the demand for alcohol has never been less even before its inception. So, Drizly has become one of the biggest names in the alcohol market even after more than seven years of being started.
The Business Model adopted by Drizly highly focuses on affordable pricing of liquor and holding an exclusive range of liquor and spirit for its customers.
The Alcohol Market
The worldwide alcohol beverage market is expected to cross 1,684 billion dollars by 2025 from 1,439 billion dollars in 2017. The value from a business point of view is expected to grow at a higher level over the coming years.
There is no doubt that there is high potential in this market and if done right you can scale a business in this industry at a phenomenal rate.
The Workflow of Drizly
Drizly is basically a mediator in the alcohol industry, it neither manufactures nor operates a physical shop or fleet. They work with local convenience stores to sell beers, wines, and spirits within an hour right at the consumer’s doorstep. Drizly believes itself to be a tech broker.
To buy a drink on Drizly, a customer has to first log in to their app or website. The order will be at the customer’s doorstep within an hour of receiving the order. Drizly does not just simply partner with any and every liquor store as it is important for Drizly to maintain its credibility to be successful and maintain its good reputation. Therefore, Drizly carries out a detailed quality review on the product inventory, storage, costs, distribution channel, and many other important factors before working with any liquor store. If the store clears the quality check, Drizly records the inventory of the shop and gets it online.
The liquor store benefits from this online alcohol procurement system and also provides them with a lot of growth potential. Shops with no credibility are able to sell drinks online in large amounts and the majority of the customers have started buying from the most famous stores on Drizly and so Drizly receives an outstanding response from both ends.
How Does Drizly Generate Revenue?
By 2020, Drizly has started its operations in more than 100 North American countries and earned $85 Million in an investment fund but the big question that still remains is how does an app like Drizly and its founders make money. Here are a few methods through which Drizly and other similar apps make money.
- Drizly gives a monthly flat payment to its founders instead of debiting payments from every purchase in its app.
- The company also charges a delivery fee for delivering the products to the customer’s doorstep.
- The framework adopted by Drizly for the ID age verification is one more way of monetization for the app.
How Does Drizly Keep up With the Big Players of On Demand Delivery?
One important method through which Drizly is staying ahead of its competitors in the on-demand delivery industry like Amazon, Doordash, etc. is by its unique understanding of the complex regulations that apply to alcohol.
The alcohol distribution system is heavily regulated in the US. Laws, policies, and taxation criteria also vary from one state to another which makes the process even more difficult.
This may seem like a hindrance in general to enter the alcohol industry but Drizly sees it as an opportunity for gaining an edge over its competitors. Most of the other big players in the On-Demand industry have shied away from alcohol delivery as complying with liquor laws may affect their core businesses.
Drizly tackled this issue and is different because it does not take possession of the product as delivery is made by the member stores and it does not take a part of sales, it charges a fixed monthly fee. This operational model gives Drizly a strategic advantage over its competitors in the On-demand industry and shields it from the entrance of big players like Amazon into the alcohol market.
Is the Drizly Platform Sustainable?
Even though Drizly has all the attributes to success like a strong network, regulatory barriers prevent big players from entering the market but it does not mean Drizly will be free of competition in all its areas of services for a long time.
The Alcohol Delivery market is a clustered market. Drizly’s operation is feasible only in a crowded urban market with a lot of retail alcohol stores and a lot of drinkers. A driven competitor in a single market or even a larger company could always copy Drizly’s model and steal share in the market.
I think the only way Drizly can defend itself is by providing best in class user experience by using all the data it has to recognize user preferences and make a seamless user experience.
Wrapping Up
While the USA and neighboring countries have got their very own Amazon for Liquor, there is still a very wide alcohol market yet to capture. If the Drizly model is adopted perfectly along with a good user experience, there is a lot of untapped potentials that can be leveraged. Creating an alcohol delivery app like Drizly can be a very good business opportunity in today’s market to scale and grow your business!
