On-Demand Alcohol Delivery,
Posted on: | Posted by: Rahul

How Drizly Works: Business Model & Revenue Model

‘Slow and steady wins the race.’

Such is the case with the world’s leading alcohol marketplace, Drizly which carved a unique, step-by-step growth strategy for itself and eventually, succeeded in transforming the way alcohol is bought and sold across various continents. Co-founded in 2012 by Cory Rellas and Nick Rellas, the Boston-based start-up which was one of the first few on-demand liquor delivery apps to make its way into the market, is today one of the dominant players in the space. As per Slice Intelligence, Drizly currently holds the second largest share among all on-demand alcohol delivery providers.

So, How does Drizly work and what does it do?

Simply put, Drizly allows users to conveniently shop for alcohol through its mobile app. It features a wide range of drinks on its platform, including different types of beer, wine and other liquor, as well as various non-alcoholic beverages and mixers. The company currently has a tie-up with around 1400 liquor stores and offers on-demand alcohol delivery markets of North America, including Los Angeles, New York City, Miami, Chicago, California, San Francisco, and many others.

The working of the Drizly app is quite simple. The customer directly places an order for the desired booze through the app, and this order is instantly routed to the closest liquor store, one which is a registered liquor retailer and is a part of Drizly’s network. This store then ensures quick delivery of the order straight to the consumer’s doorstep in less than an hour. Customers are notified when their order is on its way, which can also be easily tracked via the Drizly app.

Thus, in the entire process, Drizly only acts as an intermediary between the alcohol consumers and the local liquor stores, using the best of technology to streamline orders and deliveries. Reaching out to more and more consumers each year, Drizly has been growing by leaps and bounds in most of the cities, including in Connecticut, where it reported a 700% year-on-year increase in its sales in 2019.

Funding

The on-demand alcohol delivery giant has till date conducted five rounds of funding, raising a significant amount of $69.6 million from different leading investors. In its last funding round, which was held in December 2018, Drizly secured an enormous sum of $34.5 million from a group of 17 investors, that included Polaris Partners and Baird Capital, among others. The funds raised are being used towards improvement of the start-up’s digital infrastructure and also for various expansion activities, which includes signing up more stores in more cities, with an aim to broaden the customers’ choice horizon.

Drizly’s Business Model

The business model of Drizly is pretty unique. The start-up neither sells nor delivers alcohol, which means that it does not have any products or a delivery fleet of its own. It simply directs all the orders to its partner stores, which then fulfill all deliveries using their own inventory and delivery personnel. This is the reason why Drizly proudly calls itself as a tech intermediary.

Partnering with Retail Stores

Having quality suppliers on board has always been a key focus for Drizly. Before partnering with any local liquor store, it conducts a thorough check on each store based on various parameters such as the store’s product range, product availability, product prices, delivery team, POS, etc. Once the initial check is completed, Drizly then seamlessly integrates with the POS systems of all the chosen liquor retail stores, which automatically brings their store inventory online. With the technology that Drizly offers, all its partner stores are able to accept orders instantly and fulfill them efficiently in less than an hour.

For all these retailers, partnering with Drizly actually works as a boon. Many of these local stores who do not have a web presence or an online product catalog of their own are able to generate increased sales by simply leveraging Drizly’s platform, something which would not be possible otherwise. Drizly’s expansive reach, a strong customer base and a great brand recognition has been helping retailers to connect with many new consumers each day. According to a report, 50% of Drizly’s consumers have confirmed having shopped from a retailer for the first time using Drizly’s platform.

Complying with the Law

Precisely, it’s a no-effort game for retailers. Without them having to undertake any sales or marketing initiatives, they are able to boost their sales and ensure steady revenues. The same report also reveals that 75% of Drizly’s users have been doing repeat purchases from the same retailer.

In order to maintain compliance with the law governing the legal drinking age, Drizly follows a strict age verification process, which makes sure that on-demand alcohol delivery to minors is completely prevented. While placing an order for alcohol on-demand through the Drizly app, the consumer is required to confirm his/ her age via an online verification process, before Drizly actually approves the order. Further, the drivers who are out for delivery make use of a unique ID verification mobile app, Mident, which allows them to scan the IDs of all customers who receive the orders. In case this verification doesn’t match, the drivers have been instructed to refuse the deliveries.

Revenue Model – How Does Drizly make money?

The start-up charges a monthly licensing fee from all its partners (liquor stores) who use Drizly’s platform. This monthly fee varies in the range of $100 to $10,000, and the amount usually depends upon a variety of factors like the value of the delivery, zone served, etc. Thereafter, Drizly does not charge any interest from its partner stores on any transaction, irrespective of the number of orders they receive or the number of deliveries they fulfil. All the money originating from the sales of liquor goes to the liquor stores only.

Also, Drizly does not increase the price of the product for the consumer, i.e. there is no mark-up on any of the products listed on its marketplace. The company only charges a delivery fee of $5 from its consumers.

What makes Drizly unique?

Since its inception in 2012, Drizly has been tirelessly working towards providing a unique, unparalleled experience to all its users, and this is what makes the start-up stand out among other on-demand liquor delivery players. Some of its noteworthy offerings, which are different from the others are listed below –

a) Ample Choice to Users – Drizly has over 2,000 different products listed on its marketplace, which gives consumers a pool of options to choose from. No other on-demand booze delivery player can boast of such a rich offering, which clearly gives Drizly an edge. Moreover, since there is no mark-up charged on any of the products, the fair pricing also works in Drizly’s favour.

b) Expansive Reach – Drizly delivers in more than 100 markets of North America, and there is simply no other on-demand liquor delivery player which caters to so many cities. .

c) c) Ease of use – The Drizly mobile app boasts of a rich, simple and user-friendly interface, and the consumers can easily explore drinks, compare prices and place their orders for alcohol on-demand through the app. This ease of use that the platform offers is one of the factors why it rose to popularity among consumers. .

Key Takeaways

The growth and success story of Drizly has many key takeaways for all the aspiring start-ups, who are willing to start their journey in the on-demand alcohol delivery space.

a) Superior Customer Experience– Customers always come first, and Drizly has always abided by this rule. Therefore, make sure you create and deliver an exceptional experience to all your users, and focus on establishing a long-term relationship with them.

b) Quick Deliveries – Customers like to receive their products as early as possible. And in case of alcohol, there might be times when the demand needs to be fulfilled instantly in order to ensure continuity of ongoing events, etc. So, keep your delivery time as low as possible, and rule out all possibilities of delays.

>c) Quality of Retailers (Partners) – Another key takeaway from Drizly’s success is that it is important to choose your retailers carefully, and evaluate their offerings well before bringing them on board. Be sure about their inventories, product details and strength of their delivery network before taking the plunge.

d) Market Analysis – Study your market carefully before making an entry. Target only those areas and cities where the potential of your product is fairly high and the ratio of drinking population is significant.

The Way Forward for Drizly

Going forward, Drizly is sure to expand its operations in various other cities, and tie up with more retail stores in order to take alcohol on-demand to larger masses. However, the market is gradually getting more competitive, with the presence of many more players now, and many others likely to follow. In such a scenario, it is important for Drizly to re-invent its strategy to retain its existing customers and draw the new ones to its platform, in order to maintain its status as the market leader. For now, it’s a wait and watch game and the space needs to be constantly followed for more updates!

In case you are willing to launch your own on-demand alcohol delivery app similar to Drizly, get in touch with AppsRhino. Our team of experts would help you design a custom fit, distinct and user-friendly app for your new venture!