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Delivery On Demand, Part 1: A New Generation Of Players Looks To Reshape The Landscape

March 9, 2015

With just the click of a button, Denver retailer Argonaut Wine & Liquor has added hundreds of sales transactions a month. Last July, Argonaut partnered with Drizly, the on-demand delivery app for spirits, wine and beer. By the end of 2014, the store was making over 700 deliveries a month through Drizly, according to Argonaut general manager Mark Fetter.

Lindsey Andrews, co-founder of Minibar, another delivery on-demand app, says some of her retail customers have seen 20% sales jumps thanks to the app. And at delivery app Thirstie, CEO Devaraj Southworth expects deliveries on-demand to eventually account for around 10% of all beverage alcohol purchases in key markets. “On-demand is the last frontier (in drinks retailing),” Southworth says. “It’s been done in every other industry.”

Drizly, founded in Boston by Nick Rellas and Justin Robinson, launched in 2013 after the partners spent a year working in a liquor store. The company is partnered with about 150 retailers in 13 markets, including Boston, New York, Chicago, Los Angeles, Denver, Indianapolis and Washington, D.C. Expansion into five new markets is expected by the end of next month.

Drizly helps arrange delivery of about 10,000 orders a month and charges retailers monthly licensing fees ranging from $100 to $10,000 depending on a market’s demographics, population, product mix and other factors. Delivery fees and purchase minimums vary by market. Rellas says his ideal retail partners “are tech-savvy, offer a breadth of SKUs, good pricing, engaged management and a delivery business already in place.”

Minibar, which launched last year, operates in markets including New York, Chicago, San Francisco, Los Angeles, Miami and Dallas, with plans to add more. The company currently works with about 100 retailers, who compensate it based on volume sold. Delivery fees and minimum purchase requirements vary by market. “We love partners with a great selection, fast delivery and if possible, an integrated POS system,” Andrews says.

Thirstie, meanwhile, charges retailers monthly marketing fees. The company is currently working with about 100 retail customers in New York, Los Angeles, San Francisco, Chicago, Miami, Hoboken/Jersey City, New Jersey and Washington, D.C. This year, Thirstie plans to expand into Dallas, Boston, Denver and Atlanta. “Our customers must have a good inventory, a willingness to try new things and be delivery-ready,” CEO Southworth says.

Taking a slightly different approach is Drync, a wine-focused app. Founded in 2008 as an at-home delivery service, Drync has now shifted its focus to in-store pick-up. The company’s Infinite Shelf platform, launched in Boston last December, allows consumers to pick up online wine orders in stores within one to three days of purchase. The service currently has 150,000 active monthly users, and expansion into new markets is slated for this year.

“We’ve basically integrated with the three-tier network,” says Drync CEO Brad Rosen. “We know what’s available in wholesaler warehouses, and we market from that inventory.” Consumers can scan a wine label in a restaurant, for example, purchase the wine immediately and pick it up at a local retailer in a few days. The app offers about 30,000 wines at any given time. Rosen says small- to medium-sized retailers are responding favorably to Infinite Shelf because linking with wholesaler inventories allows them to compete with larger players.

In Part 2 of this report, SND interviews key retailers to get their take on the new delivery on-demand technology.

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