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On-Demand Delivery, Part 2: Leveraging Third-Party Platforms

September 29, 2022

As drinks retailers continue to cultivate the growing market for drinks delivery, they’re leveraging both their own-store delivery programs as well as those of third-party platforms. In the first part of this feature we focused on the former, while today we have a look at operators’ thoughts on partnering with third-party providers.

Third-party fulfillment of delivery orders—whether under the Drizly platform or the online marketplaces themselves—comes with its share of pros and cons, retailers say. Overhead for vehicles and delivery labor is, of course, reduced. “One of the many benefits of using other platforms for delivery is if one of our drivers is unavailable, we have the option of selecting a third-party delivery service to deliver our online orders,” remarks Jennifer Feuerbacher, marketing director at Missouri retailer Brown Derby.

Christine Corey Elder, president of Blanchards Wine & Spirits in West Roxbury, Massachusetts—one of six family-owned liquor stores in the Bay State—points to the labor savings that come with third parties as critical to beverage alcohol delivery. Blanchards has been partnered for the last few years with a local delivery company for its online orders after attempting its own delivery program prior to the pandemic. “Driving, especially in Boston, was stressful for our employees, and some quit,” she explains. With the labor shortages that abound today, the retailer says she’s grateful she no longer needs to hire drivers.

Texas retail chain Spec’s, which is partnered with Drizly and Uber Eats, has operated on the Instacart platform for many years, third-generation co-owner Lisa Rydman Lindsey says, and last year signed on with DoorDash for on-demand delivery. “Our customers love DoorDash delivery, and the results are growing each week,” she notes. Feuerbacher at Brown Derby, which also enlists multiple platforms for local delivery, points to the unique benefits of Instacart. “Instacart is great because their drivers come in and do the shopping, so it doesn’t take time away from our staff to fulfill the orders,” the retailer says.

While delivery isn’t labor intensive when using last-mile services, the additional orders can put stress on store staff. And fees to the delivery providers cut into retail margins. “It’s very expensive,” Elder says. “Some days I wonder if it’s worth the aggravation.” Wait times for drivers to arrive at stores is another added pressure of the third-party delivery model. Aileen Foody, associate director of regional operations at Drizly, says that while that’s not typical in dense markets, “in more rural or suburban areas, it can take longer for the driver to first arrive at the store for the initial pickup.” Poor customer service from drivers, while uncommon, can also be a downside, according to some retailers.

For some beverage alcohol merchants, a hybrid model of owned and outsourced delivery works best. Marques Warren, owner of Downtown Spirits in Seattle, says that while Downtown’s own delivery service is preferred, “there are times when utilizing our employees to make Drizly orders doesn’t make economic sense.” If store traffic is busy and customer service would be impacted by sending a worker off on a delivery, for example, a third-party driver might be used. “We follow strict metrics to ensure on-demand delivery and profitable transactions,” the retailer says. Foody agrees that a hybrid model is a good approach to delivery. “Within our network, many retailers staff their own drivers but also have third-party delivery set up for those busy Friday nights or if they experience an unexpected staffing shortage,” the Drizly executive says.

Whatever last-mile model is selected, retailers agree that on-demand delivery of beverage alcohol is here to stay. “The convenience of alcohol delivery remains strong,” says Brown Derby’s Feuerbacher. “We don’t see that going away anytime soon.”

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