Drizly – A digital marketing app

 

Just like Seamless, Postmates and Caviar, Drizly is in the direct to home delivery business. In their case, it’s alcohol instead of food. It is at it’s core a two sided marketplace, connecting consumers to retailers through their mobile app. With COVID and lockdown orders, Drizly has blown up and has experienced exponential growth as consumers are less likely to shopping in store (in some cases not allowed to) and are drinking at home more. With the app, the consumer browse through a wide selection of spirits and wines and ultimately select what they want to order and when they want the order delivered. It has never been more convenient. 

The most interesting part of Drizly though, is their business model. Unlike the food delivery apps that take a cut of restaurant sales, Drizly only charges stores a flat monthly fee. As a result, retailers have no incentive to switch individual customers off of Drizly. This is key. Drizly is essentially more of a digital marketing and advertising platform for liquor stores than the typical middleman like other delivery services. Moreover, there are an abundance of regulations in the alcohol industry. As a consequence of the prohibition era when there were monopolies on alcohol, the US spirits industry is heavily regulated now with a three tiered system, in which each party can only be either a distiller, a distributor or a retailer. Drizly, cleverly is none as they do not handle any of the products and only charge a flat fee. This business model not only encourages liquor stores to partner with Drizly on the advertising front but also prevents new entrants from coming into the market. 

While reaching scale is difficult with all the different regulations by state, Drizly has done a great job so far. The challenge will be to maintain scale along with great user experience. Most recently, Drizly is also taking advantage of the extensive data collection they can do based off their users to help their partners create more targeted and relevant advertisements and marketing materials.