Marketplaces win online, how should the industry respond?

In Distillery by Justin Robinson

As of September 2018, after 6 years of connecting consumers and retailers to power online beer, wine, and spirits sales, we know two fundamental things to be true about alcohol eCommerce.

1.  Customers want to shop from as many SKUs as possible.  Conversion doubles when a customer is shopping from 4000 SKUs compared to 1000.

2.  Customers want to shop from more than one store.  Conversion increases by 50% when a customer is shopping from three stores instead of one.

So what? Why this is important to the industry.

Retailers

Come to accept the fact that marketplaces will win and decide what that means for your business.  Generally, those that have already carved out a niche for themselves offline will carry those advantages over online.  Do you want to win customers with long tail products they can’t get in the convenience store down the street?  Do you want to convert and retain customers by having best in class, reliable delivery times and customer service?  Do you want to stack em high and sell them low? Whatever the strategy is, pick one, own it, and pay attention to what your competition is doing in the digital marketplace.  Visit retailer.drizly.com to learn more.

Distributors

Lay the foundation to understand which of your customers are selling online and tailor your strategy accordingly.  In a digital marketplace, some retailers may be more aggressive than others about their eCommerce strategy, and they may not be your biggest/most important accounts by today’s standards.  Make sure you know which retailers those are and that they have the the right product mix to appeal to the online consumer.

Suppliers

If a marketplace’s goal is to make at least 4000 SKUs available to consumers, how are you going to stand out amongst the crowd? What is going to set you apart? Today, the answer is twofold.

  1. Work with your distributors to make sure the right product is on the right shelves.
  2. Make sure your digital content is as sharp and complete as it can be. As the chart below demonstrates, products that have only 2 of the 6 major attributes (Image, Description, ABV, Top Level Category, Subcategory, Region) completed account for just 0.1% of a retailer’s online sales.  Products with all 6 of the major attributes completed account for 80.9%.

Of the 6 major attribute categories, Top Level Category (Beer, Wine, Spirits) and Subcategory (IPA, Sauvignon Blanc, Tequila) were the most important.  Products with those attributes account for 99.8% of all sales. However image wasn’t far behind, 99.2% of all sales by retailers on Drizly in the last 3 months contained products with an image.

If you’d like to learn more about what you need to do to make sure you win online, reach out to us at data@drizly.com or complete the following contact form.

Methodology
  • Data used for conversion analysis are representative of year ending December 31, 2017
  • Conversion rate is a measure of users (those who sign up for Drizly) that convert to buyers (those who purchase products from retailers)
  • Data used for attribution analysis are representative of the trailing 3 months ending on September 16th, 2018
  • Sales are in USD