This story was originally published on CO— by U.S. Chamber of Commerce and was written by Jackie Chiquoine.
Shutterstock
Throughout the pandemic, consumers weren’t just drinking and socializing differently, but purchasing wine and spirits in new ways as well.
Pre-COVID, online sales generated a single-digit percentage of the average alcohol retailer’s sales, estimates Mike Provance, CEO of data-driven alcohol marketing network 3×3.
Then alcohol purchases online surged during lockdown and have remained elevated from pre-pandemic levels: The U.S. is now forecast to outpace China as the world’s largest market for online alcohol sales after years of lagging behind, according to IWSR.
As more business shifts online, a new crop of third-party platforms, including 3×3, Wine Enthusiast and alcohol e-commerce platform CityHive, are helping small and midsized wine and alcohol retailers differentiate by creating synergies between the online purchasing experience and traditional in-store marketplaces.
These startups are powered largely by the collection and analysis of consumer behavior data, which has the effect of democratizing market entry, enabling even mom-and-pop retailers to thrive in a digital landscape.
Their emergence underscores a changed landscape.
Established alcohol retailers have found themselves competing against more players, and in more channels, than they did in the past. In recent months, for example, Uber acquired alcohol delivery service Drizly in a $1.1 billion deal; app-based wine marketplace Vivino closed a $155 million round of Series D funding; and 7-Eleven partnered with app Minibar for deliveries of beer and wine from hundreds of its convenience store locations.
Driven by data: Helping mom-and-pop retailers to thrive in a digital landscape
Now third-party platforms are helping alcohol merchants navigate this new playing field with e-commerce and digital advertising solutions driven by customer data.
“The most important thing for retail businesses is owning the customer,” Roi Kliper, co-founder and CEO of CityHive, told CO—. His business gives physical wine and spirits merchants digital tools to help maximize omnichannel sales, including inventory management assistance, e-commerce storefronts and apps, loyalty and rewards programs, and, perhaps most importantly, access to historical customer data. The customer database, he says, is what helps alcohol merchants “future-proof their business.”
Wine Enthusiast, which began as a family-owned catalog of wine accoutrements in 1979, has shifted into a multi-channel media company. Its content-meets-commerce model now includes webinars and shoppable content.
The business intelligence on consumption trends provided by its community of wine lovers not only informs a comprehensive wine-buying guide, but is particularly valuable to alcohol merchants at a time when marketers face increasing digital privacy regulations, said Jacqueline Strum, president of Wine Enthusiast’s media division.
“We have first-party data, which for the media side of the business is huge, because there’s so many sites where they’re just using retargeting and cookies and tagging your IP,” she told CO—.
Related: How the Pandemic Helped Brands Like Moët Hennessy Uncork New Revenue Streams
Encouraging wine and spirits discovery in an online marketplace
A key focus in wine and alcohol’s move to e-commerce is facilitating discovery in a digital landscape, sources said.
“People [have gotten] used to technology intermediating the purchase process,” says 3×3’s Provance. “But it also had the effect of removing discovery from it.” The result, he adds, is that many consumers tend to gravitate towards the brands they already recognize.
“We began thinking our business model was purely a data play,” Provance said. “But as we built our network, we started to realize what brands and retailers wanted wasn’t data analytics alone, they wanted us to do something with that to help them drive awareness in the market and drive shopper traffic to the stores.” Now, 3×3 uses that data to refine consumer profiles and develop sophisticated targeting for new product marketing.
For alcohol merchants, the marketing calculus has changed, as shopping for wine is akin to shopping for household goods on a retailer like Amazon, said Wine Enthusiast’s Strum: Many consumers start with a simple Google search and read reviews before ultimately making a purchase.
Wine Enthusiast, for its part, uses its blend of content and commerce to act as both a trusted source for customer recommendations, as well as a valuable partner to its advertising affiliates.
“Media companies, including ours, are really starting to do some of that research for consumers,” she said. “With e-commerce moving so far into the future, now [advertising clients] come to us for top of the funnel and bottom of the funnel marketing.”
Related: Investments in E-Commerce Yield Big Gains for Small Businesses Amid Pandemic
Normalizing wine and spirits e-commerce
The pandemic has nudged long-term changes to consumer culture at large. And the growth of alcohol sales online reflects this shifting consumer behavior around e-commerce, online discovery and home delivery.
The shift has ushered the wine and spirits category into a new era of expectations around product assortment and accessibility. However, at the end of the day, “the big changes that are occurring in this industry aren’t about alcohol, “Provance said. “They’re about how people interact.”
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
This article is from Entrepreneur.com
