Blending e-commerce with the U.S. alcohol industry is not a project for the faint of heart.
Though legal in many states, alcohol delivery has historically been a risky business proposition, primarily due to the to legal consequences that come with providing alcohol to underage drinkers. Despite this barrier to entry, a group of startups are carefully wading into the alcohol delivery business by not disrupting the distribution model, but instead complementing it with a premium service.
"You don't disrupt a $200 billion industry owned by 20 families," Nick Rellas, co-founder of delivery startup Drizly, told Bloomberg. "We want to help all the existing participants make more money."
So how does it work?
Here are three startups setting the bar for fast booze delivered to your front door:
- Drizly--Boston-based Drizly is a year-old startup that offers delivery of beer, wine and liquor via its mobile app. The company routes alcohol orders to retailers that can deliver in 20 to 40 minutes--some of which charge an extra fee. Drizly is operating in five cities and the District of Columbia, and makes money by charging retailers monthly fees. The company prevents underage drinkers from using the service by providing retailers with iPhones equipped with the Drizly's proprietary ID scanning app. Drizly has raised $4.8 million from investors including Chicago-based Continental Advisors.
- Minibar--New York-based Minibar requires a $25 delivery minimum and guarantees delivery of wine, beer and liquor in under an hour. Like Drizly, the company charges retailers a fee, but delivery is free. The service is available in Manhattan, Brooklyn and Queens, and also on Long Island, in towns such as East Hampton and Westhampton (where the minimum order is $100). Minibar has helped its 30 retail partners in New York City grow sales by up to 25 percent, co-founder Lara Crystal told Bloomberg. In addition to free delivery, Minibar offers recommendations and advice on what to order based on group sizes. And yes, they check IDs too.
- Saucey--Los Angeles-based Saucey launched last October and uses a team of drivers to deliver alcohol in under an hour, only in Los Angeles. Saucey runs promotions and add-on services, including providing a bartender for an hour, if customers order a specific package. Last month, the company partnered with underwear company MeUndies by having underwear models deliver alcohol with "sleepover packs" including mixers, a T-shirt, underwear, socks, sunglasses, and vitamins to help with hangovers. All customers are required to show IDs with their purchase.
While none of these startups have expanded nationwide, all three face potential competition from e-commerce titans such as Amazon, should it decide to dip its toe in the market.
"Amazon keeps me up at night," says Drizly's Rellas.