Loosening regulations and shifting consumer purchasing behaviors have many alcohol brands looking to enact a D2C ecommerce model.
TABLE OF CONTENTS
- Identify a New Distribution Model
- Use Data for Robust Analytics
- Expand Products and Reach with D2C Ecommerce
- Apply Grocery Brand Lessons
- Channel Opportunities to Build a Stronger Relationship with Distribution Companies
- Focus on User Experience to Create Loyal Customers
- Engage with the Right Platforms for Accelerated Growth
- Tap into the New Wave of U.S. D2C Shoppers
- Contact Vaimo to Build Your Digital D2C Strategy
Historically, the alcohol industry has been slow to adopt digital transformation. In countries such as the U.S., for instance, alcohol sales have been generally restricted to in-person interactions in retail stores and bars, mainly due to the heavy amount of regulations surrounding the sale of alcohol.
However, over the past few years, there has been a shift in how consumers expect to make alcohol purchases. Throughout the pandemic alone, online alcohol sales experienced triple-digit growth, and the global alcohol ecommerce market is set to reach $173,819 million by 2031.1, 2
This increase has been fueled both by the demand of consumers and the loosening of alcohol-related regulations. Numerous states enacted updated rules around the sale of cocktails to go, like allowing grocery stores, liquor stores, and even alcohol brands to deliver products directly to a consumer’s doorstep. And these efforts are set to continue, with numerous bill proposals underway, all modeled off of the laws enacted during the pandemic.
With regulations loosening and consumers shifting their purchasing behaviors, many leading alcohol brands are considering their digital transformation. For alcohol brands looking to enact a D2C ecommerce model, the following strategies will help make this transition a success.
1. Identify a New Distribution Model
One of the greatest shifts in consumer shopping behaviors has been a desire to interact directly with brands. Millennials and Generation Z, in particular, prefer ecommerce to in-store shopping. By 2023, the D2C online market is forecast to reach nearly $175 billion.3
Alcohol brands are taking note. These brands are identifying a new distribution model that offers numerous benefits such as:
- An increased number of revenue streams
- Direct relationships with consumers
- Access to first-party customer data
- Increased brand loyalty through reward programs and customer interactions
Related Reading: What is D2C Ecommerce?
2. Use Data for Robust Analytics
With the adoption of digital tools and ecommerce platforms comes the opportunity for alcohol brands to access customer data in a whole new way. Previously, these brands had limited insight into consumer behaviors. Every data point had to be gleaned through third parties. This made it challenging to analyze customer data on a detailed level.
Through D2C sales and a laser focus on digital marketing, alcohol brands can tap into customer data directly. This data can become one of the most powerful tools for growth. Through robust analytics, brands can learn more about what drives consumer sales, what motivates long-term loyalty, and what investments lead to the greatest returns.
Leveraging VTEX ecommerce and marketplace functionality, alcohol brands can now embrace their distribution channels and bring them into the ecommerce experience while gaining powerful end-customer data.
Related Reading: D2C Commerce
3. Expand Products and Reach with D2C Ecommerce
One of the leading benefits of D2C ecommerce for alcohol brands is the vast opportunity for expansion. A well-constructed alcohol ecommerce strategy should focus on expansion in two key ways:
- Expanding product lines
- Expanding reach
Brands aren’t confined to solely selling their core products in a D2C ecommerce experience. No longer limited by the amount of shelf space a distributor has allocated to their brand, these businesses can experiment, testing new products and even expanding the type of products they offer.
One example of this is AB InBev, who took advantage of the VTEX ecommerce platform to launch a D2C play in multiple countries:
“These multi-brand online retailers offer consumers a wide product catalog with hundreds of crafted, imported, and local beers and spirits, not to mention glassware and bar equipment to complete the tasting experience. Unique functionalities and features include geolocation, cashback, gift cards, customer reviews, payment in installments, and even the use of dark stores to quickly and easily fulfill online orders.”
4. Apply Grocery Brand Lessons
Most, if not all, of the lessons that grocery brands have learned, can be applied to D2C alcohol brands. And the growth potential is equal.
While once reliant on aggregators like Drizly or Total Wine, grocers have shifted to their curbside, delivery, and pick-up options. Alcohol brands can take the lessons grocers learned over the pandemic and apply them directly to their strategy.
Some key takeaways that overlap between the two industries include:
- The ability to accommodate a wide range of products via an ecommerce solution
- The flexibility for local variations in product offerings
- Careful consideration of the method for product delivery, taking local regulations into account
- Detailed management of delivery windows and order volumes
Using what grocers have already learned during their digital transformation gives alcohol brands a leg up, alleviating many initial risks associated with ecommerce adoption.
5. Channel Opportunities to Build a Stronger Relationship with Distribution Companies
Mitigating channel conflict is often an area of concern for brands with long-standing relationships with distribution companies, and rightly so. Many of these relationships took a massive investment of time and money to build.
But forward-thinking distributors are channeling the situation into an opportunity to help their associated brands adopt digital transformation. Acting as an intermediary to this transformation, these leading alcohol brands are assisting their distribution partners that might lack the expertise or internal knowledge to build an ecommerce solution.
Rather than D2C sales becoming a threat to relationships with distributors, it can strengthen existing relationships as alcohol brands help these businesses increase their digital reach.
Related Reading: How to Mitigate D2C Channel Conflict?
“With regulations loosening and consumers shifting their purchasing behaviors, many leading alcohol brands are considering their digital transformation.”
Head of Sales, North & South America
6. Focus on User Experience To Create Loyal Customers
User experience is key to long-term customer loyalty. Simply offering consumers the ability to purchase a product directly from your brand is not enough. The experience has to be as seamless as walking into a retail store, picking out a product off the shelf, and checking out at the counter.
And beyond just the experience of browsing products and placing orders, the holistic customer experience encompasses every touchpoint. For alcohol brands that have never offered D2C sales, honing this experience can be challenging.
This is where groups like DRAM, with insights from building 200+ digital marketing experiences across 60 groups of brands, can lend a lot of advice on best practices and data-driven experiences.
Savvy alcohol brands will lean into the wealth of information available and will adapt their D2C strategy to center around a highly personalized customer experience.
7. Engage with the Right Platforms for Accelerated Growth
One of the keys to successful transformation is choosing the right platform for accelerated growth. Platforms that help brands transform digitally should also play an advisory role to these brands.
For alcohol brands, adding ecommerce channels into their distribution model is not as simple as it is for B2C brands. More than setting up an online storefront, D2C ecommerce requires alcohol brands to embrace new operational models. From supply chain management to determining how age verification upon delivery will be handled, the move to D2C sales is complex.
This is where the right partnership is key. For example, a Vaimo partner, VTEX, points to 500% YoY growth for their client Coca-Cola in Chile, which pioneered the adoption of the D2C model. Brands such as Nissan, Whirlpool, and Sony are taking advantage of the opportunity to access their buyers, collect all of the data, and build strategies around that data. And they are doing it with the help of D2C digital transformation experts.
Rather than simply looking for a platform to launch D2C sales, alcohol brands should seek partners for the entire digital transformation journey.
8. Tap Into The New Wave Of U.S. D2C Shoppers
The number of American D2C shoppers purchasing alcohol has increased to the point that the U.S. is now the second-largest online alcohol sales market in the world — second only to China which has offered D2C alcohol sales for much longer.4
The American appetite for online shopping combined with a personalized, focused ecommerce experience and the ability to use data to meet shoppers where they are is here to stay. And this trend in online D2C alcohol sales will only become more robust as brands adapt to the trend and improve their digital experience.
Contact Vaimo to Build Your D2C Ecommerce Strategy
In the years to come, D2C commerce will continue to increase in importance for alcohol brands. As consumers become accustomed to shopping directly from brands, selling products through ecommerce channels will be necessary for growth and brand loyalty.
At Vaimo, we have successfully partnered with many leading alcohol brands looking to transform their distribution model to include D2C ecommerce channels. Leveraging industry-leading technology, we can assist you in your brand’s digital transformation and empower you to become the intermediary for the digital transformation of associated brands and distribution channels.
We worked with Brown-Forman, the creator of Jack Daniel’s Old No. 7 Tennessee Whiskey, to craft a premium experience for their digital customers. The American-owned spirits company saw a 55% increase in online turnover and a 113% increase in users. Read about our work with Brown-Forman.
Contact our team today to learn more about developing a D2C ecommerce strategy for your business.
1 – Is the Online Alcohol Sales Boom Here to Stay? – forbes.com
2 – Global Alcohol E-Commerce Market Report 2022: Surge in Wider eCommerce Sector Drives Growth – ResearchAndMarkets.com
3 – Direct-to-consumer (D2C) e-commerce sales in the United States from 2019 to 2024 – statista.com
4 – Alcoholic Drinks Worldwide – statista.com