After witnessing a value growth of over 80% in 2019-2020, the US is poised to overtake China to become the largest alcohol ecommerce market in the world by the end of 2021. Between 2019 and 2024, US total alcohol ecommerce value will grow six-fold, from half that of China to nearly double. – IWSR, Drinks Market analysis, 2020.
On-premises consumption of alcohol fell significantly after the onset of the COVID-19 pandemic. Online alcohol consumption has started showing a spiked growth since the pandemic. Though online alcohol sales have boomed, the alcohol industry has a long way ahead to get back to pre-COVID conditions.
Alcohol brands face the same set of delivery challenges that non-alcoholic products face. But they also deal with a unique set of delivery challenges that are irrelevant to non-alcoholic brands. The new business environment created due to the pandemic requires them to counter these newfound supply chain challenges.
Challenges and opportunities in alcohol and beverage e-commerce marketplace
Challenge 1: Dealing with unaware consumers
Online sales only represent 1% of off-premise beverage alcohol sales in the US, but are growing at double digit rates. – Beverage daily news, May 2019
The biggest challenge that the beverage e-commerce industry faces is gaining the attention of unaware customers. Alcohol/ beverage brands find receptive customers through large seasonal gatherings, music festivals, and sporting events. But during this pandemic the challenge lies ahead in reaching out to both existing and new customers.
Opportunity hidden in the challenge
Consumer awareness of alcohol/beverages online has increased since 2020. Both Gen Z and Millenials who have reached a legal drinking age are looking for a convenient digital shopping experience.
The restricted living conditions driven by this pandemic has created opportunities for alcohol brands to reach a wider audience base. Adopting digital media with e-commerce operations can put the alcohol/ beverage in an advantageous position.
Challenge 2: Following varied laws and regulatory compliances
After alcohol prohibition was repealed, states began to enact their own regulations to control the alcohol industry. The three-tier system of alcohol commerce like production, distribution and retail has caused chaos in the supply chain.
Some states have not lifted the ban on alcohol sales, whereas some have imposed limits on the quantity of alcohol that can be shipped. There are some regions where alcohol/beverage brands can engage in D2C shipping and some of them do not allow that. Hence, a concise understanding of who is able to sell alcohol in different locations legally.
Opportunity hidden in the challenge
A majority of states in the US have relaxed alcohol fulfillment laws due to the severe business impacts of COVID-19. This has opened up new avenues for alcohol brands to build strategic e-commerce partnerships.
The legalization of online alcohol sales can help many alcohol brands to offset their lost business activity. All that the alcohol e-commerce businesses have to do is to respond to changing regulatory shifts and make use of additional opportunities.
Tip: Partnering with delivery apps or online marketplaces after integrating monitoring solutions across all retail channels.
Challenge 3: Alcohol brands facing heavy competition
The market competition for alcohol e-commerce has increased since the pandemic. Every alcohol brand that has a presence in bars, restaurants, drink stores or supermarkets has entered the stream of online delivery.
Companies like Drizzly and Vivino have largely benefited from these new beverage alcohol e-commerce trends and competition. This overall online alcohol market and its audience base will expand manifold in the coming years.
Opportunity hidden in this challenge:
To emerge as a winner in this heavy competition, alcoholic beverage brands must focus on:
- Building a fast delivery
- Creating an excellent user experience
- Good marketing
The margin of error is very less in these circumstances as the competition is high. Alcohol being a temperature-sensitive product, deliveries should be on time to acquire new customers and retain the existing ones.
In order to set themselves apart from competitors, alcohol brands can boost last-mile efficiency with a logistics optimization software. This helps them reach customers faster and build a positive brand experience.
Challenge 4: Managing the last-mile order fulfillment
One of the biggest challenges in alcohol/beverage e-commerce is managing the last-mile delivery. Many may think that delivering drinks is quite simple, what’s there to be concerned about? As an alcohol brand builds its delivery capabilities, they realize that there is more to it.
Unlike some consumer goods, one cannot leave wine outside on a doorstep in extreme weather conditions. These high-value liquid products require varied temperature control requirements. Even specialized couriers multiply the barriers for alcohol delivery.
Brands involved in alcohol e-commerce marketplaces mention that many of today’s solutions fail almost half of the time. Though many of them experience success in delivering alcohols/beverages to different addresses, their last-mile issues are unsolved.
Opportunity hidden in that challenge
Trying to solve the last-mile challenges helps alcohol brands in building a positive customer experience. Customers stay with brands that are consistent in fulfilling their delivery promises and maintaining product quality.
The biggest test for alcohol brands lies in searching for a proper delivery logistics software. Partnering with the right product is half the battle won for brands involved in alcohol e-commerce. Before getting into the decision of selecting a delivery logistics software, it is necessary to know how it benefits brands in the alcohol e-commerce.
How delivery logistics software benefits brands involved in alcohol/beverage e-commerce?
“This year, there has been a huge increase in awareness of alcohol ecommerce among US consumers, while some states have relaxed legislation to facilitate online sales and home deliveries. IWSR consumer research data shows that in the US, 44% of alcohol e-shoppers only started buying alcohol online in 2020, compared to 19% in 2019. Growth is largely being driven by the omnichannel segment as supermarkets and traditional retailers seek to rapidly enhance their online offering. On-demand players are also expected to gain a significant share.”- Guy Wolfe, Strategic Insights Manager at IWSR Drinks Market Analysis.
Social distancing norms have sparked the rise in online alcohol demand like never before. Whether it is restaurants, grocery stores, vineyards, breweries or even startups, alcohol delivery has turned into an attractive option to expand its audience base.
On one side the legal restrictions and varying regulations pose unique alcohol delivery challenges. On the other side, alcohol brands struggle to manage their customer expectations when it comes to delivery speed. The biggest question for them is how to find the most efficient route without wasting money and burdening resources?
Whether it is an alcohol business startup or an established alcohol brand, both are looking for new ways to expand their business presence. Many brands have started to invest in delivery logistics software to boost profits and save time. Find out how a delivery logistics software benefits brands involved in alcohol/beverage e-commerce.
Smart logistics planning
Optimizing routes at the start of the delivery journey is crucial. Most deliveries in alcohol e-commerce fall under two categories:
- Delivering drinks from a local shop or retail outlet
- Delivering drinks from breweries or vineyards
If an alcohol brand owns a liquor business, it can depart from a single location which is not a problem. This is the most fortunate case as one need not worry about the initial start of the journey.
If the alcohol business relies on a diverse supply chain, it could be problematic for drivers to pick up orders from multiple locations and deliver them on time. The need for multi-stop route planning arises here as they should include both pickups and deliveries while planning their last-mile deliveries.
The best way to simplify routing is to divide the delivery areas into different zones. Another best alternative is to split the delivery area into quadrants based on order clusters and square mileage. This prevents the fleet drivers from losing track and getting lost during deliveries or pickups.
A delivery logistics software enables alcohol brands to organize their delivery zones to different clusters. Once the demand alternates, these delivery zones can be changed. This strategy helps them prevent two fleets from covering the same delivery area, thereby minimizing delivery time and reducing the overall distance traveled.
Making deliveries quick and efficient
When people want delivery of beverages, they want it fast and fresh. To make the delivery experience delightful, logistics should be fast and efficient. Planning routes manually can cause a lot of errors. It results in waste of effort and time of resources employed for the delivery tasks.
A delivery logistics software with route optimization capability plans efficient routes in a matter of seconds. Factoring numerous delivery constraints like fuel, mileage, traffic restrictions, preferred delivery windows, etc. it calculates optimal routes accurately. This helps alcohol brands make on-time home delivery, reducing the customer wait times.
Makes driver onboarding easier
A proper delivery logistics software helps alcohol businesses minimize the adoption time for drivers. The shortage of qualified and skilled drivers adds pressure in managing the onboarding costs.
With its simplified and easy-to-access features, a delivery logistics software can guide drivers who do not have logistical expertise. It enables them to focus on improving quality driving habits and communication skills of fleet drivers. Its user-friendly interface reduces the onboarding costs of firms, thereby helping them manage the available resources effectively.
Create an elite customer experience
Customer experience is the key to achieving brand loyalty. Consistently offering an outstanding customer experience, helps alcohol brands achieve customer lifetime value. Every step of the customer journey should be intuitive and straightforward. Optimizing the ordering process helps customers order liquor within a few clicks.
Real-time fleet tracking is essential to build a flawless and elite customer experience. A delivery logistics software with this feature helps alcohol brands to customize their messaging and set updates on customers orders. Its live tracking updates, email alerts and SMS notifications help customers track their delivery status in real time.
A delivery logistics software helps alcohol businesses carry out external and internal communications effectively. It helps them to share and access delivery information across the organization. This enables them to rectify any irregularities in the delivery processes, thereby building an agile delivery operation.
Proper Inventory management
Michael orders his favorite beer, pays for it and checks out. Later, he receives a message that his favorite beer has run out of stock. After this he never returns back to the same site to order that beer even if he got the refund amount. A rise in unsatisfied customers makes your business unstable.
A delivery logistics software helps alcohol brands keep a track of products moving upstream and downstream. By dynamically monitoring the flow of goods in the supply chain network, it helps them effectively maintain fulfillment and delivery volumes. It enables them to manage stocking challenges and make their supply chain more resilient.
Effectively balance forward and reverse logistics
The biggest challenge that a majority of the alcohol brands face in last-mile logistics is to reduce the drive time. As the demand for online alcohol purchase increases, the returns also increase.
Imagine that an alcohol brand runs a brewery and delivers kegs to local pubs. As the kegs turn empty, they may retrieve and reuse them to make their operations economical and eco-friendly. In these daily life scenarios, alcohol brands should balance their forward and reverse logistics operations effectively.
A delivery logistics software ensures that alcohol brands need not send separate carriers to pick up the empty kegs. Its multi-stop and dynamic route planning features help fleet managers add pickups to regular delivery routes simply. It reduces the time involved in reverse logistics planning, thereby reducing the empty miles driven, and minimizing the driving time.
Refine your delivery process with analytics
Vineyards and breweries work hard to enhance and perfect their product quality. The same level of attention and maintenance is required for providing last-mile delivery services to customers. It is here that performance monitoring becomes quite essential for upgrading the delivery service.
A delivery logistics software provides valuable detailed insights on key delivery metrics. These delivery metrics help alcohol businesses to evaluate both individual and fleet performance. These delivery analytics provide a deeper understanding of the delivery process and help them find opportunities for optimization.
Improves visibility across the supply chain
Being a temperature-sensitive product, alcohols and beverages demand end-to-end visibility. Looking at the entire last-mile logistics process from a wide and narrow angle is crucial to improve delivery processes. Lack of comprehensive overview of the delivery operations results in businesses missing out on meeting SLAs.
A delivery logistics software gives complete control of the entire supply chain network. It helps alcohol brands prepare and fulfill any order volumes despite the demand. It provides enhanced visibility over logistics networks, thereby helping brands capitalize on new distribution opportunities.
Conclusion
There is never going to be a better time than through the pandemic to build last-mile delivery capabilities for your alcohol/beverage products. Businesses that delay in adopting last-mile delivery software risk losing existing and loyal customers. The best tool to capitalize on the opportunities hidden in the challenges is a delivery logistics software.
Locus holds deeper expertise in solving the last-mile challenges of businesses with advanced delivery logistics software. It helps alcohol brands optimize deliveries and pickup services without burdening resources. Its valuable insights on last-mile logistics performance enable them to identify gaps in their delivery performance and build their delivery capabilities for a bright future.
References
- https://www.beveragedaily.com/Article/2019/05/02/US-beverage-alcohol-lags-in-e-commerce-Other-markets-are-way-ahead
- https://www.theiwsr.com/beverage-alcohol-ecommerce-value-grows-by-42-in-2020-to-reach-us24-billion/
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