How a Boston start-up is transforming alcohol sales for the digital age

Launched in 2013, Drizly facilitates the sale and delivery of alcoholic beverages online. Chain Store Age recently visited the company’s Boston-based headquarters and spoke with Nick Rellas, co-founder and CEO, about Drizly’s business model and the evolution of e-commerce.



What made you decide to enable the online sale and delivery of liquor?

It had little to do with delivery and more to do with the fact you couldn’t buy alcohol online with more prevalence. The whole world has gone digital in the last 15 years, from airline travel to books to apparel. We wondered why more rigid industries like alcohol hadn’t moved to digital.



How do you deal with the various state and federal regulations affecting alcohol?

It’s serendipitous we launched in Massachusetts, which has arguably the most restrictive alcohol regulations of any state in the country. It made us prepared. If we had started in a state with fewer regulations, we would have had a jaded perspective.



We embrace regulation -- it works. Operating in a space with a controlled substance like alcohol, our job is to work within those regulations. The laws have some intricacies. Our job is to figure out how to operate within those confines. They’re there for a reason.



Why is there a need for third-party e-commerce facilitators like Drizly?

Looking at the way retail has unfolded online in the last 15 years, many retailers have had e-commerce sites, but not been that successful. The pricing for consumers and availability of delivery time is often not where it needs to be. In the case of liquor stores, they sell a very homogenous product which is often not very compelling on a singular store basis.



In the past 10 years, a lot of e-commerce expansion has been through marketplaces like Amazon and Wayfair. They do things a single e-commerce site doesn’t do, and act more like a technology company. Few retailers, even large public companies, are good at both retail and technology.



Can you briefly describe Drizly’s business model?

We provide customers an e-commerce experience. They see different prices and availability for products across different retail partners. The customer picks the store and price shops across time.This is actually a new feature we just started offering in the past four to six weeks, so it isn't exactly the entire model of the business. Typically, based on your location you are connected with your local liquor store that is within our retailer network to shop your favorite beer, wine and liquor with delivery to their door in less than an hour. With this new feature, we are allowing you to shop from multiple retailers based on their location to shop from the store/prices/time.



We don’t do deliveries. Our retail partners fulfill orders with their own employees. We operate like a cloud hosting company. I don’t think the economics of being a delivery company are very compelling. We don’t look at ourselves as a delivery company, but as an e-commerce company. It’s the disruption of the disruptors.



Does Drizly work with a lot of independent liquor stores?

We work with an equal amount of chains and independent stores. It varies by region. In the Northeast, you don’t usually see large chains. For example, in New York you can only hold one liquor license. In Florida, our partner ABC Fine Wine & Spirits has more than 250 stores. We’re also talking with some state liquor authorities that operate stores.