One-hour liquor delivery? Good luck, Amazon. It’s harder than you think, Drizly CEO says
Source: Puget Sound Business Journal
Aug 19, 2015
Get a six-pack of your favorite brews less than an hour after you order them? Might sound far-fetched, but that’s exactly what Amazon looks to be planning.
The company has liquor licenses for four locations around the Puget Sound region, including two in Seattle, one in Kirkland and one in Bellevue. Meanwhile, Amazon (Nasdaq: AMZN) is also planning to launch its Prime Now one-hour delivery service in the city very soon.
So could we soon be getting our liquor delivered via Amazon couriers? That seems likely.
But that service is already possible in Seattle. Drizly, a liquor delivery app, launched its service in Seattle in November. Rather than doing the delivery itself, Boston-based Drizly functions as a sort of Uber of booze. The app lets the customer order bottles of their favorite spirits and then partners with local liquor stores to provide the products and deliver them.
That’s obviously far easier than developing the fulfillment and delivery centers yourself, which is Amazon’s plan.
“From a business model perspective, it will be interesting to see how Amazon is going to go from a tech company to a brick and mortar company,” Drizly CEO Nick Rellas said.
And it’s not just the challenge of building a brick and mortar facility. Each state has its own liquor laws. Some states, including New York and Colorado, allow businesses to own only one liquor store at a time. So Amazon could have only one liquor distribution center to serve the entire state of Colorado. One-hour delivery – no matter how fast those future drones are going to be – seems pretty unlikely.
Other states run their own liquor stores. Oregon, for example, would not allow Amazon to set up liquor delivery there because only the state can sell liquor. Drizly plans to gets around that by partnering with state-run liquor stores to do their own delivery. Then Drizly takes a cut of the profits.
“Our bet is that our model will be easier and more scalable,” Rellas said.
That doesn’t mean Drizly is just going to ignore Amazon’s push into its territory.
“As a young company, you’re always sitting up a little straighter when someone like Amazon enters your space,” Rellas said. “The truth is, it is a big deal in our world and something we have to take seriously.”
Amazon could be a potential partner in the future, Rellas said. The company could integrate Drizly’s technology into its own and set up delivery for customers who are already using the Drizly app.
“It takes a lot more money, a lot more time, and they might not be able to do it everywhere,” Rellas said of Amazon’s plans.
In the meantime, Drizly is watching closely to see what Amazon’s roll-out will actually look like.
“We’re actually taking this seriously as the leader in the (liquor delivery) space,” Rellas said. “We’re not pretending this is something we can just sleep past.”