Omnichannel is the buzzword today, but the reality is good business people are looking for business where ever they can find it, continually. What is clear is more people are shopping online more than ever and those numbers are going to accelerate. Smart businesses will lean into this and by businesses, I mean on-premise and off-premise as well as suppliers, distributors and government actors. IWSR Drinks Market Analysis recently came out with an growth expectation of ecommerce alcohol beverage segment of 66% by 2025. This is vastly low. The market is going to grow in the US by over 100% in less than 3 years and here is why.
- Supply chain issues actual push consumers to online ordering. Who in this day and age wants to call a bunch of stores to see if they have a product before driving down. “Supply chain is still an issue?” Yes it is friends. The much ballyhooed 50% reduction in ships waiting to enter LA harbor was all smoke and mirrors. Ships we directed to wait out of camera range. The real number as it sits today is 107 ships waiting an actual 10% increase.
- These type of growth based analysis reports always come in under the mark. In 2018, market reports were ecommerce doubling in 5 years from then 2% of the market. When it is all tallied up, the US may see 6% this year. How did I know they were wrong then? Because developed nations like Australia without antiquated shipping laws restricting growth in 2018 were already at 9% ecommerce. “But what about COVID?” Sure Covid accelerated things, but anyone with a brain in their head could see the real high water mark was way beyond expert predictions.
- The high water mark has already moved. Looking back at my example of Australia, in 2021 their non-instore purchases sat at 12%. We are at around 6%. That looks like 100% growth opportunity right now.
- Looking at the impact of delivery platforms on food points to much higher numbers for ecommerce beverage sales. The total number of restaurants offering delivery is only 30% as stated on a recent Brizo Food Metrics call. Of Full-service single location restaurants in the US, 8.3% of sales are via delivery platforms. These are your mom and pop restaurants, so with some quick arithmetic the high volume segment of these locations are doing between 20-30% sales via platform. So I ask the question, “If consumers are willing to do up to 30% of their business with food that part of the price is intrinsically in the experience of consuming on location, why would those same consumers hesitate at spending their alcohol dollars on a product that the experience in store is so low?” Sidebar: There are some great retail experiences. Shoutout to my friends at the Argonaut in Denver, Khoury’s Fine Wines and Roy’s Liquors in Las Vegas, The Austin Shaker, The Winery in Harlem, Eataly in Chicago and Johnnie Ganem’s in Savannah.
- The laws are changing to speed ecommerce. 35 states now allow some type of on-premise to go. Seemingly every decision that goes in front of a judge these days is getting a ruling in favor of open markets. Most encouraging, state and city governments are actually funding tax collection jobs specifically for ecommerce transactions.
- Logistics have never been easier. Innovative companies like Spirit Hub, Thirstie, PIX and City Hive are making solutions for beverage suppliers to go direct to consumers and for off-premise to execute ecommerce and for all channels better target potential consumers.
- The number one most obvious reason these numbers are dramatically low is the US is a driving society. If countries that are built around walking for everyday needs are still using ecommerce at 12%, why would the US not naturally exceed that when America is built around driving for everything in most communities. I do not expect us to level out with the rest of the developed world. I expect us to surpass those numbers easily by the very nature of the way we live.
Ecommerce is growing by 100% and it is going to happen fast. These will be different types of consumers and you will need different approaches to connect with them and this is just the next evolution. Apps are dying. WEB 3.0 is on its way. Twitter and Facebook are tilting the field. The battle ground of tomorrow for ads are going to be on Venmo and digital wallets. Does not matter if you are a restaurant, retail shop, government ABC, supplier or distributor, you are all ecommerce companies, and you need to build around that reality to take advantage of the technological wave coming or be drowned by it.