Alcohol E-Commerce: A Primer
The beverage alcohol industry in the United States has historically relied on brick-and-mortar stores. Thanks to the three-tier system adopted after the repeal of prohibition with the 21st amendment, goods are sold through retailers, stored in warehouses, and distributed through distributors. The end result has been that, while selling alcohol online has been possible (and in fact growing YOY) via retailers and marketplaces, the distillers themselves have been left out of the process, making data points on the final sale impossible to come by.
Why is this an issue? Because e-commerce is a game changer when it comes to learning about your customers. It provides an insight to who your customers are, their shopping habits, and their pain points. The end goal is always to make more sales. First-party data about consumers that is collected through e-commerce has benefits beyond even direct sales. Brand loyalty is extremely important these days, and learning about your customers will allow you to not only attract new customers, but keep your old ones. In short, a customer who purchases a product from your website is actually more valuable than a customer who purchases a product in-store.
E-commerce is a business model that involves transactions over the internet. It was founded 40+ years ago, and according to the U.S. Department of Commerce, in the year 2019, an estimated 16% of all U.S. retail sales took place online, with consumers spending approximately $600 billion with U.S. merchants. This percentage is up from 13.6% in 2018. Covid19 has further increased online sales significantly for 2020, with some commentators having projected that e-commerce will account for approximately 19% of purchases made in the U.S. in 2020 when the dust settles. Note that we at Thirstie believe that, if anything, that number may be low, as we will discuss in an upcoming article.
With the huge growth of alcohol sales, selling online has become normal, and the barrier for customers purchasing alcohol online has been broken. E-commerce has and will continue to become a common channel for procuring alcohol. The IWSR, an industry research group, projects that direct-to-consumer e-commerce sales will grow at an annual rate of 24% through 2024. They also note that 44% of e-commerce consumers began purchasing alcohol online for the first time in 2020. So the question for brands has quickly evolved from (a) whether they should use this channel to (b) how to best utilize this channel.
This article is the first in a series on e-commerce for alcohol brands, and will provide an introduction to the primary topics with which everyone should be familiar. Subsequent articles will delve into greater detail in each area.
Acquisition
E-commerce starts with acquisition, that is, getting people to a website/digital store. There are many channels to a website: getting there directly (typing in the url), through a search engine (like Google), through social media, emails with links, referrals from other websites, search ads, etc. Different methods may work better or worse for different brands, and it’s common to see the same visitor come in through multiple channels over their lifetime.There are also offline channels for marketing, such as TV ads, flyers, transit advertising, newspapers, and billboards. These offline channels are much harder to track and attribute, but might still be effective depending on the brand’s strategy, as there are many different types of marketing. There is awareness marketing, where brands want to familiarize customers with their brand, and there is also marketing with the intent to sell, which usually revolves around advertising a specific product, or line of products.
Once you’ve established an online presence, you will experience different types of visitors. The primary two are New visitors and Returning visitors. Shopping or browsing behaviours can vary wildly between these two visitor types, and it is important to satisfy both behaviours. A new visitor may be in a browsing or a research phase, learning about your brand and products. A returning visitor already has some familiarity with the site and may spend less time on your website and convert faster. Getting a new visitor to become a repeat visitor should be a priority for most brands, which is where data collection in e-commerce comes into play.
Behaviours
Once on your website, visitors can do a variety of things. Some may read or watch content, some may be contacting a help center, some may be researching nearby events, and others may be looking at product catalogs and prices. Some may be making purchases. Every visitor will have a different path through your website. There are buttons to click, pages to read, and many interaction points. Creating a website experience that satisfies any type of customer is important, as some behaviours may be highly correlated with sales.
It’s important to remember that a visitor may not necessarily be on your website for your specific brand/product in particular, but instead to research a product or brand that suits their needs. The design of a website is extremely important, as are page load times, in keeping a visitor from leaving. In terms of customer experiences, making sure that all product information is available, remembering visitor preferences, and transparency in pricing go a long way with potential customers. Keeping track of behaviours and optimizing where possible, can help guide visitors to the checkout.
Checkout
Once a visitor adds a product to their cart and wants to pay, the checkout process begins. The shopping funnel encompasses steps including product views and add-to-carts, but the checkout process is a subset of these steps where a user adds their personal information and intends to make a purchase. The primary objective is to ensure that the checkout process is uninterrupted, smooth and that the consumer is able to successfully complete their purchase.
Having a smooth and clear checkout process is essential to establish trust with a visitor, and eliminates possible drop-out points. Checkout processes differ from site to site, but common steps include Shipping, Billing, Delivery preferences, Payment Information, and Review pages.
In the Thirstie Access checkout process, a visitor always knows what step of the process they are in. In order to add a product to cart, a visitor is first asked to enter their address. In the checkout process, the visitor information is pre-populated, eliminating the need for them to re-enter the delivery address. Since a customer was matched with a retailer during the product journey, there is a very logical reason why the delivery address must match, but by pre-populating this information, Thirstie eliminates the extra step and pain point for the customer. Additional features like allowing a visitor to edit their shopping cart throughout the checkout process, and providing a “Review” page before purchase, allows visitors to feel in control at each step. While these considerations may seem trivial, it helps establish trust between the visitor and a brand. We use data to better understand your customers, and make changes that help attract and keep them.
Several metrics used to measure the flow of the checkout process include cart drop-out rates (and can be looked at throughout each step of the checkout process), time to purchase, cart abandonment, and customer service contact rates.
Closing
We’ve seen how e-commerce serves the goal of increasing sales and how it also provides an insight to who your customers are, their shopping habits, and pain points.
Innovations such as Thirstie Access allow alcohol brands to adopt an e-commerce model which shares the advantages of B2C model, from the perspective of the consumer, while staying compliant with the B2B model envisioned by the post-prohibition era three tier system. This allows for direct contact with the brands end consumers — the marketing/advertising implications of such a relationship clearly being quite significant. Therefore understanding your website’s and checkout experience is important, and an always-evolving process.
With Thirstie Access, we use data gathered across a broad range of brands and customer visits to optimize the user experience, leaving you to focus on how to market your brand. Since brands own this first party data, they can use the data collected from Thirstie Access to then maximize the ROI on their marketing dollars.
In the next article in this series, we will dive into different types of acquisitions, and how to understand your customers lifetime value.
Cheers,
Hannah Vogel, Phd. and The Data Team at Thirstie.
About Thirstie, @areyouthirstie
Thirstie, a New York based e-commerce company, is the leading technology and logistics solution provider for beverage alcohol brands, founded by Devaraj Southworth and Maxim Razmakhin in 2014. Thirstie helps brands to power consumer on-line transactions within an industry three-tier system complaint platform through a robust API and expansive retail network. The Thirstie platform also provides brands with transparency into all data, consumer insights analytics and ROI to improve performance marketing. For more information about Thirstie, please visit thirstie.com.
