Drizly Lands $2.25 Million to Have Booze Delivered to Your Door in NYC and Boston
Can ordering liquor delivery become as easy on mobile devices as food delivery has? A Boston-based startup called Drizly says it’s working on an app to make it so.
Drizly makes an iPhone app, conceived by three college friends in 2011, that gives liquor shoppers a digital way to order beer, wine or liquor from a store near them. It first launched publicly in the Boston metropolitan area in May, and today it’s opening its service in New York City, where it is working with 26 liquor and wine stores. It also recently closed a $2.25 million seed investment round from Atlas Ventures, Breakaway Ventures and a handful of other firms and angel investors.
In the same way that Seamless works with restaurants, Drizly works with wine and liquor shops that already employ delivery people but that are looking for new customers. Drizly is supposed to aggregate demand for booze, take the orders on its app, and send them through to the partnering store closest to the orderer. While Drizly customers enter their credit card information into the app, the stores actually process the transaction.
Drizly doesn’t take a cut of the orders — that’s one reason why New York’s State Liquor Authority approved it to operate without a liquor license — but instead charges the liquor and wine stores a monthly fee to use its order fulfillment software as well as its iPads and iPhones.
It also provides the delivery drivers with technology to scan IDs to cut down on the chances of underage buyers ordering liquor through the app. At the same time, CEO Nick Rellas freely acknowledges that many fake IDs scan as real, so the Drizly technology also provides delivery people with tips on different features to look for to help determine whether an ID is real or not. Eventually, Rellas says, the app will require customers to upload images of their ID to the app before an order is placed, to help stores screen for underage drinkers in advance.
“We recognize that any customer is potentially the one that shuts them down,” Rellas said. “So we’re spending money with no legal requirement to do so [to develop card-screening technology].”
The appeal for Drizly users is that they don’t have to try to figure out which shops near them deliver and then call them up to see what they have in stock. They can search the app by type of liquor, wine or beer; by liquor brand; or even by wine varietal.
The app has been live in the Boston metropolitan area for eight months, working with 16 liquor stores to deliver alcohol to Drizly customers, usually within 60 minutes. The company is seeing several hundred orders a week across those stores, with little promotion, but it will need more than that to build a business that lives up to venture capitalist expectations. It will also need to build brand awareness as competitor apps such as the slick Minibar app enter the fray, along with booze-delivery offerings facilitated by companies that have their roots in food delivery, such as FreshDirect and Delivery.com.
So, how will Drizly generate more demand? For one, since the app isn’t allowed to discount store prices, the company has often paid the $5 delivery charge that Boston shops must charge. It’s also currently experimenting with some advertising on Google and Facebook.
But a big boost may come from a marketing deal it just signed with Pernod Ricard USA, the maker of liquor brands such as Absolut, Jameson and Kahlua. At a high level, the deal will involve Pernod Ricard advertising its brands on the Drizly app, as well as promoting it to its customers as a preferred partner in other marketing initiatives.
“We will make sure that our consumers … are aware of this service, and are aware of the opportunity to have our products in their doors in 30 to 60 minutes,” said Tim Murphy, vice president of digital and media at Pernod Ricard USA.