Accelerated by the pandemic, demands for convenience have driven a shift towards online shopping, making e-commerce an important consideration for any retailer and an opportunity to differentiate themselves.
Increasingly, customers want the option of shopping from the comfort of their own homes and having products delivered to their doorstep, but more than that, they want fast and flexible delivery options.
Online alcohol sale has existed for many years, and although it only accounted for 13 per cent ($2.1 billion) of total retail liquor sales in FY22, Michael Waters, CEO of Retail Drinks Australia, says delivery and click and collect are key growth areas for liquor retailers.
“The available data indicates that Australia’s online alcohol sale and delivery market will continue steady growth to around $2.5 billion by FY28,” he told National Liquor News.
“Those that aren’t investing and participating in this space are denying themselves the opportunity to continue diversifying their business.”
Rachel Brown, Loyalty & Digital Marketing Manager at Thirsty Camel, says brick-and-mortar retail will always be at the core of the offering, but the concept of convenience is continually evolving.
“We know that the vast majority of Australian consumers browse and shop online and so having an e-commerce offering is crucial to our retail and digital marketing strategy,” she stated.
How important is e-commerce to the future of liquor retail?
According to data from more than 10 million transactions in the Frontier Economics 2023 study into online alcohol sales and delivery in Australia, 87 per cent of total retail liquor sales can still be attributed to brick-and-mortar.
Desperate the preference for in-store shopping, there has been a significant increase in the number of liquor retailers conducting online alcohol sale and delivery, Waters outlines.
“In NSW alone, in 2009 there were only six online-only packaged liquor retail licences – today there are more than 800. We’ve also seen many traditional brick-and-mortar liquor retailers diversify their business with other offers and channels, including online.”
For Scott Thomas of Anglers Inn Hotel Motel, who was awarded Liquor Legends E-Commerce Retailer of the Year earlier this month, demand for e-commerce has been a slow burn, but it now represents a profitable part of the business.
“We have been involved with the Liquor Legends e-commerce site since its inception. Being in a country location I felt we needed the online presence to compete against the large amount of product coming into our space from the big players.
“The average spend online per transaction is over double of the in-store shopper and the variety of product they purchase seems to be broader. The online has allowed us to shift the needle in the more profitable categories to having a more positive impact on the business,” he says.
With Liquor Legends’ support, Thomas is confident that the store’s e-commerce offering now encompasses the most sophisticated and practical solution for customer experience and backend requirements.
“Inventory is linked to our in-house POS system ensuring that the website reflects our current stock holdings. Pricing updates are reflected extremely quickly on the website protecting margins, and as far as additional workload we run weekly stock takes by categories to ensure that our stock levels in the system are correct so as we have no supply issues.
“As far as the online payment system, we have had zero fraud to deal with due to extensive work done by Liquor legends in this area,” he explained.
Delivery on demand
To succeed in e-commerce, Waters urges retailers to be customer-centric in their approach and ensure their website carefully considers design, navigation and functionality, but he also stresses the importance of satisfactory delivery services.
“Over and above the website, retailers need to ensure a seamless delivery process and their ongoing compliance with responsible delivery of alcohol requirements to maximise their chances of success. Retailers need to pay attention to their online presence rather than treating it as just an extension of their physical store – a consistent multichannel offer.”
At-home delivery is typically seen as most convenient, but many shoppers are also opting for click and collect. Removing the time spent physically browsing shelves, click and collect offers fast and free collection and positions retailers to outperform competitors.
“We are finding click and collect to be extremely strong for us and probably represents about 70 per cent of our online business. Delivery still is reasonably strong but typically with larger orders,” Thomas explained.
While Thirsty Camel is still in the early days of its e-commerce offering, Brown says the group has already expanded on its click and collect services by engaging an on-demand delivery platform.
“Our drive-thru model means we’re uniquely set up to deliver the ultimate click and collect experience where customers don’t need to leave their car, they can just drive in and go.
“We have a great partner in Rendr, whose technology allows us to offer on-demand delivery from any of our Victorian store locations by aggregating multiple delivery carriers into one easy solution for our members. With the complexities of our business and of the evolving liquor retail industry, it’s important that we have the best technology integrated into our e-commerce solution,” she explained.
Navigating delivery challenges
Thomas has found that same-day delivery caters to most customers, and although he hasn’t yet seen demand for one-hour delivery, the store’s regional location would make it difficult to achieve this.
“Being a country location we don’t have the option to engage any of the many delivery services provided in the city locations so we have had to employ a permanent delivery driver,” he says.
Another challenge that can act as a deterrent for liquor retailers operating in the e-commerce space is the evolving regulatory challenges that operators must overcome to offer online delivery services, with even more complex regulations for those operating in the same-day delivery space.
Waters stated: “State and territory governments are currently considering stronger regulatory measures including around age verification, which, if adopted, could add prohibitive cost and complexity for retailers, large and small – it’s critical to ensure a fair, equitable and sustainable environment for all.
“In addition, in extending the bottle shop counter to the customer’s front door, it’s important to remember that the same RSA rules apply in ensuring that alcohol is not being delivered to minors and intoxicated people.
“Retail Drinks’ key Industry Responsibility initiatives like the Online Alcohol Sale & Delivery Code of Conduct, ID25 and Don’t Buy It For Them are helping members and the broader industry retail responsibly.”