The Distiller’s List launched earlier this year. The website sells craft spirits and produces videos and stories about the elixirs online. But does this new online boom in liquor retailers spell the end of the brick and mortar liquor store? Some economists say it might.
So how does it work? Distiller’s List acts as a middleman between you and Argonaut Wine and Liquor in Denver. The Distiller’s List is like an online storefront for craft spirits. You buy something online from Distiller’s List, and Argonaut ships it to you. The drinks are sold at market value, and Distiller’s List takes a cut of the total cost.
Oliver Sharpe is the executive producer for Distiller’s List. He says their strategy is more about the video and written content they have about small distillers, rather than trying to undercut other businesses.
“So we’re not doing flash sales," says Sharpe. "We’re not doing limited time only or slashing prices. It’s basically available for the market price. Our big part is the editorial content. The educational pieces. That’s how we are trying to attract people rather than on the pricing play.”
Helping the little guy, without crushing other competition.
“If an online competitor opens, then the offline store is worse off," says Goldfarb. "Just like if an offline store opened, the online competitor is worse off.”
But whether or not they are trying to undercut any smaller businesses, there is still a risk of that happening.
Avi Goldfarb is a professor of marketing at the University of Toronto. He studied how consumer behavior changes between online and brick and mortar sales. He says that any time an online competitor has been added to any industry, there are major effects.
“If an online competitor opens, then the offline store is worse off," says Goldfarb. "Just like if an offline store opened, the online competitor is worse off.”
In simple terms, more options are good for consumers, and bad for businesses.
Chris Cook, is a manager at El Jebeverage, a down-valley liquor store. He says there is more concern about big-box stores like Costco and Walmart obtaining multiple liquor licenses, than being put out of business by online sellers. Currently, companies are only allowed to have one liquor license in a state. That booze you see in Costco, for example, is licensed to a different person and not the company.
“It doesn’t make or break us," says Cook. "Our business deals with more of the local people around here. Certainly some of them are going to go around and search for the best bargain.”
So both sides seem to be going for a different market. One for the local shopper, and the person who wants something very specific a small shop might not carry. But what might be the biggest hurdle for online liquor retailers is the range of laws that make businesses like that difficult to run and start.
Jon Gebers is a liquor license consultant for the Messner and Reeves law firm based in Denver. He says he gets calls from people inquiring about opening online liquor stores multiple times a week. Colorado law says that to apply for a liquor license, you have to have a brick and mortar location before you can even establish your online component.
“It’s something everyone is interested in...they found a wine and they think it’s going to be be really great and they want to open it up to the web, and have people find or it be in the know and have it be the next big thing - but you can’t do it that way.”
Like Chris Cook at El Jebeverage, Jon thinks that the big-box stores pose more of a threat to the small liquor store than online competitors might. Chris pointed out that if the City Market near his store were to get a liquor license, it would make a serious dent in his business.
Oliver Sharpe says one of the goals of his company’s website is to share the brands of smaller distilleries with a larger audience, and help brands reach a bigger audience. He says that sometimes it is hard for businesses like these to break out of their regional bubble.
“A lot of times people are so focused on making their product that it’s hard to get them out of a regional area," says Sharpe. "Woody Creek Distillers. Everybody here knows them in the valley. You might not know it if you go to the East coast or go to California.”
There are lots of moving parts to this issue. People trying to reach different markets. Legal issues hindering the new guy. The old guard trying to stand their ground as new business tries to make its mark. Only time will tell if the Distiller’s List has any effect on small stores, or if the big-box guys will get to them first.
