E-commerce – solution to challenges that alcohol industry faces
The SARS-CoV-2 pandemic has shaken the global economy. Stock exchanges, investors and companies from a variety of industries are looking with concern at the effects of COVID-19. Adverse effects have not spared the alcohol industry. Lockdown of hotels, restaurants and bars, and cancellation of mass events, samplings and festivals have brought about a significant decrease in the sales of alcoholic beverages. However, there are branches of industry which are doing quite well in this new situation – one of these being e-commerce. It is the internet where the alcohol industry should be looking for solutions to the challenges it is now facing and ways of minimizing losses, and even perhaphs changing long term consumer habits.
Limitation or lack of possibility of selling alcohol is not going to suddenly terminate the need for ardent spirits. The real challenge is how to make it possible for consumers to buy and enjoy their favourite drinks in the conditions of lockdown, i.e. without leaving their homes. Fortunately, the industry has a powerful tool at hand which not only allows to deliver selected products right to their doors, but also ensures entertainment which has always been one of the main levers of the alcohol sales.
Consumers turn to online shopping
Research by CivicScience conducted recently on more than 2500 American adults at the age of 21+ (amongst those who drink alcohol) shows that 15% of them have done online alhocol shopping over the past two weeks due to COVID-19. 12% of them declare that they intend to do so in the near future. These numbers grow in the age group of 25- and 34-year-olds, out of whom 21% have decided to buy alcohol online as a result of the pandemic.
It is reflected in the performance of online shops. It is particularly visible in the US, one of the countries most affected by SARS-CoV-2. The American platform Drizly has announced that Sunday, March 22, was their best day in terms of sales, exceeding New Year’s Eve and Halloween. Their sales in a 7-day period until March 15 was twice as high as in 2020 in the pre-epidemic period, and the average expenses of customers were approx. 30% higher. Since that time, their total sales performance has risen by 500% compared to the same period last year, and the order value on average by 50%. Orders on online platform Minibar are also going up. The company has advised that the number of orders started increasing since Wednesday, March 11, and the average order value increased by 22%. The sales surged in the next week – Monday orders went up by 131% compared to the previous week and Tuesday orders by 115%.
The Australian alcohol supplier Jimmy Brings Alcohol Delivery has announced that the number of its customers increased by 23% compared to the same period last year. Its average order value is also rocketing – this week one of its highest orders totalled USD3.626 compared to the average order value of USD60. Another Australian industry company – Tipple – has also experienced an increase on its platform, as well as 50% rise in the number of active users online and on its mobile applications.
Online entertainment a chance of increasing alcohol sales
Staying at their homes, customers are also looking for online entertainment. Entertainment and alcohol industries have always been connected. People drink ardent spirits spending their time in clubs, at concerts, festivals and events. The COVID-19 pandemic does not necessarily have to mean an end of this marriage.
JD.com, Chinese e-commerce alcohol giant, started its online club campaign in February this year in order to boost the sales of alcoholic beverages, which according to the platform translated into „great sales results”. The company banded together with Taihe Music Group and many international drink brands in order to provide its recipients with online entertainment and compensate for the lack of possibility of meeting their friends in clubs or at concerts. Every week, JD invites musicians and DJs from Taihe to air a three-hour live show connected with placement of alcohol products which the viewers can buy at one click. The campaign has been joined by such brands as Budweiser, Rémy Martin, Carlsberg and Pernod Ricard. The success of this campaign is reflected in sales performance – during one of the live concerts the sales of partner products rose by 70%, and the sales of whisky went up eight fold compared to the previous day. At the next event, the sales of beer increased by 40% compared to the same period from the previous day.
China an example for the alcohol industry and legislators
The Chinese market is a good example how effective logistics and conducive legal environment can support the alcohol industry at the time of the pandemic. Before its outbreak, alcohol e-commerce in China was in its heyday. Online purchase of wine represented approx. 30% of total sales countrywide, compared to 7% in the US. Obviously, one of the reasons for that was perfectly organized network of supplies, and lower transportation costs. This change in consumer habits, started before the outbreak of the pandemic, allows for more optimistic forecasts for this sector. Similarly, online marketing and promotion of alcoholic beverages is on a much higher level in this country. The example of online club concerts, referred to above, is not the only one – in the Middle Kingdom, online samplings and training courses are held connected with the delivery of drinks to the recipients in person.
In many European countries, online sale of alcohol can still be problematic. Strict legal conditions and licences related to online sales and returns drive away the distributors. However, if the current situation does not end quickly, and there is nothing to indicate this, the authorities will have to find a way to make it easier for employers from the alcohol industry to deliver their products. And it is the industry’s responsibility to adjust to the new conditions and direct its resources to e-commerce and online marketing in order to reverse the situation to its advantage and change the consumers’ buying habits.