Drizly's alcohol sales surge amid COVID-19 crisis

Alcohol sales are booming in the midst of the COVID-19 pandemic. Drizly Co-Founder & CEO Cory Rellas joins Yahoo Finance’s On The Move to weigh in on why the alcohol delivery service is in high-demand.

Video Transcript

JULIE HYMAN: For many folks stuck at home, they still want to get their essentials. And their essentials, in many cases, include wine, beer, other types of alcohol. That has helped pushed sales of Drizly, the largest e-commerce site for deliveries of this stuff-- it's pushed [INAUDIBLE] sales overall, up 488% for the last week of March. We're joined now by the co-founder and CEO of Drizly, Cory, Rellas. He's joining us from Colorado.

Cory, obviously, these are incredibly huge increases in these numbers. Logistically, how are you handling all of this increased volume?

CORY RELLAS: That's a great question. Thanks for having me, Julie. I mean, this is a supply chain that hasn't changed a whole lot in 90 plus years since prohibition was repealed. What we've seen is just a massive mix shift from on premise drinking-- bars and restaurants, obviously-- to home. And what we've done is use our technology, as well as partner with our liquor stores on the other side, to effectively make them e-commerce distribution centers to keep up with demand. As in-store traffic falls, we really need to lean on technology to bring all of us together and be able to provide deliveries to the house, and within two hours.

- Hey, Cory. So I have to fully disclose-- I used Drizly a couple of days ago to send a bottle of champagne to one of my dear friends who got engaged during this time of quarantine, which is bonkers. And he was complaining-- she and her fiancee were complaining that they didn't have any alcohol left, as they had been drinking every day. So it was a very welcome treat. I do have to say, it was actually reasonably priced. And the delivery fee was quite low. So I tried to tip extra.

What is the rev breakdown, with the drivers, with the liquor stores, with Drizly as a whole? And do you feel as though this does enough momentum and growth to really keep these liquor stores open on the other side of this pandemic?

CORY RELLAS: Well, thank you for tipping extra for the delivery driver. I think that's a PSA message that I'd like to get out more broadly. So to speak about the model, and I that'll get into the fees a little bit, we are we bring liquor stores online. And we allow consumers to shop across the different shelves, comparison pricing, access a larger selection than any one store, and then with the convenience of delivery on the other side.

So there's no markup on the bottle itself. You're seeing the price of the bottle within the store. And then post that, there is usually a $4.99 delivery fee, which then goes to the store to pay for the cost of the delivery. The tip is up to you as to what you would like to provide for the delivery folks themselves.

So there's not a built in margin into the supply chain. It's more about enabling liquor stores to come online, accessing consumers where they are, and providing a platform to do something that they really haven't done prior. Alcohol e-commerce is only 2% online coming into this crisis. And I think what we're going to see going forward is, can off premise e-commerce keep these doors open long enough to return to some sort of new normal on the other side?

We feel confident about it. Our numbers are supporting them. And at the same time, it's really going to come down to each store and how they embrace this moment.

- I've got to confess, I recently used Drizly for my wife and I, our anniversary, to get champagne, and some whiskey on the side. I got to ask-- you know, we're talking about the cut it usually takes. Is it just a $4.99? Or is there something else in there? It's similar it's with Seamless, where there's been push back from certain restaurants about the fee structure?

CORY RELLAS: Yes, so the $4.99 goes directly to the liquor store. And Daniel, don't feel like you must confess anything. I think all of us having access to a liquor store come to us is a good thing in a time like this. Where we make money is a software fee at the end of each month. So it almost looks more like a SaaS based platform, less than 10%.

And so really, knowing the margin of a liquor store, trying to enable them for success, is what we're about. Because if they don't succeed, then Drizly can't succeed. And that's really where the fees are what they are, and trying to just bring their shelves online.

ADAM SHAPIRO: It's Adam Shapiro. I was just curious-- we're more red wine than anything else. Different parts of the country, what's the demand? What are people drinking?

CORY RELLAS: Yeah, I think it's changed. And this is fascinating. You're going to see the personality of cities in the data. As we started to go into this moment, there is a lot of stocking up. And I think you saw a broad breadth of products being purchased. As it's sort of leveled out, and we've kind of become accustomed to shopping from home, you're seeing more of the macro red wines. You're seeing rosé. And then I also think you're seeing craft beer. A lot of IPAs and easier drinking beers really take share in the coming-- I'm sorry, in the past days.

But overall, haven't seen too much of the mix shift versus what had been previously purchased before the crisis.

JULIE HYMAN: Cory, what happens when we're done with this, and people venture back out to their stores? I mean, obviously, that's going to create a certain lumpiness in your revenues. So from an operating perspective, how are you thinking, as much as any of us can, being this current period and what that's going to mean for business?

CORY RELLAS: Yeah, it's a tough one. And I think we're trying to provide the-- have the intellectual humility to say we don't know what's going to happen. Therefore, we need to be flexible on the other side. I think one thing is for sure-- awareness for the legality of alcohol e-commerce has grown. Awareness or Drizly, the platform, and why it is potentially opening up avenues that you couldn't do within a liquor store has grown.

So I think there's a new normal there. What that new normal is, we're not quite sure. And at the same time, the technology is incredibly flexible to provide the experience for a consumer that wants something off premise delivered, or as they walk back into the store, to be used as a tool to help them shop more effectively.

- Cory, I have to ask, are you at all concerned-- you know, we're-- you're seeing the sort of surge during a health crisis. Are you afraid that you're contributing to additional sorts of health crises as people are drinking more alcohol, perhaps more calories in a day, and then, of course, those liver concerns?

CORY RELLAS: It's the right question, and I can you one we're talking about intently internally. And so this is alcohol awareness month. And so while we are providing a consumer good that is in demand, I think that needs to come with awareness. I think that needs to come with education, and some messaging on our side to imbibe healthily, and to think about how this can complement the good times in your life and bring this to the social aspect, when were largely distanced from each other, rather than something as a coping mechanism.

So while we can enforce that, largely how we want to portray our brand and help people through this time is much more one of social and celebration, and being there for the moments that matter.

JULIE HYMAN: Cory, thanks for your time. Be well. Cory Rellas is the co-founder and CEO of Drizly.