Though consumption channels are slowly migrating from being store-centric to e-commerce, certain segments face hurdles — both regulatory and logistically — to be sold online. One such segment is the alcohol and spirits market, where companies looking to sell products online must comply with a myriad of federal and state regulations that vary across state lines.
FreightWaves connected with Spirit Hub, a leading alcohol e-commerce company, to understand how it ensures logistics companies are not put at risk by working on a direct-to-consumer (DTC) model.
“Traditional retail in the industry is about having an omni-channel approach to business, where it is local e-commerce and physical retail. You also have aggregators in the market who aggregate retail liquor stores from around the U.S. and outside,” said Michael Weiss, the CEO and founder of Spirit Hub. “We are a blended hybrid, where we are a physical retail liquor licensee and take the risk by purchasing inventory ourselves and are an e-commerce solution exclusively since inception.”
Weiss explained that the DTC model is a constant struggle for organizations as it is ever evolving. In DTC, customers require a certain level of transparency and also expect convenience in getting delivery. When companies take those two elements and tie it to liquor and regulation, they see challenges that look overwhelmingly complex.
“A lot of questions arise. If you require a signature upon delivery, how do you ensure the customer is home? How do you ensure that the product will be delivered within a timely manner in a non-local jurisdiction that is not local to your physical location?” asked Weiss.
“Spirit Hub’s proprietary technology platform allows us to manage our logistics while having customer-engagement tools that help us to remain regulatory compliant and deliver on our promise to our customers,” he said.
Spirit Hub works with the three-tier model for alcohol distribution — manufacturers sell to distributors who sell to retailers. The end consumers buy from the retailers, completing the cycle. Usually, this distribution tier is operated by the state governments or by independent licensed contractors who work under the state’s authority.
“We developed the back-end framework required to deliver across the nation. The products come from the distilleries themselves, where we maintain a relationship with every one of our distillery partners. We ultimately take the product in, as it relates to delivering it to one of our physical locations, where we do warehousing. We then assign distributors or work with various independent distributors to deliver products directly to consumers,” said Weiss.
With sanitation being a significant part of logistics operations since the COVID-19 pandemic, Spirit Hub disinfects all its bottles prior to delivery, while also ensuring the packages are stored in areas accessible to few people.
“We have moved to the work-from-home environment, with all employees, except our retail associates, working remotely now. As an organization, we’ve made modifications and adjustments to ensure employee and customer safety. We have put in place a specialized policy that requires a lengthy amount of paperwork to ensure that everyone is safe,” said Weiss.
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