Welcome Guest

Home Magazine December 2013 Online Liquor Retailing is a Business With a Twist

Online Liquor Retailing is a Business With a Twist

If you are looking for a scalable online business idea, consider online liquor retail. It has been pegged as the next big thing by budding entrepreneurs as well as by established liquor shop owners.

BY Chhavi Bakaria | COMMENTS ( 0 ) |

A burgeoning working class having busy schedules but a high disposable income are the target customers of this segment. Another key driver is the growing number of women drinkers, who are uncomfortable to shop liquor from the often dim-lit and overcrowded stores. Moreover, a new breed of globetrotters with a taste for imported wines and spirits, which are not easily available at local stores, is fuelling the trend.


The Model of a Service Provider

Dhruv Khandelwal, Business Head, LetsBuyDrink.com, recalls, “It was a lazy Sunday afternoon in July last year. A bunch of friends were sitting together at my place and we ran out of beer, but nobody felt like going out to buy it. That is when the idea of an online liquor portal occurred to us.”


LetsBuyDrink.com was officially launched in April this year with a seed investment of Rs 10 lakh (borne out of personal savings). Later Rs 10 lakh (from friends and family) were also invested in the venture.


It currently caters to liquor buffs in Delhi, Gurgaon, Faridabad and Mumbai. The website operates on a unique business model more as a service provider that lists the liquor inventory and books the orders.


After the order is placed, it checks with partner retailers for the availability and it then allocates the order to the retailers for delivery. It beats both licensing and delivery hurdles through this model.


“We partner with the licensed retailers in a particular city. We have a small commission system in which for whatever order we give to them for delivery, we get a percentage of profit from them. This kind of a business model or website is not there anywhere in India. It is a win-win situation for both,” says Khadelwal.


As of now, an order is usually delivered within two hours, however, the last order is taken between 7:30 pm and 8:00 pm, and anything later than this is kept for next day delivery. LetsBuyDrink.com has a tie-up with more than 50 top licensed retailers in Delhi and about 30 licensed retailers in Mumbai.


He says, “The biggest challenge for us was to convince the retailers that it was a very good model and it would be successful and become the next big thing in the dotcom industry. We are currently creating a business plan to be pitched to the investors. We need the funding to improve our delivery model.”


The minimum order on the website is priced at Rs 1,000 and goes up to Rs 5,00,000 for premium brands. The company has registered brisk sales in the Diwali season by booking over 150 orders in just one month. With the wedding season in full swing, they are also receiving bulk orders for parties and marriages.


As a Strategic Expansion for Brick and Mortar

Madhuloka Liquor Boutique is a leading chain of modish liquor stores in Bangalore. Keeping in view the activity in the e-commerce space, it forayed into the online space with Madhuloka.com, last year.

Shivalingegowda Lokesh, Managing Director, Madhuloka Liquor Boutique, says, “The online retail contributes nearly 10 per cent to our total sales. We expanded online to cater to the customers who do not have time to visit stores due to their busy schedules. In addition to this, e-commerce is emerging as the new way of trade.”


Madhuloka Liquor Boutique has 17 outlets in Bangalore. It delivers orders placed online within a range of three to four kilometres of these outlets.


Likewise, Chandreshwar Wines in Mumbai has been in the business of liquor retail for nearly 22 years now. In 2011, it started with WineBazaar.in. “A brick and mortar store gives the visibility only in a particular area, whereas the online platform provides a reach to a larger audience. Also, out of over 500 shops in Mumbai, a mere 30 to 40 shops stock imported spirits. There is a demand for imported wines and spirits, so through our website we list all imported stuff that we stock,” says Sagar Shetty, owner, WineBazaar.in.


WineBazaar.in operates in Mumbai, New Mumbai and Thane. It usually delivers the product within 24 hours. It offers cash-on-delivery, but not an integrated payment gateway. It takes up gifting orders through the RTGS transfer. Nearly 8 to 10 per cent of its sales come from the online portal.


Through the portal, Shetty is looking to offer good discounts and deals in future. He says, “We want to expand our base further, but the biggest problem would be the delivery. No logistics company procures alcohol as a shipment.”


The Challenges of a Highly Regulated Market
“The current legislation caters only to the offline model of sales and the license parameters cover only such requirements. Unfortunately, the laws in India are slightly archaic in nature. Ideally, a licensing mechanism that permits retailers to open online stores and a registration of such domains with the authorities would probably strike a good balance of control and modern approach to undertaking business in India,” says Ramya Sridhar, Attorney, NovoJuris.*


There is also an age-limit for drinking that ranges from 21 to 25 years in different states.


The websites try to maintain the age limit checks by demanding a scanned copy of a photo identity proof during online registration.


Investors’ Outlook

The liquor industry in India is estimated to be between Rs 80,000 ($12.9 billion) and 1, 00,000 crore ($16.2 billion).


In addition to this, according to a study by the Internet & Mobile Association of India and KPMG, Indian e-commerce grew to $9.5 billion in 2012 (including online travel bookings) and is projected to reach to $12.6 billion in 2013.


Currently, around 11 per cent of the country’s population uses the Internet and that number is set to grow thanks to an increasing Internet penetration, growing Smartphone users and rising appetite for online shopping among consumers in Tier-II and III cities.


Thus, the prospects for the online format for the liquor industry look rosy. Rajesh Sawhney, Founder, GSF Accelerator, says, “This is a good development. It is certainly a scalable business even though there are significant regulatory and distribution hurdles. Consumer aspirations are rising. Online retailing could offer tremendous value of convenience and choice to consumers. We would look at investing in this segment provided the business model is differentiated, backed by a talented team.”


“E-commerce businesses can only be viable at scale, especially for investors to get good returns. To build a sizable business in the liquor category may take five to seven years. Investors will need to be patient here. It will also be a capital intensive business,” he concludes.

Related Articles

10 Lessons Arvind Kejriwal Teaches Entrepreneurs

BY Editorial Team

Aam Aadmi Party has made a dream debut at the Delhi Vidhan Sabha elections. What lessons can entrepreneurs learn from the success ...

Creating Young Role Models in Entrepreneurship

BY Sandeep Soni

The youth of today’s India is building enterprises on its own. Recognising this, in their quest to create entrepreneurial role mo...

Leather Industry Back on Track

BY Sandeep Soni

With the exports of leather and leather products expected to reach $5.75 billion in FY 2014, the Indian leather sector is hoping t...

From Growth to Near IPO

BY Sandeep Soni

Started around 15 years ago as a one man show, Matrimony.com today enjoys a 60 per cent of the Rs 400 crore online matrimony space...

“BMB is About Fulfilling a Need”

BY Chhavi Bakaria

The recently set-up Bhartiya Mahila Bank (BMB) has received flak for being a mere populist measure. Usha Ananthasubramanian, Chair...

How SMEs Can Overcome the Data Security Challenge

BY Manish Arora

Information technology adoption helps SMEs improve efficiency, connect with new customers and markets and compete with big players...

Tata Docomo to Focus on Managed Services for SMEs

BY Manish Arora

Tata Docomo, the unified telecom brand of Tata Teleservices, has set itself an ambitious target of 20 per cent revenue growth from...

5 Ways to Manage Operations Effectively

BY Think Tanks

The SME sector forms a strong foundation of Indian manufacturing and service sector. According to recent studies, it contributes...

4 Ways to Effectively Use An Executive Assistant

BY Think Tanks

An Executive assistant (EA) is a more evolved role of a personal secretary. A personal secretary earlier used to arrange appointme...

5 Tips to Manage HR Consultants Effectively

BY Think Tanks

For SMEs in India, the choice of deploying an HR consultancy perhaps represents one of the most important challenges for their bus...

Growing With MSMEs

BY Sandeep Soni

Shriram City Union Finance (Shriram City) positions itself as a premier lender to India’s MSMEs. Today, the company has over half ...

The More the Merrier

BY Sandeep Soni

It has been only a year since crowdfunding started in India but it has already turned many heads. As a model to raise finance, cro...

A New Frontier for Science & Enterprise

BY Dr Manisha Acharya

Bio-entrepreneurship is increasingly being viewed as a lucrative career path within the scientific field. The number of bio-entrep...

Please add your comment

Not readable? Change text.
Enter the characters as seen on the image (case insensitive)
  Notify me of followup comments via e-mail   Subscribe for daily newsletter