What's Trending— ReserveBar CEO Derek Correia on Unlocking E-commerce

E-commerce in beverage alcohol has historically lagged behind traditional CPG sectors, but thanks to the pandemic and the gradual loosening DTC shipping laws,  we're seeing this channel assume a meaningful share of alcohol sales for the first time. 

In this episode, the Park Street Insider Podcast welcomes ReserveBar CEO, Derek Correia. He and Emily Pennington evaluate how bev-alc e-commerce has progressed to where it is today, how ReserveBar was able to scale its business to sit at the center of online bev-alc sales, and how brands can build e-commerce into their strategy. They also explore key insights regarding how consumers behave online and the spirits categories/price tiers that are currently trending. 

Key topics mentioned:  

• What will the future of bev-alc e-commerce look like? 

Millennial and Gen-Z consumers have an increasing interest in buying alcohol online. Correia posits the concept of "e-commerce everywhere" and offers a profile of how the modern shopper behaves. Doing an on-site brand activation? Derek sees a world where the time between a consumer trying a product and subsequently purchasing it online shrinks to a matter of seconds. He and Emily discuss how e-commerce is set to influence industry dynamics down the road. 

• What does Uber dissolving Drizly mean for bev-alc e-commerce? 

With Uber shutting down Drizly at the beginning of 2024,  questions were raised about what the future of the sector would look like. Correia offers his thoughts on how this move alters the bev-alc e-commerce landscape. ReserveBar is attempting to fill the void for brands whose money was tied to the known depletions of Drizly. "Brands don't enjoy the same ability to influence purchase in that last mile digitally as all other CPG does, so platforms like ours have become very important"

• What strategies can brands use to implement e-commerce capabilities? 

Correia gives his best practices for using an online presence to leverage sales. He emphasizes the importance of building out a frictionless path to purchase across all online consumer touchpoints. He also offers his take on the mistakes he sees brands making when constructing their e-commerce presence. 

In this episode you'll hear from:

Derek Correia, CEO, ReserveBar

 
Mentioned in this episode:

ReserveBar
Minibar Delivery
GetStocked

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Transcript

Emily:
All right, Derek. Welcome to the Park Street Insider podcast. We're happy to have you. 

Derek:
I'm happy to be here. Thanks, Emily.

Emily:
We'll kick off our discussion today as I kind  want to set the stage So that if someone isn't familiar with reserve bar or e commerce in general, let's get like the description of Reserve bars capabilities and geographic spread right off the top,  of course, so reserve bar dot com.

Derek:
If you're not familiar with it, it's essentially a beverage alcohol marketplace platform. You can come there, search and find quality spirits, wine, champagne. It's a curated site. So we have about 5000 products on there and we do that curation. So that tends to be super premium luxury products. A lot of great quality spirits.

Bourbons and scotches and any how tequilas and champagne and wine. We do a lot of gifting business. The site lends itself to sending people gifts, which is somewhat complex to do because of the regulations and so forth. So we simplify that. We make it easy for you to pick a nice bottle, send it to somebody.

.And then we also own and operate mini bar delivery, which is more akin to drizzly. That's sort of like your everyday platform for getting just about any wine, beer or spirit delivered to you in about an hour or in a 50 plus markets doing that.

But the real exciting part of our business sort of isn't, you can't just go to a website and check it out because it's. Proliferating to hundreds of different websites. And that's what we call our power by commerce solutions. So we're really trying to become essentially the Intel inside, if you will, of for every logical moment where somebody could purchase alcohol and it's difficult for people to build all of the infrastructure that we've built.

Emily:
Okay. So before we sort of get into the business and the bigger insights into e commerce, like tell us a little bit about your own professional background and experience and how you ended up at ReserveBar.

Derek:
Yeah, so I started out my career on the agency side and I quickly moved to the brand side working for PepsiCo and at the time it was the pizza business. So they own the beverage side of the business, Frito Lay. They also own Pizza Hut, Taco Bell, KFC and other restaurants.

But some great people worked with some amazing folks. I then went over to Burger King, where I was a vice president of product marketing and innovation. And the funny thing is Burger King at the time was actually owned by Diageo, which doesn't quite seem strategic.

So while I was there, I did learn the Diageo way of brand building. I'd learned a lot about beverage alcohol brands, even though I wasn't working on them.  Later on, I was a CMO of a couple of different industries, as different as professional tooth whitening.

And travel and leisure as a CMO of a cruise business called Renaissance Cruises. And that later morphed into a Oceana, which is a very nice cruise line. After that, I went back to the agency side. I ran an agency for about 11 years.

And when I sold my interest in that, I took a little time off and I was trying to start. Businesses that matter and I, I launched a business with a friend called role model mentors, which was actually trying to productize near peer mentorship. I was in an office that was actually reserved bars office. Because, uh, Lindsay held the founder. Two of his daughters were mentors in, uh, in role model mentors. And we met as a result of that and he liked it so much, he had some extra space and the business was a fopsy, a for profit social enterprise.

He loved what we were doing. So now you can use the space. I won't charge you.  So that was quite the nice thing to do. So late at night as two struggling entrepreneurs, I would stay a little. Later and try to help him out and, and offer him strategic advice since I wasn't paying rent.  And, uh, one thing led to another and eventually he said, you know what? I could really use you over here if I should come over and join me. And that's how it all began.

Emily:

You joined like There was like a perfect microcosm of what's been happening over the long run is we've seen e commerce get a little bit more and more attraction every year.

And then, like you said, it went up to 10 during the pandemic. And then now that the pandemic's over, we're seeing a sort of like a moderation or slowdown. So can you, can you expound a little bit more on what that experience has been like for you so far and what you've seen? 

Derek:
Yeah. Well, I mean, initially it was overwhelming.

Nothing we didn't have. A team that was ready for that kind of explosive growth. We didn't have technology that was ready for that kind of explosive growth. And it was during a time where people on the brand side and marketers and advertisers, maybe some companies were sort of just starting to spin up some e commerce expertise.

Others hadn't even gotten there yet. And all of a sudden. E commerce was everything, right? It wasn't even just that it kind of took over off premise, but the entire on premise business was shut down. So there was just so much dislocation from normal all happening at the same time and on the consumer side of things, adoption or even awareness.

Pre pandemic of e commerce for Bevalk was very limited, right? So that that accelerated as well. And yet I would say even today, I do still think it's in its infancy. I think the majority of people probably still don't really think about e commerce when it comes to alcohol. And one of the reasons for that is it's not on a lot of, you know, Amazon doesn't,  you can't buy alcohol from Amazon, right?

So if, if you can't do it on Amazon, is it even e commerce? Well, of course, of course it is. So yeah, it's definitely cooled off, right? So it was this meteoric rise when the restaurants and bars opened back up. You had a double whammy for e commerce. You had consumers now all this pent up demand to go back out to restaurants and bars and so forth.

So there was fewer at home occasions to service. And then on the brand side of things, we rely a lot on the brands to send traffic to these sites and inspire people with their brand marketing to then come to a site like reserve bar to buy. And a lot of that marketing spend had to go back to support the on premise business again, right?

So you had both of these dynamics happening at the same time, and that's why you had, you know, a fairly significant cool down on e commerce, starting in 22 and persisting into 2023.

Emily:
Let's talk about kind of the change afterwards. And I know you just said that that site has been your focus, but what else has changed post COVID and the way that you're
operating?

Derek:
Yeah. So first of all, one thing that's changed is that there's a lot more awareness on the business side of this industry around e commerce and it's evolved early on.

It was a bit frustrating because people would think about e commerce and they thought of it as a channel and like, okay, we see like e commerce is now 4 percent of business. It's a very small channel. And as a result, it captured a small amount of of attention and budgets, right? But I think the sophistication around e commerce has grown significantly and now brands are realizing, Hey, this isn't just about the depletions that you drive through e commerce.

It's about  Insights and information. It's about more efficient ways to launch products than the way we've been doing it for 50 years. It's about unleashing very efficient, targeted digital communications that are oftentimes more measurable and more efficient than big, splashy brand campaigns that are difficult to really understand what they've done.

It's about consumer insights, either I  Given back to you by a platform by reserve bar or for those brands who are really getting it now and putting commerce on their own website.  They're actually getting PII and they know who their consumer really is. And it's kind of crazy to think about when we talk to young brands and they say, Hey, what's one of the first things that we should be doing?

We have very limited budgets, like help us strategically and aside from doing all the smart things to gain distribution, which is obviously the most important thing as a young brand, but we always tell them put e commerce on your site. Because even in a month or two, even if you've only sold 200 or 500 bottles, and that's not terribly material to your desired case volumes, you'll know 200 to 500 consumers who bought your product.

You'll actually know who they are. You can actually communicate with them. You can learn from them. You can embrace them and leverage them to be ambassadors for your brand because they're amongst the first ones to discover it. And there's some brands that have been around a hundred years. And they don't know who 500 of their consumers are, right?

That's crazy to think about.

Emily:
Yeah, and that data is so valuable. And I think pre e commerce, you really didn't have a lot of options other than if your distributor would give it to you, or if you would pay thousands of dollars a month to be able to access those at the big data companies. So I agree with you.

I think that has been such a macro change, even. Yeah, even beyond just like the addition of a new channel, but just the insights that you can gain as a small company, it really like lowers the barriers to entry into success. I think so fully agree. And there are two tracks that you mentioned here that I definitely want to go down.

One is for supplier strategy, but I think for now let's stay on sort of like Consumer insights if that's all right with you. I'd be curious to know in your opinion What stage of maturity do you think? We're at for like consumer adoption rate of e commerce of alcohol 

Derek:
Yeah, and if you think about like historic economics type Marketing books or learnings that you'd had, if you studied marketing and you look at adoption curves, right, they tend to, they're slow, then they have a period of hockey stick, typically, then they sort of start to flatten out.

And in most instances, there's the long tail end of that, where actually some of the business erodes, right? I think we had an artificial hockey stick spike that was triggered by COVID. And it was pretty amazing when COVID first happened, there were some states. They shut down everything, right?

Pennsylvania shut down alcohol.  And they pretty quickly were like, that's not actually working out so well. It didn't work out for Prohibition. It's probably not a good idea now. So, when the only way you really could get alcohol for a brief period of time was Through e commerce, right? That wasn't a normal adoption curve.

Like something was dumped on the economy and on people and the behavior change was mandated. And so since it's cooled off from that, if you were to draw like a logarithmic line through it, That that would be the more normal thing to expect going forward. Right? So it's still growing. It's still early. It way lags CPG, like think about all the other stuff you get delivered to your house all the time, right?

People say in, in alcohol, why do you need e comm, right? My products everywhere, my products on every shelf. It's at every C store, comm? Well, Hello, most of the stuff that you get on Amazon is also at your local grocery store or C store. And yet they're running 50, 000 trucks driving stuff around every day.

So it's got a ways to go to catch up to CPG. It has a lot of aspects to it that should make it catch up. Regulatory is not one of them that makes it difficult, right? But these are big, bulky products that they're kind of annoying to go to the store and buy. Retail experience oftentimes isn't great. It's either the staff is either not knowledgeable and not helpful or annoyingly knowledgeable and intimidating  when you're trying to just pick a cabernet to bring to somebody's house for dinner.

So I think it's early. We have great expectations, and the more friction we can eliminate between the logical moment when purchasing alcohol on your phone makes sense, the more people will do.  I think.

Emily:
The general assumption and things that I've seen in IWSR is that e commerce customers tend to be a little higher income, a little younger.

Does that track with the reserve bar consumer? Are there any other common traits that you see? From e commerce loyalist. 

Derek:
Yeah, well, certainly reserve bar skews older and more affluent because by its nature and what we curate, right?  We like to think of the business more along the lines of occasions necessarily than demos.

And so if you think about occasions, if you live in an urban area.  And you live in a small apartment, you don't have a wine cellar, you don't have space to have a lot of bottles of things right at the cost per square foot in New York City and San Francisco and Chicago. So there's an occasion there where ordering it, getting it brought to you by a DSP like DoorDash or Uber  Eats or a local liquor store.

Driver or courier bringing it to you. That just makes sense. That's the same way you get everything. That's the way you get food. That's the way you get your groceries from stop and shop or quote, right? So, so those kinds of occasions, e commerce makes a lot of sense, just like it does for so many other things.

Then you've got these occasions. All totally different than that gift giving like go try to go to a liquor store and send somebody a bottle in another state for their birthday. You can't do it. You go to the post office. They're like, what's in there? Liquor. Oh, you can't ship that. Then you try to go somewhere.

No, you can't ship that across state lines. So that's an unlock. On quite frankly, when you think about the kind of gifts that people send each other, I'll bet you most people listening. If they think about the last three gifts, somebody sent them, they'd probably have rather gotten a nice bottle of bourbon or, uh, or a nice bottle of wine.

Right? So you got stuff like that. You've got people who collect, you've got people who are always in search of something that may not be in the product assortment at their local liquor store that may only have 800. Skews in their assortment, right? And there's 50, 000 out there. So I think e commerce, when you start to think about it on what's the use case, what's the occasion that we're serving, the people who have those occasions are easy to understand in terms of who you're trying to reach. 

If it makes sense to think of it in terms of occasions and not consumers, is it still a value to ask something like, do you track first time orders versus repeat customers and which one do you have more of like consumer behavior? I guess, is that still valuable? I had to,  yeah, for sure.

Generally, when you're talking about a platform like reserve bar or mini bar delivery as a business, the most expensive thing that you have on your P and L is the cost of acquiring new customers. You have to get a first order from somebody to have hopes of getting a second and subsequent order. And it's those subsequent orders that you start making money on.

Cause generally you're upside down on the first purchase. Now reserve bar happens to be. Quite a bit better because our average order volumes are way higher, right? Like our cards are around 145 on average. So when you have a bigger cart, you have a greater penny profit contribution from that order. And if you can acquire those customers efficiently, that's a good business.

Mini bar, of course, is a lower Because it's more of an everyday occasion. That's more like a 60 cart, let's say so that there you're relying on that person saying, Hey, this site is convenient. They give me an easy ordering experience. They have the products I want. They get it here on time and they're going to start using you and you're going to get much more frequency out of those everyday occasions too.

Right? Like if you use reserve bar for gifting, and that's the way you think of us, and maybe you discover, you know what? I see this. I want to try this new gen that I just found out about. And then you order it for yourself. But those kinds of occasions are not the same as the everyday consumption occasion that many bars services.

So our order frequencies are lower on reserve bar for that reason. It makes sense. 

Emily:
Interesting. Okay. So, so if they sort of have different occasions, different products and different price points, do you sort of like cross market between them? Right? Because in theory, you're ordering from minibar for, for one need and maybe reserve bar for a different need.

Derek:
Yeah, that's a good observation, Emily. We do that in particular. So on minibar, you're accessing the same retailers, the same product assortment and the same prices generally as on because the prices come from the retailer.

We don't get to decide prices. So our minibar, you could essentially buy anything that's on reserve bar on minibar, but the inverse is not true. Like minibar has probably 50, 000 skews in it and reserve bar I've mentioned has about 5, 000, right? So we do let people know who are reserve bar customers. Hey, if you want a broader selection of products, if you want to order kind of everyday stuff for one hour delivery, download the minibar app because you're right.

It is as we were just talking about a different occasion and more often we would benefit from that app. Yeah. Being downloaded and that person sort of using mini bar is the way they order alcohol all the time. 

Emily:
Okay, and while we're already on the topic of sort of comparing platforms, what do you think about Uber eats kind of dissolving drizzly as a standalone platform and absorbing it into Uber eats?

Does that affect your business at all?

Derek:
No, it does. I mean,  we suspected that the original strategy of Uber Eats acquiring drizzly was to integrate them. And there's a logic and having one app that enables you to order food, groceries, get your laundry done.

And of course, alcohol belongs in there. So it wasn't surprising that they did it.  It was surprising. They hadn't done it sooner. And then when they did announce that, that they were just shutting it down. It certainly was surprising. That's the way that they did it. And I think what they underestimated was the Uber Eats shopping journey is built around restaurants.

And that journey starts with picking a restaurant because the restaurant matters. If you want sushi and there's six different sushi places that can get the product to you, you might have a particular place where you like their sushi, or you like one. Places, hamburgers or chicken wings or whatever it is, right?

So the restaurant matters. So you have a restaurant first driven shopping journey  Drizzly has a brand product Category driven shopping journey because what matters most is the products and the brands you don't necessarily care If it's getting brought to your house, whether it comes from retailer a B or C so I  think they were a little bit flummoxed by exactly how do you facilitate that migration of the drizzly customer into the Uber Eats shopping experience?

And so for us, with many by delivery, still offering that category Product brand first shopping journey, facilitating an hour delivery, having a lot of the same markets and reach that drizzly has. If I'm being honest, my struggle with mini bar was how do we differentiate from drizzly? We have the same products.

We offer the same service. They're a bigger brand. They have more app downloads. They're advantaged over us. How do we differentiate with service or whatever. Education and information and shopping experience. And now all of a sudden being just like Drizzly isn't the worst thing to be with Drizzly going out of business.

So that that's sort of what's going on there. 

Emily:
Yeah. Okay. So we're suspecting it will be a boon for minibar.

Derek:
We hope that's the case.

And you got to remember, it's not just the consumers that are displaced, right? However, many people were buying drizzly and all of a sudden it's gone, but there was a lot, there isn't a lot of retail media in our industry because of tied house, it's the brands don't enjoy the same ability to influence purchase in that last mile digitally as all other CPG does.

So companies like us and drizzly and Instacart, we're very important for that. Kind of thing. So with drizzly getting vaporized, there's a lot of brands that are trying to adapt to what do they do now to spend their money that was tied to those known depletions. And so we're trying to step in and help as many brands as we can.

Emily:
Yeah. Oh, yeah, that makes perfect sense. I hadn't thought about that aspect of it either. Okay. So to kind of Close out like this segment here on consumer behavior. I kind of want to get your thoughts on alcohol categories or price tiers that you're seeing drive engagement right now on many bar and reserve bar.

Derek:
Yeah. I mean, everybody knows that tequila came out of nowhere a couple of years ago and was on fire for a while and stayed that way. It's still pretty strong. Everything's coming off of peak. A little bit for the last six to eight months, category tradeouts are happening a little bit. There's the premiumization trend that was sort of locked in year after year.

You could just count on more and more people moving upstream and trying higher marks. That's cooled off. A little bit, which is not surprising. Anytime there's economic headwinds, that that's to be expected. Cognac really seems to be taking it on a chin now a little bit. And from what we understand, that's not even just a us phenomenon, but a global one.

So it'd be interesting to see what happens there. Um, what continues to be on trend is apparently there's still a lot of celebrities left to associate themselves with the alcohol brands and leverage their. Celebrity persona and their reach in the social media outlets to drive those kinds of businesses.

So we continue to see new brands that are associated with celebrities that are good product. Innovation has not really slowed down, and that's an interesting thing because we are in a category where most. Product innovation actually comes from entrepreneurs, not from the suppliers themselves. Right. And so  it's funny.

One of the things and we're not quite seeing this yet, but I would predict that you'll actually see more innovation because what happens is when the economy gets slowed down and people get bumped out of jobs. Not everybody then gets another job that actually births a lot of entrepreneurs out of necessity or out of a pause of working all the time.

And all of a sudden, okay, I got let go. What do I want to do with my life? And that's when you see a lot of people going into incubating new businesses, and it should be no different when it comes to spirits. 

Emily:
But do you find going back to categories, it sounds like this is the case, but do you find that in general retail trends are sort of mirrored on your platform?

And are there any big differences that you see that that stand out that do not mirror the general category trends?

Derek:
That's a really good question. I think  generally they do, but I don't, it's kind of interesting. The term mirror is an interesting one. Cause that's like a logical way of thinking about it. I think sometimes in some instances, we're usually a little bit out in front of what's happening, things happen.

A little bit earlier, certainly launching products now in the digital e commerce age is a completely different ballgame, right? You can get, uh, you know, if you think about a state like California, which is such an important state for any new brand in this industry in the old days. When there was an e commerce, you had to get that product.

California is huge. You had to be in hundreds of stores to service the state of California. And now, theoretically, you can get a distributor, get into one store that ships in the state of California, and you're instantly able to get your product to every single person in California. That is. Like a dramatic difference in how you go to market as a new brand or a new company.

So there are things that are slightly different, but in general, when it comes to like categories being up or down and preferences or people making cocktails more, is that slowing down all of those kinds of things are fairly consistent between econ and brick and mortar. 

Emily:
Yeah, definitely useful information.

And that makes sense.  So outside of like category trends, are there any other consumer insights or behaviors that are interesting and changing that you see via reserve bar that the industry might not see sort of just observing from the outside?

Derek:
So that is an interesting thing, right? And when the thing about e commerce is it's different than the way you think about shopping, right?

And in general, it used to be before e commerce, you went shopping. I am going to go shopping. I'm going to go to this store because I'm shopping and I need to buy things that store has, right? That's going shopping today in the digital world. People are just shopping. You're just you're always shopping like you could still go shopping.

You could still go to Nordstrom dot com because you have intention of shopping for clothing or whatever it is. That still happens. But when you're not intentionally shopping, right? You're still shopping when something pops up that's relevant to you that inspires you that that is curious to you or reminds you of something that yeah, you know what?

I need that so you're always shopping. So that's where e commerce is sort of fascinating. And how do we manage that? And where do we put the right message in front of the right person at the right moment when that wasn't necessarily them shopping? But you can deliver, you know, a commercial outcome from doing that.

Emily:
Switching gears a little bit to talk about sort of like how our audience typically is independent, emerging midsize brands. And so we're always looking for tactical advice on how they can succeed and grow their businesses. So I want to switch gears and talk a little bit about some best practices.

Right. And when I think about e commerce. There, there are a lot of different strategies I think that you can use as a brand. And you've mentioned some of these up top, right? It's not just about it being a channel anymore, but you know, you can use e commerce to get insights for data. You can use e commerce as a, or like almost as a way of like marketing and social media, you can use it as a channel.

You can put your entire portfolio on it, or you can just do your LTOs on there. So I think that maybe. A better way to ask it or at least to start off that might be interesting is What are the ways not to use e commerce?  What are the strategies that don't work? And then maybe segue into some of the other options.

Derek:
Yeah, that's, I like that spin. That's really good, Emily. Yeah, so I mean, that would take me right to some of like, the things that are differentiated. From e commerce to traditional marketing, but then even within e commerce, a platform like reserve bar versus say, sending customers to Instacart or door dash or Kroger.com.

So a couple of things that, and again, when you're a hammer, everything looks like a nail, right? So this is all coming from my perspective as a guy that's running an e commerce company. But the first thing I would say is these kinds of retail finders and hey,  At all of these places are using like a Mic Mac to rotate in because you have to have a minimum of three retailers because of Tidehouse isn't a great experience for the consumer, right?

Like it's the paradox of choice. You're not making it easy for me. Now I've got to which one of my now am I going to click and look at a couple of these different places? And by the way, when they click through. To those other places, a lot of times they land in an environment where they're immediately cross sold something else.

You're Jack Daniels, and you sent that traffic, you paid for the marketing, you got an intentioned person,  they picked one of the retailers that you rotated in, and right on the page that they land is you may also like Jim Beam. And maybe it's even got a promo or right. So I think that a better way to do this is to actually use a call to action that we offer, like with reserve bar or minibar, or take them back to your own website for commerce, because you have a preserved journey.

You have less. Decisions to make you have greater trust. You have no cross selling of other things. We will not show anybody on reserve bar another product from another brand until after they've carded the one that they came in on. So. That's, I think, a mistake that some people make, especially when you're a young brand and you have limited dollars, you get somebody to intention.

You want to close that depletion for your bottle. You don't want to be the one that paid to inspire somebody to then buy your competitors products. So, so that's one thing I would say. And if you are doing commerce and you. Are you doing digital commerce, which is smart. What e commerce enables you to do is let's say you, you run a buy and you're running 10 different ads or you're running in a couple of different channels, you're running different creative, you're running different messaging, what e commerce enables you to do is to say, okay, I ran these 10 ads, ad number six, depleted 200 bottles.

The noble add the next ad wasn't even close. It only depleted 37. Let me move all of my media and all of my spending into the one that I know depleted the most bottles, right? I mean, if I have only 10 grand to spend on marketing, that's how I'm going to want to spend it. I'm going to want to learn quickly with the 1st 1000 or 2.

And then make sure the rest of the 8, 000 is spent on the ads that sold the most of my bottle. So I think that's an important thing for young brands and then by all means if you have a buy now button on Social media or advertising that you're doing Please don't take them back to your home page and tell me that.

Oh, well, it's very important I want them to have the whole brand story and take the no they hit the button that said buy now Take them right to the PDP or better yet, take them right to a deep cart link with the product in cart, where now they just have to decide the quantity and check out. So there's all of these little kind of nuanced things that I wish I could evangelize to everybody because there's, it's very tragic when people work so hard. Create a brand and build a flavor profile and whether you're buying juice from MGP or you're a distiller and you get through all the stuff you have to do and you get that product to market, you just can't waste, you can't be wasteful with any of your limited budget. 

Emily:
Okay, those are good insights. What about portfolio offerings. Do you think having your whole portfolio on e commerce makes sense depending upon the size, or you have something that you recommend, like maybe start with one, maybe start with your LTOs.  Or is there any like common wisdom across that? 

Derek:
Yeah. Well, if it depends on what kind of product you are and what you're trying to do, but if you're going to be like, if you're going to have commerce on your site, for instance, to me, there would be no reason to not have all of your expressions and all of your SKUs.

Available there. Now, as far as what you merchandise and what you focus on, what you spend your money on, you know, it's always going to be product. Like if you're a new product, it is news, right? So you're pushing that all the time. But if you're not a new product and you've been around for a while, it is those LTOs.

It is those kinds of line extensions and so forth that tend to do much better. In e commerce than your core product might, but you wouldn't not want your core product to be there as well. Right. And you also do smart things like bundle your core product with the new product and try to move two bottles and get to bigger carts.

So to me, everything belongs in e commerce. Like I said, even if your velocities are not all that much, just getting that data and that insight is, is worth it on its own. 

Emily:
So let's say I am a, I'm a small supplier and my product is on reserve bar. What if I want to get highlighted attention or in some sort of curated list?

Is there anything that I can do on my end when I interact with reserve bar or those types of things outside of a partnership or more like independently curated and.  It's like what the brand want isn't taken into account. 

Derek:
Yeah, well, you know what the brand wants is taken into account when the brand pays.

That is true. I mean, we do create products on, there are products on Reserve Bar that we've curated and put there because they belong there and the brand didn't have anything to do with it. We've decided that they belong in the assortment, but those brands are not. Going to appear like on our homepage and marquees are in touts.

They're not going to be merchandised at the top of collections. They're not going to be in the emails that we send to our consumers and our customers and so forth. Right. So we have a lot of, uh, of a tactical array that's available to brands and depending on their size and their objectives, we can put together a package that's, you know, maximum efficiency on whatever your spend is, you know, if you only have, you know, five to 10, 000.

We'll at least get you a presence.  One of our new product emails, which are usually our best performing emails. People use reserve bar for discovery and exploration and and rely on us to be the one that brings them news around good new products. But we can also do highly targeted things like it. Let's say you're you're a tequila brand and you're really interested in.

Not focused on your blanco. You think your repo and you're an AHO are terrific. And you have a strategy that you really want to conquest. Uh, other Brown spirit drinkers. You don't want to go after tequila drinkers. You think yours is like a serve neat pour that I could snag scotch people and move them over into my product.

Well, we know who the scotch drinkers are. We can focus your database marketing to those people. We can put you. Um, in front of the right kind of buyer, not only from what type of alcohol, but even spend level, you don't just want scotch people. You want people who buy scotches over 100. Yep, we can target those people.

So there's a lot of efficiency and the database we've built of consumers, not with theoretical purchase behavior appended like through a third party, but actual known purchase behavior. 

Emily:
That makes sense. And we're getting pretty close to an hour here. So let's kind of transition to and let's close out on what the future looks like for ReserveBAR and e commerce.

The first stage of that is I want to talk about what are ReserveBAR's priorities for 2024.

Derek:
Yeah. So, I mean, it really boils back down to our vision, which is, you know, we want to power e commerce everywhere. And what that means is facilitating frictionless commerce and having the technology that enables  any, like literally any moment you can think of, Hey, would it make sense for somebody to be able to buy a beverage alcohol product in this instance, in this place, if the answer is yes, we're going to be the ones that have the technology that enable that to happen.

So some of the. Obvious examples of that are on brand sites, right? A brands cannot sell DTC, but they can use our technology to facilitate a DTC like experience where the person can buy, but it's pulled through three tier comes to you from a licensed retailer. The brand sees that transactional information and gets the PII of the consumer.

Another logical example of this is content to commerce. If you look at the most recent whiskey advocate.  drop at the end of last year, the best whiskeys of 2023, instead of those being links that go to places like reserve bar Instacart, you can read that list of top 20 cart two, three, five of them if you want on whiskey advocate and buy them all.

on whiskey advocate without leaving. So we believe that the yesterday model of platforms like reserve bar, which is okay. How do we go out and find people who would likely buy on reserve bar and get them to go to reserve bar to discover carton checkout? Instead is let's bring the discover carton checkout to all of the places in the world where that person already is.

So that's content to commerce, that shoppable video, that's extended shelf for retailers that maybe only have 100 or like, say, 1000 products on their shelves, but we can extend that shelf with another 5, 10, 000 products that are available from our network of retailers. There's all kinds of things you're going to see happening that are enabled by our technology and other places.

And the only way you might even know that we're behind it is when you're checking out, you'll see something down at the bottom and might say, powered by reserve bar or powered by liquid, which is one of our, which is the brand ecosystem for all of our SAS services. And so this is this to us is the future.

And that even includes in real life. Events, right? Like if you're activating a Coachella and you're serving people cocktails two minutes after they tell you that cocktail is terrific They're over at a stage watching another band and the moment is lost. Let them scan a QR code Cart that whole everything they need to make that cocktail and have it sent to their home It'll be there when they get back from Coachella.

So there's There's stuff that people haven't even thought of that we're building our technology to enable. 

Emily:
Yeah. You're getting me excited just as a consumer of alcohol. I'm like, Oh, the possibilities are so exciting,  but this also begs the question. I'm sure that you run into like prohibitive regulations that you would like to be able to do things that you just, you know, can't in the alcohol industry.

So I'm curious, a two part question is one, how do you see regulations changing? In general, around DTC and e commerce, do you see positive progress there? And how does reserve bar approach regulation? Do you do lobbying work or do you just work under the laws that exist? 

Derek:
Yeah, I sure wish that we actually had a budget to be doing lobbying.

We don't. I do attend a lot of the conferences and speak often at these conferences and go out and meet regulators because I want them to understand what we're doing and how we're doing it. I want them to know, like, we're not hiding or trying to circumvent regulations. Every day we intend to have every single thing we do be regulatory compliant.

We have 3, 500 retailers in our network, right? So it's not. It would be unfair to expect us to be the regulator for all of those retailers. They're the license holder. We require them to attest to the contractually that they have a license and that they understand what that license does and doesn't allow them to do.

And they're accountable for that. But I, I do think regulations in general, they certainly got. A lot looser during covid. Some of that has stayed. Some of it's retracted a little bit. I, it varies greatly by states. Some states are extremely hands off. Some states are watching everything and trying to, there's a lot they don't understand.

Like when you are a regulator and you go into a liquor store, you can see it with your own eyes. You see the shelves, you see the employees, you see the cash register, you see people walking in, people walking out. e commerce is mysterious. They don't really understand a lot of times what is happening. And oftentimes they assume bad things are happening when it's not the case.

And in other instances, there are some bad actors in this industry. There are companies story fronts and they're breaking laws left and right. There are companies we've had our IP stolen and companies like stand up a website that looks just like reserve bar taking orders. And it's not even real. They're not breaking.

Any alcohol regulations, they're breaking laws because they don't even send you the bottle. They pop up and collect a hundred grand from some unsuspecting folks and then they're gone. So this industry does need to be regulated. We welcome regulation. We have a lot of thoughts about certain regulations that should be rethought.

We have a lot of thoughts around stuff that, that is friction that regulators have created. That's not. It doesn't achieve anything, right? Those are the ones that we want to go away. The ones that we want are the ones that are important, right? Age verification. Yes, we do. Like that's why we ship with common carriers or DSPs that check IDs at the door before they hand over that product.

So there, there's a lot of regulations that are good. There's a lot that, uh, we'd like them to go away. 

Emily:
Yeah. Okay. So out of pure. Curiosity from my end, are there any trade groups that you align with that, like if you don't have a lobbying budget, are there groups that you're a part of that are sort of on the same mission that Reserve Bar is?

Derek:
First of all, we are active members of DISCUS and DISCUS is a pretty important one. And so we have, we are heard by DISCUS. We attend those meetings. DISCUS is generally pushing for regulations that Don't create friction to buying alcohol, but also make sure that everything's hooky dory, so to speak, like, right?

Like, age verification. We don't want underage drinking. We don't want people who are intoxicated to be served more. We support temperance. And in fact, all of our platforms have non alc and low alc products on them. Right? So we were involved with discus. We're not necessarily part of other trade organizations like napka and so forth.

But we do attend those meetings and I often speak at them and we we spend a lot of money on very good law firms that have the relationships with regulators and prevent us from doing things that we shouldn't be doing. 

Emily:
I have two last questions to close out bar sort of betting big on AI?

Derek:
We are, we have some things like some of what we're doing in powering content to commerce will be AI informed where we can crawl a website and the AI can find all of the shoppable terms. It can find here's 32, 000 things that we know are brands that are in our product catalog.

Here's 48, 000 mentions of a category, like a cocktail that says two ounces of rum, right? Like, We can crawl that and we can turn every time we find the word rum, that is now a hover over that pops up a carousel of rums that you can buy. So that's a pretty cool application of it right now. And one that we've had on the back burner for a while.

And, uh, if somebody steals this, cause they listened to this, so be it because the world needs this. We just haven't got around to building it yet. And that is in the wine industry, there's 10 or so people and entities that. Essentially, drive the entire wine market, right? You've got Robert Parker and James suckling and people like that.

You've got wine enthusiast and wine spectator and food and wine. And what happens is when the pundits or the experts say, hey, this cabernet is a 96, it will immediately cost 100. Right. The market follows the ratings, and you can see how powerful ratings are in both e commerce and in stores, right? Every shelf talker.

It is a rating for the most part. Well, the problem with that  is the best kind of shopping journeys make it easy for a consumer to find value. But how do you find value when?  As soon as something is considered to be really good, it becomes really expensive because of those ratings. And to me, the way you do that is to say, okay, Emily, I don't want you shopping this store and seeing all of the ratings of other people and what they say is good.

We're going to use AI to know what you think is good. Because if I told you this Zinfandel is a 96 and you don't like Zinfandel, there's no such thing as a Zinfandel that's a 96, right? So if we start deconstructing what you prefer from a taste perspective, whether it's specific based on your purchase behavior and how you've rated things, or it's through quizzes or information, like do you like the, do you like the smell of fresh cut grass or not?

Do you like juniper? Do you like, you know, through questionnaires? Then you could shop a store that the ratings were Emily's ratings. We think that Emily thinks that this wine would be a 97, and then you can see, wow, that wine's only 23.  That's going to be a tremendous value, right? So that's the kind of thing that AI can do that would be transformative.

Emily:
Yeah, so having your own taste algorithm, basically. Okay, I like it. I'm on board  All right, derek, thank you so much for indulging we went a little longer than I meant to but I appreciate you letting me Pick your brain and go on tangents So the very last thing I will ask you to close out is if any listeners at home Presumably they're probably suppliers or in the industry if they want to learn more or they want to get in touch with the surf bar Where would you like us to send them?

Derek:
Oh, they can hit me up on LinkedIn. I usually welcome any connection that comes from somebody who's in the industry. I accept you can hit me up direct. You can email me at Derek at reserve bar dot com. And again, I'm always happy to help. And by the way, I did want to mention that. If you are a brand that's owned by a BIPOC owned brand, a female owned brand, a TQ owned brand, a veteran owned brand, essentially anybody who's from a historically marginalized community, we have a program we call the Spirited Change Initiative, and we'll support you with merchandising and presence on Reserve Bar at no cost, as well as whatever advice and consulting we can give you, support with distribution, anything we can do to try to level the playing field for people who are trying to make a run at launching a product, which is hard for anybody to do in this industry, but inappropriately extra hard oftentimes for people from these communities.

Emily:
That's awesome. We love to hear it. Well, Derek, thank you so much for being here today. We appreciate you joining us on the Park Street Insider podcast.

Derek:
Thank you so much for having me, Emily.