In Sarah J. Maas’ “Throne of Glass” young adult novel series, Aelin Galathynius has the ability to shift between her Fae form and her human form. When in her Fae form, she is extremely powerful.

In a similar, but less magical fashion, the eCommerce market has recently experienced a shift to meet consumer expectations.

Justin Dean, chief technology officer at DRINKS, details how the eCommerce market has evolved in recent years.

“The alcohol eCommerce market has been slow to change, but it’s finally catching up to modern retail practices and consumer expectations,” Dean says. “The pandemic has accelerated a major shift toward online sales and direct-to-consumer (DTC) relationships. Our survey reveals that, while 66% of consumers haven’t changed their online purchasing habits, 16% are buying online compared to last year, indicating a gradual shift toward eCommerce in the alcohol market.”

The key to this evolution is awareness and accessibility, Dean adds.

“DRINKS, for example, is making it easier for retailers to sell alcohol online, removing barriers to entry,” Dean explains. “This satisfies younger generations, who are much more brand-savvy and expect eCommerce relationship with their favorite products. These younger consumers are more drawn to brand stories and mission-driven products.”

Younger generations expect personalized experiences and direct connections with brands, Dean notes, which is forcing alcohol companies to overhaul their digital and DTC strategies.

“AI’s [artificial intelligence] integration into product recommendations, catalog curation and operational processes has also dramatically changed the industry, enabling personalization at scale and more efficient decision-making,” he says. “This improves brands’ understanding of their customers’ preferences while simultaneously optimizing their operations and product development.”

eCommerce will only further integrate with the alcohol industry, Dean adds, becoming as vital as it is in other retail sectors.

“This shift will enable rapid product innovation, allowing brands to test new offerings quickly and gather immediate feedback,” he says. “The ability to innovate faster and build direct customer relationships set to transform the traditional alcohol distribution model, potentially reshaping the entire industry from production to final sale.”

Alan Wizemann, chief digital officer at Southern Glazer’s Wine & Spirits, Miami, Fla., shares similar insights, especially in terms of consumer loyalty.

“We are seeing a much deeper focus on the customer and how their lifecycle, lifetime value and overall understanding of their usage and patterns can be leveraged to drive a deeper loyalty and value,” Wizemann says. “With this move toward hyper personalization, from product recommendation to service, eCommerce has been advancing and getting smarter.”

With the advent of AI, he notes that this trend has been moving at a much faster pace.

“It has allowed for a deeper, personal focus across all touch points for customer, with the ability to speak ‘directly’ to them, in a tone and focus that has pushed the limits of what selling is online, mimicking the in-person approach,” Wizemann states. “This approach has also helped personalize and evolve digital advertising to be more contextually relevant to help increase product adoption, up selling and cross selling.”

Adjusting to a growing market

Given these shifts, consumable brands have had to adjust to the growing eCommerce market.

“Consumable brands have had to pivot quickly to meet the growing eCommerce demand,” DRINKS’ Dean shares. “They’re realizing the importance of direct consumer relationships and first-party data. Many are still catching up, honestly.”

Traditional alcohol brands often don’t have consumers’ email or any sort of direct connection, he explains. Such brands generally do not participate in lifecycle marketing or getting real-time direct response and feedback on products.

“However, we have data indicating that 60% of consumers can be influenced to try a new drink based on a recommendation from someone they trust,” Dean says. “Brands are leveraging this information to reshape their strategies, realizing that fostering a community around their brand can be more effective than traditional marketing approaches.”

He shares that more brands are experimenting with online-first products, especially in the ready-to-drink (RTD) category. eCommerce allows these brands to test new offerings quickly without the risks of full-scale production and distribution, Dean adds.

“There’s also a push toward more personalized experiences,” he says. “Brands are using AI and data to curate product recommendations and create tailored marketing campaigns, aiming to build brand affinity with younger consumers who expect this level of engagement.

“Forward-thinking brands are adapting their supply chains and product development processes to be more agile, leveraging eCommerce data to inform their strategies,” Dean continues. “It’s a big shift from the old model of shipping to distributors and hoping for the best.”

Wizemann of Southern Glazer’s says that, although eCommerce from a consumer and consumer packaged goods (CPG) perspective has been around for decades, it is currently in a phase of a “complete shift” for all other industries to becoming digitally native.

“Over the past decade, propelled by the pandemic, food, beverage and adjacent industries have been pushed to be as digitally native as possible with direct-to-consumer services, deliveries, monthly subscription services and combined fulfillment services,” Wizemann shares. “The goal of all of this has been to make sure to get the consumer what they want, where they want it, when they want it.”

Although alcohol markets have adjusted to eCommerce opportunities, the arena still is contending with limitations.

“There are many companies, start-ups and ‘disrupters’ that are focused on the beverage alcohol industry, more initially propelled by the pandemic, but also driven by the consumer need for the inclusion of beverage alcohol products with food, groceries, etc.,” Wizemann says. “In our industry, there is great complexity due to the regulations and licensing that are needed, as well as the compliance required to be successful.”

Another challenge Wizemann notes is that almost all delivery and alternative fulfillment services aren’t profitable. Adding a hyper-controlled and regulated product into the mix, Wizemann says that profit margins are further eroded.

“Some companies have figured out how to deliver while maintaining compliance with the three-tier system, and some are taking advantage of the fact that the laws and regulations move slow and are based in much older language, so they are racing for scale to then challenge the laws and regulations,” he states. “Another issue is that is similar to CPG eCommerce is supply chain and inventory problems, but for beverage alcohol, these can also be challenging, as some brands and their products are limited from a production and availability standpoint, and those products are usually in high demand.”

DRINKS’ Dean says there is a “big awareness gap” with eCommerce, as many retailers and brands don’t know they can easily sell alcohol online.

“Regulatory concerns are another major hurdle,” he notes. “The three-tier system has been in place since Prohibition, and changing it is like trying to boil the ocean. There’s hesitation about compliance risks, like accidentally selling to minors, navigating complex state-by-state regulations or running afoul of licensing requirements.”

Such concerns can make businesses reluctant to jump in, he adds, causing them to fall behind in the eCommerce world.

“We’re also dealing with outdated supply chain models,” Dean says. “The traditional distribution system isn’t set up for the speed and flexibility eCommerce demands. It limits product innovation and makes it harder to respond to consumer trends.”

Dean lists data as another challenge, because many alcohol brands lack direct consumer relationships and first-party data.

“They’re missing out on valuable insights that could drive product development and marketing strategies,” he says.

Additionally, Dean says that varying alcohol regulations present potential problems.

“Each state, and sometimes, even each county, has its own set of rules about alcohol sales, shipping and distribution,” he explains. “It makes scaling eCommerce operations more challenging than in other industries. You can’t just set up a national online store and start selling everywhere. Instead, you need to navigate a patchwork of regulations, adjust your operations for each market and sometimes even partner with local distributors.

“This complexity adds significant overhead and slows down expansion efforts,” Dean continues. “We’ve built products to seamlessly handle these complexities, and we’re continuing to work to simplify this for the industry, but it’s still a significant limitation for many businesses entering the space.”

Beverages best performing 

As for the beverages that best perform on eCommerce, Southern Glazer’s Wizemann says it can vary based on the market, channel and customer type, as well as the consumption even that the products are being purchased for.

“It would be easy to assume the growth we have seen in the RTD categories or even the lower dollar spirits categories, as consumer buying trends and spend ranges have changed, but it would be misleading,” he says. “If you filter this down more, there are specific categories that outperform online, but are smaller in overall share and revenue (specialty spirits, hard to find allocated products, etc.). The good news is that, with all the growth of these new digital channels, customers can now find almost every product online and this has opened new opportunities for retailers to sell products to a wider audience.”

DRINKS’ Dean feels that the categories that perform best are those that can create engaging online experiences, leverage data for personalization, and adapt quickly to consumer trends.

“The beauty of eCommerce is that it allows for rapid testing and iteration, so we’re constantly seeing new subcategories emerge and thrive,” he explains. “From what we’re seeing, RTD beverages are taking off in the eCommerce space. They’re convenience, appealing to younger consumers, and perfect for online ordering.”

Dean says this trend aligns with the company’s survey data that shows convenience is the biggest driver for online purchases.

“Wine is another strong performer,” he adds. “Based on our data, we found that about 85% of wine purchases are based on the bottle and label, which translates well to online browsing. Our AI recommendation system works great for helping customers discover new wines they’ll love paired with products from their favorite brands.”

Dean has noticed “interesting trends” with mission-driven products, like organic, sustainably produced, or zero-additive alcoholic beverages.

“These niche categories really benefit from the detailed product information and storytelling you can do online,” he concludes.