By Cheryl Durzy - As founder and CEO of LibDib, part of my job is staying on top of our competitive environment. I read a ton and talk to people from both the beverage industry and the technology world. One of the most common questions people ask me is: “Who are LibDib’s competitors?” Given that, I thought I’d take this time to jot down my thoughts on the specific businesses I get asked about the most.
I get asked about Merchant23 most often. While many perceive them as a LibDib competitor, we are pretty different. Merchant23 has an online platform for retailers to submit a purchase request for a product; however, they are not a licensed wholesaler. Merchant23 can gather orders but they still need to clear those orders through a licensed wholesaler (like LibDib). The Merchant23 margin, plus the clearing wholesaler margin, needs to be taken into consideration by wine and spirits producers when considering pricing. In addition, there are the complexities and timing of consolidation, shipping, pricing and compliance. It’s not an easy task and it’s hard to do one case at a time via the Merchant23 model. I caution Makers regarding working with non-licensees. Why? Because it’s YOUR license at risk if things go sideways. As a licensed wholesale alcohol distributor, LibDib handles the order in a 100% compliant manner.
How is LibDib is different from other online ordering platforms like SevenFifty or Provi? Both SevenFifty and Provi are mergers of alcohol wholesalers’ offerings. Their goal is to work with each state’s wholesale “population” and put them all together so buyers go to their single site to order from multiple alcohol wholesalers and producers. Like Merchant23, SevenFifty and Provi are not licensees. They pass along orders to alcohol wholesalers like LibDib. So, LibDib is a potential customer of both platforms (we work with Provi in WI!) LibDib differs from both of them in that we actually provide ALL wine and spirits Makers access to three-tier distribution. (As I mentioned before, LibDib is the licensed entity in the transaction). We purchase from Makers and resell to restaurants and retailers, pay taxes, collect, and report. We ensure the right product gets to the right buyer in a compliant manner via our technology platform.
When I was raising the first financing round for LibDib, a VC I met with asked the question he asks all e-commerce platform start-ups these days: “What’s going to keep Amazon from crushing you?” I was very thankful for that question and the research we put into it so I could answer intelligently. Amazon is putting more investment into their B2B category, so of course we needed to consider it.
However, there are laws in the U.S. that prevent a large organization from owning the entire “chain” of alcohol consumption from producer to consumer. These laws are called Tied House Rules and they were created after Prohibition. The initial application was based on Tied Houses (i.e. Pubs in the UK) being owned by breweries. Overserving of alcohol was common; the more beer sold, the more money made. Lawmakers in the U.S. put rules into place where the tiers (producer, wholesaler, restaurant/retailer) must remain separate. Amazon now has retail stores and Whole Foods, so they are actually a customer of LibDib vs. a competitor.
These three platforms are very different from what we do, and in fact they are actually complimentary to our business. We have all shared ideas about the “endless aisle” at retailers and how our small production products can improve retailers’ offerings. Drizly provides consumers with a platform to order beverages and have them delivered, often within the hour. They spend a lot on building their retailer base and consumer marketing to build awareness. An order is passed to the retailer who then fulfills and delivers. We have had conversations with several of these folks with long term visions about how to service all Makers to have access to retailers, via LibDib. Stay tuned!
Southern Glazer’s Wine & Spirits, RNDC, Young’s Market Company, BreakThru Beverage Group, Johnson Brothers, etc.
Other than RNDC, who is our key strategic partner, and Young’s Market (who is now in a JV with RNDC), all of the above companies are actually our competitors. Why? Because we are all fully licensed liquor distribution companies. There are many more that aren’t listed above and some ask if the market is too crowded. The answer is no.
Each of us specialize in specific markets or in specific types of products. For example, LibDib offers distribution to ANY licensed wine or spirits producers in the states we operate in. This means that any Maker looking for distribution in California, Colorado, New York, or Wisconsin can sign up on LibDib and have access to the marketplace. Other distributors don’t operate this way. They pick and choose the brands that they distribute. That’s what works for their business.
Technology threatening the wholesale alcohol business?
Several of the above mentioned company's have developed online ordering platforms. People ask me if this threatens our business. No, we think it’s exciting!
Using technology to transform our industry is good for all of us. Streamlining B2B transactions will increase efficiency making it easier for Makers/Resellers to do business within the three-tier system. Innovation is key to making this happen.
There is room in the market for all of us to operate. There are thousands of fine wine and liquor producers in the world. Giving small and emerging brands access to markets was the driving force for me to start LibDib and remains my focus as we grow and scale throughout the country.
The adult beverage industry is ripe for innovation and I’m so excited to be a part of this transformation. I have met some of the most amazing and brilliant people (a number of them that started the companies mentioned above.....Taylor!) through this journey.