Covid-19 sped up the alcohol ecommerce trend already growing before 2020, boosting companies like City Hive. This New York-based business provides an all-in-one ecommerce platform for wine and spirit shops. As the pandemic paralyzed America, City Hive helped retailers nationwide digitize their sales and operations.
So what comes next? What happens with alcohol ecommerce as Covid-19 shifts further into the past? For insight into this question — plus a retrospect on 2020 — we recently caught up with Roi Kliper, co-founder and CEO of City Hive.
Beverage Dynamics: Other than Drizly, City Hive was the ecommerce company we heard mentioned the most in 2020.
Roi Kliper: The sentiment is that retailers have been happy across the board. We work for the retailers; we help them generate equity in their business. Normally, alcohol retail generates cash flow as a business. We generate long-term equity in their customer base. Our data-driven approach secures the retailers’ future.
We really do have Drizly to thank for that. Drizly made it very evident to retailers that they need to think about all these things.
I think City Hive has a unique view. We’re not an ecommerce business, we’re a digital platform. We help businesses operate in a highly digitized environment. Commerce is commerce — it’s not ecommerce vs. the physical store.
BD: You don’t think ecommerce is at odds with brick-and-mortar?
RK: Ecommerce is a muscle that makes the overall business stronger. You still have to know and serve the customer effectively in the store. We do a lot for stores in which we work to operate efficiently in-store, online and through mobile.
I think you’re going to see more hybrid environments like that: where a sale starts online and ends up in the store, or starts in the store and ends up online.
We play in that gap between online and in-store. We offer events management. We offer in-store loyalty programs. That translates to sales in-store.
BD: Do you think alcohol ecommerce will decline after Covid-19?
RK: I do not believe so. Ecommerce is value for the customer. And the value for the customer should be better at your store than anywhere else for you to win that customer.
The volumes are growing in customers who expect convenience. It’s about providing the best experience. Independent alcohol retailers can provide that: they offer the convenience, the range in inventory, the personal touch.
BD: That ‘personal touch’ increasingly means collecting and utilizing customer data.
RK: Yes. We touch every point of the transaction: $8 billion of transactions over our platform. (Siloed by each individual store, of course.) We’re able to generate very rich profiles about customer habits, preferences and market trends. We have very good numbers, but we’re still only scratching the surface. There’s a lot more to be done with data.
BD: Like what?
RK: There’s a good understanding in the industry that customer data is important. But the industry doesn’t have a very good understanding about the killer use of that data.
Right now, we see a lot of data pieces out there about trends in the market and food pairings — stuff like that. But as we use data to better understand customer behavior, we’re going to see a lot more of data built into the products themselves.
Data-actions are going to be a big thing in 2021-22. Decision-support engines, decision-making engines, inventory management, pricing engines — all of that will be automated.
BD: You believe automation is a big part of ecommerce after Covid-19?
RK: Automation, machine learning, things like that are opportunity. We’re already doing some of that at City Hive. It’s still observed by humans, but it’s small steps that we are taking. And these are taking margins up, while increasing customer purchases and loyalty.
We’re close to four million customers on our platform. That’s a big number when looking at data at scale.
BD: And yet the point of all this data seems to be a personalized connection with individual customers.
RK: Yes, you’re looking to create that personalized customer relationship.
There’s a tendency with your customer relationships to put them out there for someone else to manage. To blanket social media with brand-awareness campaigns and let somebody else manage their effectiveness. That’s a big mistake. If you’re using a third-party to manage your customer relationships, reality will rear its ugly head.
Customer ownership and the drive to create equity in businesses through customer ownership, those are the number-one things we try to do in our business.
There’s going to be a more personalized relationship with customers moving forwards. There’s going to be a shared custody of customers. Suppliers will engage directly with customers, as will retailers. The key will be who wants to build customer relationships vs. brand awareness. That will be the major change in marketing moving forwards.
This interview was edited and condensed for publication.
Kyle Swartz is editor of Beverage Dynamics magazine. Reach him at firstname.lastname@example.org or on Twitter @kswartzz. Read his recent piece How Greens Farms Became the Go-to for Whiskey Picks in Connecticut.