E-commerce now accounts for roughly 11% of all retail sales in the U.S., according to the Department of Commerce, and is growing at around 13% annually, far ahead of the broader market. In wine and spirits, retailers have joined the e-commerce trend through delivery providers like Instacart and Drizly, and suppliers have gotten in on the action as well, with wineries leveraging direct-to-consumer sales and major players—like Moët Hennessy with its Clos19 site—creating their own digital platforms. Now the wholesale tier is also undertaking bold initiatives to upgrade, streamline, and reinvent operations for the digital age.
“As an industry, we’ve been a little bit behind in terms of using e-commerce technology to service our customers and present our brands,” says Brad Vassar, COO and executive vice president of Southern Glazer’s Wine & Spirits, which is in the midst of an e-commerce push totaling tens of millions of dollars in investments. “This is a matter of us putting platforms in place to meet the necessities of today’s business world.”
Southern Glazer’s isn’t the only wholesaler with ambitious plans for the online space. While the company has opted to build its own e-commerce platform from the ground up, others have aligned with third-party providers to offer online ordering and other digital tools to their customers. And some, like Republic National Distributing Co. (RNDC) and Breakthru Beverage Group, have used elements of both approaches.
“We’re seeing an evolution of the industry,” says Darrell Riekena, chief information officer at RNDC. “Our eRNDC platform will streamline how business is done for our customers, our suppliers, and our own sales team. We plan to roll it out across all our markets very soon.”
Going All In
The genesis of digital transformation at the $19 billion wholesale giant Southern Glazer’s came about two and a half years ago, when CEO Wayne Chaplin assembled the company’s leadership team for a week’s learning session at Harvard Business School. That experience underscored the depth of the challenge facing distributors as they grapple with disruptive new technologies that are rapidly altering the wine and spirits market landscape. “We came to the conclusion that we wanted to lead that change into the future, and we’ve gone all in,” Chaplin says.
The company’s e-commerce effort has multiple components, all grouped under the umbrella of SG Proof. At its heart is a business-to-business (B2B) e-commerce site, which allows customers to browse the Southern Glazer’s portfolio, order products, understand pricing, and manage their account from any device 24 hours a day. That platform initially launched in Indiana, Kentucky, Washington, Florida, Oregon, and South Carolina in May, and is expected to roll out across all of Southern Glazer’s open markets by March 2020. SG Proof’s B2B site features product ratings and reviews from Wine Spectator and Whisky Advocate, customized product recommendations, and food pairings, among other content. “This is about ease of doing business with us so that retailers can operate on their own terms, and do it when it’s most convenient for them,” Chaplin says.
John Wittig, who’s been on the front lines of the e-commerce initiative as Southern Glazer’s chief transformation officer, says the company is initially targeting independent accounts in both the on- and off-premise markets. “We’re focusing on how we can help the independent retailer grow their business through the data we have at our fingertips,” Wittig says. “We can look at a geographic area and show what’s being sold around them, and see if they’re missing anything hot in a particular category.”
On the supplier side, SG Proof allows producers to directly market their brands to retailers and restaurateurs. “It’s a comprehensive platform that allows customers to see brands from all the suppliers that we represent, and it gives suppliers the opportunity to present their brands effectively to more than 300,000 customers,” Vassar says. Suppliers are able to provide brand information, videos, education, and other content as part of SG Proof’s marketing component.
Southern Glazer’s has also deployed a SG Proof Sales platform in partnership with Salesforce.com. “It provides the salesperson with a customer relation management tool on their iPad,” Vassar explains. “When they walk into their account, they can pull up account history, buying history, credit, and brands, and offer analytics that will help their customers make better buying decisions. We’ve already seen a huge benefit to the salespeople who plan out their calls on this platform. Their rate of sales is 50% higher than the account visits that were not planned.”
At RNDC, a recent alliance with San Jose, California-based LibDib has accelerated the distribution behemoth’s e-commerce agenda. Launched in 2017, LibDib is a proprietary web platform that allows on- and off-premise accounts to efficiently purchase boutique wines, craft spirits, and beers through local wholesalers. “The combined force of RNDC and LibDib will offer new, fully three-tier compliant solutions at both ends of the distribution process,” said RNDC president and CEO Tom Cole when announcing the move.
According to Riekena, the LibDib partnership is playing a key part in the rollout of the distributor’s eRNDC e-commerce initiative. “Initially, we started down a path where we were building our own e-commerce platform, including our product catalogue, search functions, a shopping cart, and so on,” he explains. “As an executive team, we got together and asked, ‘How can we go faster?’ That’s how the relationship with LibDib came about. They’ve built a platform that allows the three-tier system to be conducted online. We’ll leverage that technology across our markets, while helping them grow the small brand incubation part of their business.”
Similar to Southern Glazer’s platform, eRNDC encompasses new tools for both suppliers and customers, as well as the distributor’s own sales team. The customer component includes a digital product catalogue and online ordering features, while the supplier portal allows RNDC’s partners to provide product details, bottle images, tasting notes, and other content to present their brands to on- and off-premise operators.
On the sales side, eRNDC will enable the company’s sales team to sharpen its focus on business development and product mix when calling on their accounts by streamlining the ordering process. “The idea is that the transactional part should be more self-service, taking place whenever the customer prefers, not only when their rep is visiting,” Riekena says. “Another benefit is that the customer can go online and do product research and explore an entire portfolio, not just what’s being presented to them. And our sales team will have customer history, ordering patterns, and product info at their fingertips, rather than having to gather all that information themselves.”
RNDC piloted its e-commerce platform in the Georgia market, and is gradually rolling it out across its 23-market footprint. With the recent closure of RNDC’s joint venture agreement with Young’s Market Co. in the western U.S., the eRNDC platform could be launched across those ten markets as well looking ahead. Riekena says the initial customer response has been “tremendous,” adding, “Suppliers are also excited and have been proactive about engaging with us and giving feedback as we continue to expand eRNDC.”
Third-ranked wholesaler Breakthru Beverage has also made a concerted e-commerce push in recent years, including a partnership with SevenFifty, a platform that allows distributors to list and sell their offerings online to retailers, bars, and restaurants.
“SevenFifty has been a key product information partner, helping our associates bring the right information to each sales call and enabling on- and off-premise businesses to make the right purchase decisions,” says Breakthru COO Lloyd Sobel. “To strengthen these relationships, we’ve written algorithms that identify opportunities for our customers based on their previous order history and sales data.”
Breakthru has also forged a partnership with Provi, an online marketplace that Sobel says is an efficient channel for processing orders. “Our focus is on being flexible to serve partners regardless of their preferred channel for ordering product,” Sobel notes. “Provi has been launched in Illinois, Colorado, Maryland, and Tampa, Florida, and the early response has been positive.”
According to Sobel, Breakthru’s digital transformation has been underpinned by its rollout of SAP software across the business, which tracks the distributor’s customer order management and supply chain execution. “Within the next year, our entire footprint will be running on this platform, which will enable financial, supply chain, and operational efficiencies and equip our associates with real-time information to better serve our customers and suppliers,” he says.
Breakthru is also targeting specific segments of the market with new digital tools. One example is its Trident Almanac app, which zeroes in on the distributor’s craft spirits offerings. “Trident Almanac offers rich content on craft spirits and trends in cocktail culture,” says John Oliver, the company’s national trade marketing director for emerging and craft brands. “It also provides in-depth ‘Meet the Maker’ distiller profiles, cocktail recipes, and demonstration videos, as well as the ability to easily search, filter, and share any brand sellsheet within Breakthru’s craft spirits portfolio.”
While the market’s top three distributors are playing a leading role in the e-commerce segment, they’re far from the only ones leveraging opportunities to upgrade and modernize their operations in the digital space. Fedway Associates in New Jersey has launched its own e-commerce platform to streamline the ordering process for its customers; Johnson Brothers has partnered with the B2B e-commerce provider Handshake; and many distributors have aligned with SevenFifty to publish their portfolios online. SevenFifty now counts 1,000 distributors on its platform, including RNDC, Breakthru, Young’s Market Co., Empire Merchants, Martignetti Cos., Winebow, Major Brands, and Opici Family Distributing. SevenFifty says more than 70,000 on- and off-premise buyers are now using the platform. Meanwhile, suppliers like E. & J. Gallo, Constellation Brands, Sazerac, Pacific Highway Wine & Spirits, Hahn Family Wines, and O’Neill Vintners & Distillers have aligned with the company, which allows them to circulate marketing tools and sellsheets to their own teams as well as distributor partners and retailers, while also tracking national wholesaler pricing, among other features.
SevenFifty recently formed a strategic alliance with Beverage Media to create what the companies call “a comprehensive new online marketplace for beverage alcohol in the U.S.” SevenFifty and Beverage Media’s combined marketplaces will contain over 1,000 distributors, 120,000 buyers, and 1 million unique product listings, with expected sales volume for distributors from on- and off-premise retailers approaching $1 billion in 2019.
Building For The Future
Moving forward, wholesalers say they’ll continue to invest in digital transformation across their businesses, with the e-commerce arena growing only more vital as a new generation of customers enters the industry. “Whether it’s a family-run bar, restaurant, or liquor store, often the next generation is coming up through the business, and they’re used to doing everything online,” Riekena notes.
Distributors stress that collaboration will be key, as feedback from both customers and suppliers allows them to fine-tune e-commerce offerings. “We’ve been proactively collaborating with suppliers and customers in our digital development process to ensure we build capabilities that make all parties more effective,” says Breakthru’s Sobel. “It’s founded on an enhanced understanding of our supplier’s target consumer.”
Chaplin of Southern Glazer’s agrees. “Working digitally has become an integral part of everyone’s life,” he says. “This is always going to be a business built on personal interaction, where salespeople go in and talk about new products, merchandise, and educate—but this digital component will make it a lot easier for many of our customers to transact with Southern Glazer’s.”