By Regina Ye
The COVID-19 pandemic has changed many aspects of our lives. Even with things slowly returning to normal some of these changes are unlikely to be reversed. One of these changes is the way Americans buy alcohol. With the advent of alcohol e-commerce and alcohol delivery now becoming more widely available, a new marketing channel has opened up in the alcohol industry: retail media. Find out how the alcohol industry landscape has changed and how alcohol suppliers are now taking advantage of retail media to boost their online alcohol sales.
The rise of alcohol e-commerce: setting the stage for retail media
During the pandemic, online alcohol sales increased by 262% year-over-year in the United States. This incredible surge has spurred large business acquisitions and endeavors in the food delivery sector. For instance, Uber acquired alcohol delivery startup Drizly for $1.1 billion in early 2021, while Doordash is now allowing customers to buy alcohol directly through its app.
While buying alcohol online isn’t something that all Americans are able to do, it’s becoming a possibility for more of them as states continue to loosen restrictions on alcohol delivery For instance, Iowa is one of the latest states to make such services legal. As a result, the market is projected to boom in the coming years.
In addition to consumers benefiting from the increased convenience of having booze delivered directly to their doorstep, the boom is great news for delivery services, retailers and even restaurants.
Restaurants typically generate up to a quarter of their revenue from alcohol sales, and with many having experienced a surge in delivery orders since the beginning of the pandemic—a surge that shows little sign of trailing off—being able to send out booze along with food to their customers is hugely profitable.
What is retail media and why it will boost online alcohol sales
The list of beneficiaries from the sudden growth in online alcohol sales doesn’t end there. Another area that is set to blow up in tandem with this trend is retail media. For those of you who’ve never heard this term before, retail media is the advertising you see within retailer’s websites and apps. Usually the brand whose ads you see is one that you’d be able to purchase through the site or app, and the chief advantage of advertising in this way is that it’s a virtual certainty that anyone using that site will be interested in the product.
For example, if you went to the website of an alcohol retailer you’d see digital display ads for a certain brand of whisky or tequila rather than ads for unrelated products, such as furniture or shoes. In a world where third-party cookies won’t be permitted after 2023, it’s a different, and some may even argue better, way of targeting your advertising efforts.
Retail media is playing an increasingly central role in the advertising strategy of alcohol brands. With alcohol advertising expecting to reach the $6bn mark in 2023, brands that don’t have their retail media plans in place could end up wasting their money and losing out to competitors.
Standing out in a crowded marketplace
Around half of all alcohol sold online is wine. Within an online wine marketplace, product listings will all look fairly similar so it can be difficult for brands to stand out from the rest. However, by implementing a retail media strategy they can secure a prime position on the website with a banner ad or perhaps a sponsored listing. This gives them a point of differentiation and allows them to stand out, ensuring they can reach their target consumer with their own messaging. It’s a bit like having an endcap display in a brick-and-mortar store, but in the virtual realm.
Brands need to ensure that they are connecting with high intent consumers, and with e-commerce booming, retail media makes a great deal of sense to make that happen. Brands are much more likely to focus on working with retailers that support retail media versus those that don’t, so it’s also important for retailers to get onboard with this trend.
The benefits of retail media
The retailer is in a position to benefit from supporting retail media as they can be certain that alcohol brands will recognize the value of the digital real estate on offer and pay an appropriate amount for it. By opening up access to this advertising space on an auction basis, the retailer can get the best possible price. As online alcohol sales grow, so will advertising revenues.
And it’s not just the alcohol industry that can benefit from retail media. Just about every online retailer or marketplace could look to introduce sponsored listings as a way to counter the expected loss in ad revenues the demise of the third-party cookie will bring—up to 70% in some industry sectors. It’s something that has the potential to improve the online experience for consumers, brands, retailers and publishers.
Because of the nature of the product, alcohol advertising must be approached with care. Laws about purchase, consumption and marketing vary from state to state, so alcohol brands should refer to each states regulations before moving forward with their advertising plan.
Retail Media Wrapped Up
By leveraging retail media, alcohol brands can ensure they’re reaching the right audience—people who are both interested in purchasing alcohol and are legally entitled to do so—and maximize their chances of increasing sales. Once you’ve ran your retail media promotions, you’ll want to make sure that your ads are working. To do this, you’ll need to measure your sales lift. Learn how to calculate your sales lift and measure the effectiveness of your retail media promotions here.
About the author
Topsort CEO and Co-Founder Regina Ye is a GenZ entrepreneur and former small vendor. In college, she founded the beauty brand Zirui and spent many tireless nights trying to understand Facebook and Amazon Ads. Today, she brings her on-the-ground retail experience to adtech startup Topsort, with her sights set on demystifying the advertising industry for all.