Merchant Innovation

Drinking To-Go With Saucey

Summer is, for some, almost synonymous with cracking open a cold one, be that a beer, wine cooler or mixed drink.

While drinking on the deck is a good deal of fun in the summer sun, going to the grocery or liquor store to keep a gathering well-lubricated is not quite as enjoyable, particularly if the drinks run out in the middle of the event.

Filling that hole — and making it easy for customers to get their drinks delivered right to their doors — is an area that caught the eye of many an innovator. Boston-based Drizly, which raised more than $35 million, has a foothold in 70 cities and a stated ambition to be the “Amazon of Alcohol.” Comparatively, New York-based Minibar has a presence in 30 cities, and even the smaller, also New York-based services Thirstie and Swill claim 10 and 12 cities served, respectively.

Onto this crowded field strides Saucey, a delivery service which, like its cutely-named counterparts, delivers alcohol on-demand, albeit in a novel way.

While its competitors mostly run order taking services — which then send the delivery orders along to alcohol vendors, and the vendors make the deliveries — Saucey handles its own delivery logistics through a network of 2,300 vetted and background-checked couriers.

Though the field is crowded with well-capitalized players, Saucey co-founder and CEO Chris Vaughn genuinely isn’t worried. According to Vaughn, the race isn’t to build the best-funded company the fastest, but to build a better consumer experience to capture the estimated $113 billion-per-year off-premise alcohol business.

“I’ll first say that raising tons of capital doesn’t inherently make you a good company or [give you] a competitive offering,” said Vaughn. “We saw multiple on-demand or marketplace services that raised more than $100 million shut their doors last year. I’ll also say ‘being available’ in a bunch of cities doesn’t actually mean you do well there. There are eCommerce platforms that ‘ship nationwide’ — [it] doesn’t mean they’re having impact in any given market.”

Saucey’s goal, he added, is not to see how fast it can get into “20 or 30 markets.” Vaughn views that type of rapid expansion as something that would be a huge mistake for his firm.

“I think it’s about launching a market and focusing on each city,” he said.

That level of focus means Saucey can claim some things its competitors can’t. It only has a presence in four markets, but it “runs positive” in all of them. The vast majority of its competitors in the delivery space have run perennially in the red. Saucey’s control of delivery logistics translates into better control of customer experience and the ability to deliver a consistently better outcome.

“Our customer purchase frequency and retention far exceed not only the other players in the space, but also the traditional brick-and-mortar operators as well,” Vaughn said. “Our focus is how we actually change the future of retail in a market, and consolidate buying behavior to a platform that offers a better way to shop.”

The work is not easy. Delivering alcohol is sensitive, and Saucey only provides a marketplace that connects consumers to alcohol distributors. The sale itself is between those parties, and it’s up to them to stay on the right side of the law. Saucey delivers the alcohol with vetted and screened couriers who also scan the credit card and license of every delivery recipient. That applies to every customer, every time — no matter how they look or how many times they’ve ordered before.

This, Vaughn notes, is not simple — particularly when one is working with alcohol.

“We had to build a real logistics company, specializing in delivering alcohol — a ‘controlled substance’ — in a way nobody has done before,” said Vaughn. “FedEx, DHL and Google Express all struggle in this category. The potential downside is it takes a ton of work and proprietary technology to do that, along with taking on the responsibility — and cost — of running live delivery operations.”

But, he notes, the upsides are paying out, and he expects they will continue to pay out in the long term.

“You offer a far more compelling and reliable service to customers, resulting in higher purchase frequencies and retention. You operate a delivery service with all background-checked operators — bringing a safer experience to customers, which is important at scale — and have full control and visibility into ID verification,” Vaughn explained. “Lastly, without question, you offer the best model to retailer partners, who can scale their business to two, three or four times what it once was, without each of them having to figure out courier recruitment, retention and operations.”

And those are results, he noted, are already observable in practice. According to the firm’s internal figures, the Saucey partnerships represent some 40 percent of its retail partner’s revenue and experiences a 20 percent month-over-month revenue growth rate.

Ordering platforms, according to Vaughn, are easy to build, which is why there are so many of them. But, he said, to stand out in a crowded field, Saucey wants to do something harder: build a real logistics network that is ready to scale profitably.

It’s the kind of job one might like to start with a stiff drink. Luckily for the team at Saucey, there are probably a few people they can talk to about that.

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