Subscription Commerce

It’s Always 5 O’Clock Somewhere: Distilleries Get Into Subscription Retail

There’s nothing inherently wrong with such whiskeys as Jim Beam and Jack Daniels — they are a staple of blues, country and rock-and-roll songwriting, after all, and still have the power to soften the edges of a rough work week by the time Friday evening rolls along. Nor is there anything bad about the vodka, tequila and other liquor brands found in mainstream stores across the country. They all get the job done.

However, sometimes, a person just wants something more — something harder to find, something with its own unique and perhaps even rarefied taste, something that tastes of craft instead of mass production. Shots Box CEO J.C. Stock knows that feeling well. He’s a homebrewer and entrepreneur (and recent student of the complexities of the U.S. liquor industry), who has combined the ongoing consumer desire for online subscription retail with the rise of craft distilleries. Along the way, he learned more about the power of brick-and-mortar retail in this increasingly online world.

 

Shots Box sends monthly sample boxes of liquor from craft, small-batch and mom-and-pop distilleries — carefully selected by the company — to subscribers, who then have the opportunity to buy full bottles of any libations that catch their fancy. Essentially, Shot Box offers the tasting room experience via online commerce with those subscription boxes and samples.

During the latest edition of the PYMNTS Matchmakers series with Karen Webster, Stock not only spoke about the sweet spot in which Shots Box operates, but how it reflects the joy that many drinkers get from quality, hard-to-find liquor — an experience that used to require a trip to certain, specially oriented bars or a local distillery.

Outlets For Distilleries

Those distilleries “don’t have an outlet to get their spirits out,” save in their local areas, proving frustrating to many drinkers, given this new and ongoing golden age for craft spirits. (Not everyone digs craft beer, after all, which is in the midst of its own lucrative golden age, and even beer and wine enthusiasts sometimes want to sip or shoot a good spirit.) “This gives them the ability to have their tasting rooms outside their normal areas,” he said.

Much easier said than done, as Stock learned when he began turning his visions of providing wider access to craft spirits into a viable business. Prohibition in the U.S may have ended in 1933 (at least, on the federal level), but we still live in its long shadow.

For example, there are the laws regarding the manufacturing, distribution and sale of liquor. Stock quickly learned that there is a three-tier system for liquor, a process that governs its movement from source to consumer — distillery, distributor and retailer. Shots Box had to open a retail store in Southern California so the company could legally sell to online consumers via those boxes (shoppers can also go onto the Shots Box website to access those full bottles of craft spirits).

Did he have any sense of the complexity of the liquor business before he started Shots Box?

“Nope,” he said. “We had to buy a retail store to fulfill this dream. It was a learning process, and a very expensive one.”

Indeed, even though Shots Box is a mostly online operation, and has a digital-first outlook, it must, under law, get its liquor from the distilleries it works with via the distributors. Those distributors ship the products to the Shots Box retail store in California, where the company assembles those boxes, then ships them to its own customers.

“It all comes through our store, and it all leaves through our store,” he said. “We didn’t plan on any of that. We didn’t know the logistics involved. We didn’t even know the logistics of making a box, to keep those minis from leaking and making them look good.”

That’s more evidence, perhaps, that good alcohol leads to great ideas, but more about that in just a bit.

Distillery Gains

First, it’s worthy to discuss what Shots Box does for those distilleries, and what both parts of the overall operation bring to the table. The biggest drinking nerds among us often plan road trips and vacations around various distilleries — just as craft beer fanatics do, but, by most accounts, in much smaller numbers. However, the rest of the drinking population is not as motivated, yet still eager to try new spirits, especially those created by small operations.

At first, according to Stock, those distilleries had a tendency to “slam the door in our faces,” he told Webster, but things have become much friendlier since then. “We have distilleries lining up, coming to us,” he said, adding that some of them promote Shots Box — and, by extension, their own creations — by informing their newsletter readers about the subscription operation. Inclusion in the boxes is on a first-come, first-served basis, and the cost for a box comes to $39.99 for 10 samples.

“The whole appeal is not knowing what you will get — the anticipation.” Stock explained.

Those boxes are designed to provide an experience, and not come across as just a bunch of products stuffed into a box. Part of the experience comes from recipe cards, with ideas about how to make drinks from that month’s liquor samples. “We just don’t want to send alcohol in [the] mail and have it be a party box,” he said.

Those recipes come from the distilleries, and reflect their expertise about the best ways to consume their products. To make sure customers will be pleased, Stock and his employees take on the hard, soul-crushing testing of those recipes. “It’s a very hard place to work at,” he added.

All kidding aside, at least until the next drink, Shots Box obviously operates in an area of retail where age verification is key. (PYMNTS has closely covered the new technologies and processes that are popping up to provide age verification services to retailers of not only alcohol, but eCigarettes and online gambling.) Stock said his company relies on signatures and other methods, and its delivery company offers carding services to people receiving those orders. So far, he said he can report no problems, including those of teenagers ordering boxes that are later accepted by mom or dad. “We are lucky, we guess,” he said.

Future Path

Stock told Webster that the company, which is self-funded, has enough capital to keep going for two years with an income. In addition, he noted that the time has come to “take a step back and look at what everyone is doing” so that Shots Box doesn’t lose its edge or miss out on a new trend. Upcoming is a redo of the company’s two-year-old website. “That’s the struggle,” he said. “You have to make sure your website is hip.” The company will also seek other avenues of revenue, perhaps via monthly clubs devoted to certain spirits, such as a whiskey-of-the-month offering.

As for that retail store, it’s on the path to turn into more of a blessing than a burden — and could stand as yet another example of how digital-first and digital-focused merchants are turning to physical locations to enhance their brands and offerings, and to tighten their bonds with consumers. The company plans to move the store to Anaheim, CA — closer to the action of Disneyland. That will allow Shots Box to tap into a large flow of consumers, and entice them by offering tastings and other events.

Stock, like so many homebrewers (if not all of them), gets a kick from people trying and liking his own creations. He wants to inject more such joy into the Shots Box operation, including via its brick-and-mortar store. “We are trying to sell an experience,” he said.

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