Ever since the passage of the 21st Amendment to the U.S. Constitution repealing Prohibition, selling liquor wholesale has been costly, time-consuming and complicated by middlemen – as the law requires. Apparently in 1933, Congress didn’t want liquor makers to have an easy time moving their product. But now, a business-to-business Web marketer feels it’s found a way to beat this system.
Over the last few months, Indianapolis-based eSkye.com has given liquor distributors a “neutral” online marketplace for their wares. It lets restaurants, hotels and other big purchasers of liquor and other alcoholic beverages order large quantities without having to fax or call on several distributors to get everything they need.
“The biggest impediment to consolidated purchasing in the beverage [business] is the lack of a single industrywide catalog of products linked to the distributors that have the product franchise in a specific geographical area,” says CEO Smoke Wallin. He notes that eSkye’s services act as a “standardizer” of product and transaction information.
“Oh, our system’s 500% more efficient than the way it’s done now,” Wallin claims.
To use the site, customers must register to access the different distributor’s offerings, and can pay for the liquor through a secure electronic funds transfer mechanism. Wallin says this feature makes it safer for delivery drivers because they no longer need to carry cash, “and this is a very cash-intensive business.”
So far the site has more than 500 customers and lists about 35 distributors operating in 37 states. The latter are responsible for 89% of the $110 billion in annual U.S. liquor sales.
For its services, eSkye charges a flat transaction fee of less than $1 per order, compared with the $6 to $9 per order it costs to buy liquor through conventional means.
While declining to project sales, Wallin believes the site will begin to generate revenue sometime next year.
Last May the 10-year liquor industry veteran thought the Web would be great for the business, but not if each distributor worked solely through its own site. Wallin offered all distributors the opportunity to go into this collective venture with him; many accepted, but some declined. This, he says, helped him keep the site neutral.
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