Alcohol delivery startup Tipple goes national: How it’s growing 5% week-on-week in an over-saturated market
Wednesday, March 28, 2018/
Alcohol delivery startup Tipple is set to slip the surly bonds of Victoria and expand its product offering nationally, finally delivering on its original vision through a spate of newly-established partnerships with bottle shops across the country.
Forty-one different ‘zones’ across Australia have been earmarked for expansion by the startup, which offers an UberEats-style delivery service for alcohol of all sorts and sizes, delivered cold within 30 minutes in the areas it supports. Until now, those areas included only select suburbs of Melbourne.
But it’s the areas the startup didn’t support that kickstarted its national growth, with co-founder Ryan Barrington telling StartupSmart he and his co-founder Shane Barrington were seeing significant interest from users trying to sign up for Tipple from outside their supported zones.
“Fifty percent of the traffic hitting our homepage were entering their address and finding their area was not serviceable, so that helped us identify which areas to grow into next,” he says.
“On top of that, over 8000 users left their details to be contacted once we were available. And almost all of this traffic is organic via word-of-mouth, as we don’t advertise in the zones we’re not launched in.”
Right now the startup is undergoing a soft launch in three zones around Sydney, but is keeping to location of these trial zones under wrap. The team hopes that if they can nail the systems in those areas, rolling out the service nationally will be much easier.
Also working in their favour is Tipple’s latest progression of its business model, with the startup beginning to use partnerships with other bottle shops to deliver its grog, rather than its previous model of sourcing it from stores owned by the founders.
A partnership model has long been the goal of Tipple but it had been out of the question in the early days as the startup got off the ground. The focus in the early days was on proving the Tipple concept, says Barrington.
“We owned the bottle shops ourselves, so we were the entire package — when orders came through Tipple they’d come from one of our stores. We did that to prove the concept and to build the system right, as if you live through every experience and face every obstacle yourself you’re better positioned to build the right solutions,” he says.
But now the tech is ready to take to market and the founders think will prime Tipple for serious growth. Already, numerous bottle shops around the country are asking about partnerships, says Barrington, which he thinks signifies the growing importance of online delivery.
“The industry knows online is where everything’s heading, and a bottle of Johnnie Walker is the same no matter how or where you get it,” he says.
Real growth visible
Around six months ago, Tipple had just worked out a way to increase its order volumes by 54% year-on-year through a savvy use of geographical and customer data and was reaping the benefits in the zones where the startup is best established.
One such zone is the inner Melbourne area of Windsor and St Kilda, which was the launching ground for Tipple back in 2015. Barrington remembers the earlier days of the startup were a bit easier, as consumers were yet to fully embrace the convenience craze.
“When we first started, delivering it in 60 minutes and getting there cold was considered great, but those market expectations changed heavily with Deliveroo and UberEats,” he says.
The startup has since cut its delivery time in half and continued to cut down the costs of delivery, benefits which have shown results in the Windsor region where the startup currently has 6.9% market penetration.
While this might not seem like a lot, Barrington says there are 39 bottle shops within the four-kilometre radius area, so the startup’s claim on the market is impressive considering the saturation. Additionally, in the last week, the region pulled in $36,000 in sales and is averaging $1.5 million in sales a year.
“We’re also increasing sales 5% week-on-week. The first customer is the hardest, but we found once they’ve ordered once it’s much easier to get them to a second purchase,” he says.
“Out of the 6900 customers in that zone, 40% of them have made more than one purchase, and then 40% of them make at least four purchases every 90 days.”
Barrington puts the startup’s success in that zone down to the team having perfected the business model there, getting delivery times down below 20 minutes. This has upped Tipple’s customer retention rate, as the startup’s data shows customers who receive their order under 25 minutes are more likely to make a second order within three weeks.
Ideally, the founders would like to see 10% market penetration in the zone, and they hope the partnerships with more bottle shops will increase the startup’s slice of the market. But another way they’re looking at upping their users is through an old classic marketing tactic.
“We’re launching a new referral campaign, you know, refer a friend get $10 credit, that sort of thing. This has been in the pipeline for a while because so many other components have taken priority,” Barrington says.
“We were just getting so many customers through word-of-mouth we knew we had to do a referral program.”
But while growth can be exciting and stimulating, Barrington warns founders not to lose their cool.
“While it can be exciting and nerve-wracking keeping up with growth and demand, it can go pear-shaped if you don’t get your foundation right. Deliver on your software before biting off more than you can chew, then try to enjoy the growth you get,” he says.