Khandelwal’s counterpart in Bangalore had a different reason to venture into online retailing of alcoholic beverages. The owner of Madhuloka Liquor Boutique, with 17 stores across Bangalore, noticed a trend that young consumers, mostly the technology professionals, tend to keep a stock at home because of their unusual working hours. Madhuloka then started its online platform that offers the “convenience of shopping in your own time in your own space when you need to stock up or for an event or replenish your fridge with your favourites”.
A handful of online retailers have started offering alcoholic beverages through the e-commerce route since then. Letsbuydrink.com caters to Delhi, Gurgaon, Faridabad and Mumbai and offers imported alcoholic beverages for sale. There is Madhuloka in Bangalore, wineBazaar.in and hopscorkenbottle.com in Mumbai and boozzr.com in Delhi, among others.
The phenomenon is still in its infancy, with volumes limited. And, metro-centric. But it has the potential to grow. Sagar Shetty of winebazaar.in, who sells almost everything from imported alcoholic beverages to country spirits at his retail outlet in Mumbai, gets about six per cent of his monthly sales of about Rs 1 crore from online orders. Another retailer in Bangalore, who also sells through online but prefers not to be named, says it gets orders worth more than Rs 2 lakh a month through its online portal. “This is small compared to what we sell in the shop but a new revenue stream.”
Of course, the business model they follow is of the marketplace, where they connect the buyers with the sellers. Yet, they are living on the edge of the law, which could be a serious challenge for its growth. A buyer can place the order and the site connects them with the local retailers it has arrangements with. But unlike companies like amazon.com or flipkart.com, which provide the logistics and delivery directly, liquor portals face a regulatory block. They cannot sell or deliver liquor at homes, as they do not hold the mandatory licence for doing so. In fact, some experts say there is lack of clarity on whether liquor can be delivered at home or has to be bought from earmarked licenced retail outlets.
As a result, the onus for delivering the product lies entirely on the retailer, which also means there are e-commerce sites which do not make any money on logistics at all. However, some say they are circumventing the law by tying up with independent individual delivery boys, who get paid a commission for delivering it at home, which is entirely off the book. They get paid in cash after delivery.
The liquor e-commerce sites have also found ways to circumvent the dry days in a city. They say even if orders are made, for example, on Mahatma Gandhi's birthday, while they register the delivery date, there is no real-time tracking of this to be brought under scrutiny. They, however, can change the dates in the delivery register to that of a non-dry day.
There is, of course, another challenge — the minimum age to buy alcohol varies from 18-25 years in the states. Some of the portals, such as letsbuydrink.com, ask the buyer to upload age proof while placing the order. Letsbuydrink still has more than 2,000 registered members.
“There are legal hurdles and alcohol being a state subject, online retailing of alcohol might not be scalable until governments change regulations. And, drinkers tend not to wait. They want it when they may order it. So, delivery would be an area of concern. This model is unlikely to go beyond metro cities,” says Anil Talreja, partner, Deloitte Haskins & Sells. He adds that globally, too, online retailing of alcohol hasn’t been very successful to date.
Still, “it’s convenient, it offers you a reasonably good variety and it is reliable,” says Ajay Chatterjee, a technology professional in Bangalore, who buys from madhuloka.com regularly. “My wife can easily buy alcohol online of her choice, while she does not prefer buying from a retail outlet.”
By industry estimates, the Indian liquor market is pegged at around Rs 1-lakh-crore, of which about a fifth is imported stuff. IndigoEdge, a research firm, says India is the third largest and one of the fastest growing liquor markets in the world.