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HelloDrinks looks to take on the big guys with Catch

How does a less than two-year-old online liquor retailer compete with the Dan Murphy’s of the world? Team up with a marketplace.

At least, that’s the strategy of Sydney-based startup HelloDrinks, which on Wednesday started selling a range of wine, beer, cider and spirits through Catch.

“We tried to identify who’s making the big moves, who’s trying to take on the Woolies and Coles. Catch have got big plans, and liquor is an obvious [category] for them to tap into,” Irish expat JP Tucker, who founded HelloDrinks with wife Stephanie in December 2016, told IR about the decision.

According to Tucker, packaged liquor is a $17 billion market in Australia (IBISWorld measures it at $12 billion), 75 per cent of which is owned by the supermarkets, with Woolworths’ Dan Murphy’s being the major player.

And Tucker is under no illusions that HelloDrinks would be able to compete with the likes of Dan Murphy’s on its own.

“Our competitors would be Boozebud, Mybottleshop…that’s the level we play at,” he said.

By partnering with marketplaces, however, smaller players like HelloDrinks are able to reach huge audiences and potentially amplify sales many times over. Tucker estimated HelloDrinks’ customer database to be less than 1 per cent of the size of Catch’s database. And they’re growing.

According to Australia Post’s latest e-commerce report, online marketplaces grew 74 per cent year-on-year in 2017-18, much faster than the online retail sector as a whole. And with Amazon’s recent arrival to Australia, that figure is not likely to slow any time soon.

This hasn’t escaped the notice of larger retailers like Dan Murphy’s, which recently launched its own online liquor marketplace to offer a wider range of products than it carries any given store.

HelloDrinks currently stocks around 350 products, including Jacob’s Creek wine and Glenfiddich whisky, which it ships from its warehouse in Sydney.

Tucker said he expects to offer 80-90 per cent of the range on Catch, and is working with suppliers on pricing so the margins can work. He said he is open to bringing on new suppliers.

HelloDrinks initially started as an on-demand delivery service before evolving into a digital storefront for major beer, wine and spirits brands, and expects to launch same-day delivery in Sydney in the coming months. The startup also sells through local Australian marketplace, MyDeal.

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