Team eCommerce Next interviewed Jeff Carroll from Avalara to get more insights on alcohol ecommerce. Following is our interview with him:
Alcohol ecommerce is exploding; what is driving growth?
According to Rabobank, alcohol eCommerce grew from $2.6bn in 2019 to $6.1Bn in 2021. Alcohol tends to lag other categories in terms of technology adoption, partly because of the regulatory complexity, and eCommerce sales are not an exception to that rule. COVID was a wakeup call for producers, wholesalers, and retailers alike and we saw a staggering amount of investment in technology and human resources as more consumers became comfortable buying alcohol online. The pandemic was a catalyst for consumer adoption of ecommerce across channels, including grocery outlets, marketplaces, and brand websites seeing uptick in new online customers.
What is Avalara and how do you help companies who sell alcoholic drinks online?
Avalara provides cloud-native tax compliance solutions for many industries and tax types, including beverage alcohol. On top of being able to very accurately calculate tax on beverage alcohol products, we also offer an array of services to help alcohol sellers manage the compliance complexities inherent in this industry. For example, we can file and remit taxes after calculations, ensure transactions are compliant prior to fulfillment, acquire, renew, and modify alcohol licenses, and register, renew, and revise product registrations. Avalara tracks tax rate and rule changes across thousands of taxing jurisdictions, and tracks legislative changes impacting changes around, for instance, how and where sellers can go to market with online sales.
What should businesses prepare for if they want to jump onboard the alcoholic beverage ecommerce bandwagon?
There is a good amount of regulatory complexity in this industry. We go to lengths to help educate the industry about how to practically comply with the myriad laws and regulations. For example, we have a partnership with Wine Institute that shows all of the rules that wineries need to comply with when it comes to direct shipment of wine. Businesses newly entering the ecommerce space now have the advantage of adopting the right cloud-based tools and platforms to manage growth, provide optimal customer experience, and mitigate against compliance risks.
Is there important legislation worth watching in this area in the next year? If so, explain the impact / potential impact to online businesses.
We’re watching several key things in the legislative arena in 2022. It’s been remarkable to see how many states have adopted “Cocktails to Go” from restaurants either on a temporary or permanent basis, and that continues, with New York extending their allowance for three more years. Similarly, states are adopting laws that allow for the delivery of beverage alcohol products from off-premise retailers. And finally, spirits and beer advocacy groups are pushing to get access to more states for direct to consumer shipping. Currently, wineries can reach roughly 97% percent of the US population with direct shipments, but breweries and distilleries can only reach 17% and 11% respectively.
What are some interesting trends taking place right now in beverage alcohol ecommerce?
Innovation is happening at a pace I haven’t seen before. Brands want to help consumers find and receive their products, and obviously that is all shifting more and more online, especially as consumer generational shifts continue. To take full advantage of these shifts in consumer preference, Rabobank’s Bourcard Nesin wants wineries to think about the resources they devote to on-premises vs. off-premises sales, and be prepared. Ecommerce already accounts for more than 10% of off-premises wine sales, and he expects revenue from online channels to match or surpass on-premise sales in a few years. Successful wineries need to have enough people to manage their brand thoroughly on their ecommerce channels. According to Nesin, the difference between a good ecommerce team and a bad ecommerce team comes down to people – and most wineries just haven’t invested in the people they need to succeed in the digital world.
What is the #1 mistake online companies make when it comes to selling wine, beer or spirits online?
I’ve seen a lot of businesses jump in without understanding the regulatory complexity of selling online. Consider the dynamic state-by-state and local regulations that must be tracked and complied with, from tax collection and remittance, licensing and product registration, to shipping and age verification, and suddenly the new obligations can be daunting. A little homework and expert advice upfront can save a lot of hassle down the line.
What can we expect to see from Avalara in the next year? What are your plans for further helping online businesses in the beverage alcohol industry?
Avalara is on a mission to be a part of every transaction in the world, and that translates directly to the beverage alcohol industry solutions. We will continue to look for ways to help businesses simplify the process of selling alcohol, whether that’s online or offline. Our goal is to make compliance seamless so businesses can focus on what they do best. The roots of our beverage alcohol group are in compliance services, and we continue to add more real-time and cloud-native capabilities for alcohol sellers.
About Jeff Carroll
Jeff Carroll is General Manager for Avalara for Beverage Alcohol. He was formerly Product Management Director and prior to Avalara, he served as Chief Product Officer at Compli, overseeing the development of software solutions and marketing strategy. Jeff regularly speaks about and advises customers on beverage alcohol compliance issues, particularly in the areas of direct shipping and sales tax.
Avalara helps businesses of all sizes get tax compliance right. In partnership with leading ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging, and other indirect tax types. Headquartered in Seattle, Avalara has offices across the U.S. and around the world in Brazil, Europe, and India.